Are Houses Less Affordable Than They Were in Past Decades?There are many headlines about how housing affordability is declining. The headlines are correct: it’s less affordable to purchase a
September Market Update
Dated: September 14 2020
What’s happening in our real estate market globally.
That’s the question of the hour. Well, first off let me just start off by saying that I am just reporting what analysts and real estate experts across the nation are predicting. I personally nor anyone else can control or predict what will actually happen. But, according to Goldman Sacks, Jp Morgan, Wells Fargo, B of A, and several other analysts, they are predicting economic growth in the third quarter ranging from 15-25%. A graph statistic from Opportunity Insights shows that most businesses ranging from health care to transportation, all had a decline in consumer spending in the first half of the year with the exception of groceries, which actually went up. So, its good news that their predictions from the analysts are that we will see progress in the third quarter as compared to the first half of the year. In fact, according to Lisa Shalett the Chief Investment Officer of Morgan Stanley, she states and I quote, “Indeed, the worst ever GDP reading could be followed by the best ever growth in the third quarter.” So we are starting to see a rebound. Small businesses obviously have been impacted due to the stresses and issues that are happening across the globe. But how has this impacted the real estate market nationally? How have we recovered there? Well, I’m going to show you a few quotes from the economists and real estate analysts regarding the recovery of the housing market and it’s very interesting, it almost reads like a movie trailer here. Realtor.com “Astonishing Rebound." Housing Wire “Shockingly Strong." ATTOM Data Solutions “pulled something of a high-wire act in the second quarter”. Zillow. “Stared the pandemic right in the eye and hasn’t blinked." Meyers Research. "Has been nothing short of remarkable." So it seems that housing may play a critical role in the recovery. Buyers across the nation have been out in full force since about the middle of May. According to the National Association of Realtors the Housing Market Index looks into four things, Demand, Supply, Price and Time on the Market. It combines those together and creates an index, and we saw a rise and a dip down, and now we are above what we were in February of this year, so it shows that we are recovering strongly. The question is, what’s going to happen with pricing. What should you do? I’ve been in the industry for over 15 years and I don't think there has ever been a time of so much uncertainty, so I can see how it can be scary. So what is going to happen, well, obviously, I don't have a crystal ball, but let’s look at what the real estate experts and advisors across the nation are forecasting. Only two of the major organizations are saying that we will decline. Seven of the nine are projecting house prices to go up ranging from about 2.3% to 4.4% percent. We believe that the lack of inventory has a significant impact on the projections going up. Right now we can’t bring homes to market as fast as people are buying them. Locally we hit a high of $750,000 median price for a detached home in San Diego County and $479,000 for condos and townhomes. Inventory cannot keep up with buyer demand. This is also happening nationally, let’s look at a quote from Move.com “Summer home buying season is off to a roaring start. As buyers flooded into the market, Realtor.com monthly traffic hit an all-time high of 86 Million unique users in June 2020, breaking May’s record of 85 million unique users.” I personally feel that the low interest rates have a lot to do with buyer demand. The record-low mortgage rates have converted some prospective buyers into active buyers. Many times an economic downturn causes interest rates to go down, but as we see the economy recover we should assume that rates will go up. Remember, as interest rates go down, a buyer's buying power goes up, meaning they are able to afford and qualify for more and their payment does not go up. Also, if you look at the amount of home purchase applications that were taken out from buyers, according to the MBA, Mortgage Bankers Association, they have seen 11 straight weeks of year over year increases in loan applications. So according to experts and analysts across the country, the projections are positive. For more information or to just chat about what may or may not be best for you, reach out to me CC Summerfield, I love setting my clients up for success.
I have been a real estate agent here in Ocean Beach for the last 11 years and have lived in and loved this little beach community collectively for 20 years. My passion is helping people and after reti....
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