What is the number 1 question both buyers and sellers are asking right now? I bet you know what it is...
With Covid-19 running rampant, work stoppage and skyrocketing unemployment, and with mortgage lending getting tighter and tighter everyone wants to know what is going to happen to the real estate market. But what they are really asking is what will happen to the price of homes.
I wish I could answer that question, but I can tell you that based on the amount of available inventory I would say that I don't believe it will go down, at least not in any significant way. Take a look at this chart of Inventory of Single Family Homes in Bristol County spanning the last 5 years:
Notice the number of listing units. One of the biggest issues we have had over the last few years is lack of inventory. Now look at the inventory level for 2020. It is down 25% from this time last year and down 45% from 5 years ago.
Now look at the months of supply. A stable market, a market in balance (equal number of buyers and sellers) is usually indicated when there is a 6 month supply of homes available. We are currently at 1.7 months of supply.
Now, let's take a look at this chart for Multi-Family homes in Bristol County:
See a trend here? Very similar statistics as the single family chart. Now let's look at condominiums:
Again, similar story.
There is no doubt that the effects of the corona virus will have a chilling effect on the economy and the number of home buyers in the market place but with so little inventory the likelihood of any long term and significant downward pressure on pricing is low.
However, if there is one constant in real estate it's change! I do expect that once we are on the other side of this, and businesses are able to re-open and we all start to become more accustom to this new normal that there will be a flood of homes hitting the market. So when that happens we will have to see how the market responds.
EZ Home Search Real Estate
The 2008 crash was caused by subprime loans and speculators. Together, they drove prices to unsustainable levels. It was a perfect storm of events that had a devastating impact.
But if you think we’re headed for the same rough waters today — think again.
Today’s housing market is much different than it was in 2008 — and therefore more stable today.
There are key differences in this market then 2008. Don’t believe me? Check out this article that shows 8 Reasons the Coronavirus Won’t Crash the Housing Market.
Buying and selling real estate is still a good idea right now — if you have the right agent on your side.
Contact me to find out how we can guide you through these uncharted waters.
Every year the housing market changes. In the last decade we have seen very high highs, and very low lows. But it is predicted that the 2017 housing market will even out, creating a steady amount of inventory and demand in the upcoming year. Below are some of the specifics that we can expect in 2017.
We discussed the economy’s effect on interest rates in great depth in a previous post (Click Here to See Post) of ours, but here’s a small recap if you missed it. Immediately after the election results came in, mortgage rates increased. They continued on an upward trend through the end of 2016, and with the Federal Reserve’s December announcement to increase interest rates, we can expect the mortgage rates to continue to rise. Typically, when rates begin to go up, buyers come out earlier in the selling season to try to lock in lower rates, so that is something agents can expect this year.
By 2017, sellers have finally regained enough equity in their homes to feel comfortable putting them on the market, the feeling is that this will mean that there will be more homes on the market than we have seen in recent years. Often, when mortgage rates go up, price appreciation goes down so that the overall cost of buying a home isn’t absurdly high. Therefore we often see that the homeowners who are thinking they will sell in the next few years consider selling sooner rather than later because they don’t want to risk selling their home for less in the future than they can sell it now. Thus, early 2017 could see higher inventory and activity than we usually see in the winter months.
Though the rates are increasing, credit is not as hard to get as it was directly after the recession. The Federal Housing Finance Agency even announced that it will increase lending limits for 2017. The increase of the conforming loan limits is the first time these have changed since 2006. The limit will rise to $424,100 from $417,000. Some lenders are also offering new mortgage programs that call for a modest down payment and don’t require buyers to purchase an FHA loan. Typically, lenders require credit scores of at least 620 to qualify. We’re also seeing more products form municipal housing agencies that assist many first-time buyers. All of this is in addition to Fannie Mae and Freddie Mac programs that allow for as little as a 3% down-payment for first-time home buyers with loan amounts below the conforming threshold.
Overall, there is an optimism surrounding the 2017 housing market predictions, and the hopes are that we will see a thriving market throughout this new year.
Christopher Terry is a licensed real estate broker in Ma and RI, has completed the Accredited Buyer Representative Certification, is a graduate of the Certified Distressed Property Institute, holds the prestigious CDPE designation, is a 4-Time winner of the Master Sales Society's 5/50 Award and is the founder of EZ Home Search Real Estate Inc.