Although the US entered this year still recovering from the Covid-19 pandemic effect, it still didn’t slow down home buying. On the contrary, the first few months witnessed a rapid increase in home prices, high buyer demand, and low house inventory resulting in fierce price competition in medium-to-small metro locations and suburban areas.
While the Covid-19 pandemic has raised people’s hope on its end, some real estate trends prompted by the pandemic might continue for the rest of the year.
The following are some real estate market trends.
Homes are Selling Quickly
Presently, demand is high, but inventory is low, creating a highly competitive real estate season. According to a report from Redfin, a real estate brokerage, an average house sells in under 18 days presently, a whopping 17 days down from the duration it stayed on the market last year, making it the quickest pace ever recorded.
Shockingly, many homes sell even in lesser time. Forty-five percent of homes are under contract in one week, while 58 percent of listings go off the market in under two weeks.
Sadly, it appears this trend isn’t stopping anytime soon. According to Redfin’s Chief Economist predictions, Daryl Fairweather, the real estate market has moved from one extreme – more listed houses with low buyers before the pandemic to another extreme – the mad rush to buy both primary and second homes due to low mortgage rates.
While this home sale boom persists, this is the best time to sell your house. If you’re in California, visit https://propertyescape.net/blog/sell-house-california/ to sell your house for cash quickly.
Delinquencies and Foreclosures are Dropping
With numerous mortgage forbearance options and foreclosure bans, this trend didn’t come as a huge surprise. However, mortgage delinquencies and foreclosure filings have slipped from one percent from March to April and will be down 17 percent the rest of the year.
In April, about 3,700 foreclosure starts began, a low record for the statistics. At the same time, more than five percent of mortgage loans are delinquent—the worst since the pandemic started.
However, loans more than 90 days past their due dates dropped by 151,000 in April too. While these statistics imply fewer distressed properties for the immediate future and the present, investors that prefer fix-and-slip and other related strategies might find this real estate market trend worrisome.
Don’t forget that forbearance options won’t last long. Once borrowers run out of time, the tide could change. Only time will tell!
Decreasing Housing Affordability
Although prices of real estate properties have been increasing for a while now, it has witnessed a massive surge since March without any signs of stopping anytime soon. According to Federal Housing Finance Agency (FHFA) data, the House Price Index prices increased by a whopping 12.2 percent this year.
In some places, such as Colorado and Arizona, it went up to 15 percent in the last 12 months. However, that’s not all; the increase was also witnessed in historically low-cost areas, with some parts seeing as much as 75 percent in median home prices.
Presently, just a smaller number of homes are still under $150,000 in these places. However, when you add the surging mortgage rates, affordability slows down considerably.
People Are Moving To Suburbs
Due to the rise in Americans working from home since the pandemic, many people are placing more attention to affordable space. As such, the slow-rising suburban areas during the pre-COVID-19 period are presently witnessing a massive surge.
Housing Industry-Focused Administration
The present Biden administration has continued to focus on housing issues since they took over, which is affecting investors in a good and bad way. For instance, the SECURE Act bill, reintroduced in mid-May, would enable remote notarizations, resulting in digital closings across the country.
Once this bill is passed, it becomes a huge advantage to investors, especially those who buy outside the state. Additionally, in March, a massive rental assistance measure was included in the American Rescue Plan. The bill allotted over $21 billion to tenants in need, which can be used for future rent, past due rent, or utilities. However, some states are yet to start disbursing these funds.
Sadly, the administration plans to reduce the tax advantages associated with 1031 exchanges. For example, this plan will limit the capital gains of tax breaks for purchases under $500,000. So consider making some changes if your portfolio consists of such exchanges.
Emphasis on Virtual Tours
Before the pandemic, people enjoyed looking online at different houses for sale in their locations. However, since the pandemic, real estate agents utilize virtual formats, using the live stream features for open houses. This strategy has placed so much emphasis on photographs, videos, and virtual tours in home listings.
While most people wouldn’t want to make a large purchase without touring the house in real life, these digital tools used in 2020 continue to stick around the rest of this year.
Every real estate professional must brush up on the necessary digital marketing methods other successful agents employ on real estate websites and social media.
What Does the Future Hold for the Real Estate Industry This Year
With the high economic uncertainty witnessed last year, many feared being hit with a real estate market crash this year. Well, to douse your tension, the housing market recession or crash won’t likely happen in the next years.
While the resultant effects of the quarantine lockdown were witnessed for a while, a gradual improvement is visible as favorable interest rates continue to boost home buyers’ confidence.
Whether there would be another Covid-19 surge or not, the likely negative impact we’ll see is a short-term decline in rental units before the industry re-enters into a period of recovery.
The Bottom Line
The Covid-19 pandemic has dramatically affected our economy, everyday life, and jobs, and sometimes planning for the future feels very tricky. Nevertheless, with the right real estate market trends, market patterns, and expert forecast knowledge, you’ll know what to expect.
If you’re in a suburban area, consider listing your home now for a quick sale. There may be an expected decrease in rented units, incentivizing the landlords to obtain better deals.
Although the past year was a tumultuous year and appears daunting, note that the real estate industry is still recovering, and there wouldn’t be any oncoming market crash.
If you’re thinking of selling your home in California quickly and at favorable rates, contact Property Escape for the best deals.