Home prices are increasing at double the pre-pandemic rate and selling nearly two weeks faster, according to Realtor.com’s Weekly Housing Report.
Reluctant sellers and eager first-time buyers in a market driven by low interest rates have pushed the inventory down by 400,000 homes compared to last year, according to Javier Vivas, director of economic research for Realtor.com.
“The majority of sellers are also buyers, so even as new listings hit the market, another buyer is also added,” he said. “Adding to the inventory issues, thousands of previously vacant homes, such as second homes and rentals, have been reoccupied by their owners during the pandemic, effectively taking them off the market.”
A total of 2.91 million unique properties have been put on the market since the beginning of the pandemic in mid-March — that’s about 390,000 fewer (down 39%) than the same period in the previous year. This last week’s listings were down 15% from the previous year but up two percentage points from the week prior, according to the report.
“The house-buying power increase was driven by the combined impact of lower mortgage rates, which were 0.08 percentage points lower in August than the previous month, and a moderate increase in month-over-month household income,” he said. “The increase in house-buying power boosted market potential by approximately 28,180 potential home sales.”
The price increase in the median listing price broke a new record, hitting a year-over-year jump of 11.1% for the week. That’s more than double pre-pandemic numbers from January.
Homes also are selling 12 days faster and staying on the market an average of 53 days compared to last year.
The median listing price in Atlanta was up 9.9% for the week, compared to the same time period last year, while total listings were down 46.6%. Homes sold nine days faster compared to last year, the report noted.
The latest Home Purchase Sentiment index from Fannie Mas shows how more and more Americans believe the worst is behind us, and their personal employment situation is good. “The percentage of respondents who say they are not concerned about losing their job in the next 12 months increased from 78% to 83%, while the percentage who say they are concerned decreased from 22% to 16%. As a result, the net share of Americans who say they are not concerned about losing their job increased 11 percentage points.”
Americans are naturally optimistic and have always responded to challenges with both resiliency and resourcefulness. Today is no different. As an example, the Wall Street Journal (WSJ) just reported:
“Americans are starting new businesses at the fastest rate in more than a decade, according to government data, seizing on pent-up demand and new opportunities after the pandemic shut down and reshaped the economy.”
Why would someone start a business in the middle of an economic crisis? The WSJ explains:
“The jump may be one sign that the pandemic is speeding up ‘creative destruction,’ the concept…to describe how new, innovative businesses often displace older, less-efficient ones, buoying long-term prosperity.”
The 2020 housing market has surpassed all expectations and continues to drive the nation’s economic recovery. The question is, will this positive trend continue throughout the rest of the year, especially given the uncertainty around the current health crisis, the upcoming election, and more?
“Homeowners’ balance sheets continue to be bolstered by home price appreciation, which in turn mitigated foreclosure pressures…Although the exact contours of the economic recovery remain uncertain, we expect current equity gains, fueled by strong demand for available homes, will continue to support homeowners in the near term.”