It would seem that we're not out of the woods yet. The reopening phases seem to coincide with increased cases and positive tests. Let's all put our patience hats on (along with our masks) and continue being careful. We'll get through this.
Support your friends, family and neighbors. Check in on your extroverted friends (we introverts are in heaven). And keep focus on the welfare of others, not just yourself. Go team!
Sorry. I've been reading more news than normal lately (which is typically none). Tends to get me all fired up and wanting to spread good news instead of all the ick.
Last week, we talked about the market beginning to heat up and this week we're going to stay on that wave. There's lots of good news for sellers this week so let's get rolling.
First and foremost, and indirectly beneficial to sellers, is the current state of mortgage rates.
Last week, the 30-year fixed-rate mortgage set a new record as rates averaged 3.13 percent, the lowest average rate in Freddie Mac’s records, which date back to 1971. And 15-year fixed-rate mortgages averaged 2.58 percent during the same week. Right along with that, buying activity is also starting to swell. Purchase demand activity is up over 20 percent from a year ago and is the highest since 2009.
So there's no question buyers are going to be a bit more motivated to get in the game. And it turns out they already are. Clever Real Estate did a study on buying experiences and found that 42 percent of buyers (who purchased between January and May) were in a bidding war.
Another brokerage noted that in the Boston metro area (close to home) 64 percent of all deals in the month of May had competitive offers.
"Our biggest challenge now is inventory. We need more homes to offer the buying community," Badger Realty agent Karla Badger said.
Another interesting area that is showing significant gains is new home construction. The way they gauge that is through single-family building permits. That number showed a double-digit gain in May. Looking back at our overall situation, it makes sense.
March and April brought the construction market (and, let's be honest, the whole world) to a bit of a standstill. Now that things are starting to open back up (for better or for worse) the market is coming back, demand is increasing and builders are ramping up production.
The other secondary benefit to the increase in single-family permit applications and the subsequent increase in production is the labor market. As builders ramp up, they are bringing with them the workers they were forced to lay off a couple of months ago.
This helps the market in immeasurable ways. The workers are able to provide better for their families. The family is able to purchase goods and services that they were forced to put on hold. And the overall economy is able to breathe a little easier. I recognize that is basic economics, but it bears repeating.
And while this does all point to it being a great time to buy, sellers can also rest easy. While a survey from Lending Tree indicates that 70 percent of sellers are willing to accept a lower purchase price than desired in order to sell their home, the data says they shouldn't have to.
The National Association of Realtors reported that median existing-home prices for all housing types in April were up 7.4 percent from a year ago. This tells us that home prices are staying steady (nation wide) and sellers (assuming they are priced appropriately) should not feel like they need to come way down to get the sale.
The basic tenets of supply and demand are also a factor right now. Until more sellers join the fray, the existing set of listings can enjoy the limited supply and stand firm on their price.
If you're considering selling your home, this might be a fantastic opportunity. Supply is really low and adding your home to the fray will have a much larger impact than if we were swimming in listings. Mortgage rates are insanely low and the new home construction market is starting to heat back up.
Reach out to your real estate professional this week and ask them about the state of things. How are showings happening? What precautions are being taken to slow the spread of the virus. Allay your fears and jump in the market. This might just be one of those amazing times you can take advantage of.