The residential real estate market has definitely been the shining light in this country’s current economic situation. All-time low mortgage rates coupled with a new appreciation of what a home truly means has caused the housing market to push forward through this major health crisis. Let’s look at two measures that explain the resilience of the real estate market.
The number of buyers getting a mortgage to purchase a home is a strong indicator of the strength of a housing market. Below is a graph of the week-over-week percent change in that number, as reported by the Mortgage Bankers’ Association:The number dropped dramatically in March and mid-April when the economy was shut down in response to COVID. It increased substantially from later in April through the middle of June. The strong increase in May and June was the result of the pent-up demand from earlier in the spring along with the normal business that would have been done during that time.
Since July, the market has remained consistent on a weekly basis, but still reflects a double-digit increase from the levels one year ago. The August 12 report shows a whopping 22% increase over last year.
Like purchase mortgages, pending contracts are also a powerful indicator of the strength of the real estate market. Zillowreports each week on the percent change in the number of homes going into contract. Here’s a graph of their data:The graph mirrors the one above, showing a drop in early spring followed by a strong recovery in late spring and early summer. Then, in July, it settles into a consistent level of deals. That level, like the one for purchase mortgages, is well ahead of the level seen last year. The last report revealed that pending deals were 16.9% greater than the same time last year.
Both indicators prove the housing market recovered quickly from the early setback caused by the shelter-in-home orders. They also show that Americans have realized the importance of their homes during this time and are buying more houses than they did prior to the pandemic. We are seeing record sales in the Inland Empire too. Give the Ransom-McKenzie Team a call today to see how we can help you.
One of the biggest questions on everyone’s minds these days is: What’s going to happen to the housing market in the second half of the year? Based on recent data on the economy, unemployment, real estate, and more, many economists are revising their forecasts for the remainder of 2020 – and the outlook is extremely encouraging. Here’s a look at what some experts have to say about key areas that will power the industry and the economy forward this year.
“The recovery in housing is happening faster than expected. We anticipated a drop off in Q3. But, we don’t think that’s the case anymore. We revised our Q3 numbers higher. Before, we predicted a 2 percent decline in purchase originations in 2020, now we think there will be 2 percent growth this year.”
“Sales completed in May reflect contract signings in March and April – during the strictest times of the pandemic lock down and hence the cyclical low point…Home sales will surely rise in the upcoming months with the economy reopening, and could even surpass one-year-ago figures in the second half of the year.”
“We can project that the next few months will see a slow-yet-steady improvement in new inventory…we projected a stepped improvement for the May through August months, followed by a return to historical trend for the September through December time frame.”
“The weaker-than-expected single-family starts number may be a matter of timing, as single-family permits jumped by a stronger 11.9 percent. In addition, the number of authorized single-family units not yet started rose 5.4 percent to the second-highest level since 2008. This suggests that a significant acceleration in new construction will likely occur.”
The experts are optimistic about the second half of the year. If you paused your 2020 real estate plans this spring, reach out to The Ransom-McKenzie Team today to determine how you can re-engage in the process.. We have details regarding our local Inland Empire market that will help you determine the best course of action.
Here’s why. As we continue to work through the health crisis that plagues this country, more and more conversations are turning to economic recovery. While we look for signs that we’ve reached a plateau in cases of COVID-19, the concern and fear of what will happen as businesses open up again is on all of our minds. This causes confusion about what an economic recovery will look like. With this in mind, it’s important to understand how economists are using three types of sciences to formulate their forecasts and to work toward clearer answers.
Business Science – How has the economy rebounded from similar slowdowns in the past?
Health Science – When will COVID-19 be under control? Will there be another flareup of the virus this fall?
People Science – After businesses are fully operational, how long will it take American consumers to return to normal consumption patterns? (Ex: going to the movies, attending a sporting event, or flying).
Sam Khater, Chief Economist at Freddie Mac, says:
“Although the uncertainty of the crisis means forecasts of economic activity are more unclear than usual, we expect that most of the economic damage from the virus will be contained to the first half of the year. Going forward, we should see a recovery starting in the second half of 2020.”
This past week, the Bureau of Economic Analysis released the advanced estimate for Gross Domestic Product (GDP) for the first quarter of 2020. That estimate came in at -4.8%. It was a clear indicator showing how the U.S. economy slowed as businesses shut down and consumers retreated to their homes in fear of the health crisis and of contracting COVID-19.
Experts agree that the second quarter of 2020 will be an even greater slowdown, a sign more businesses are feeling the effects of this health crisis. The same experts, however, project businesses will rebound, and a recovery will start to happen in the second half of this year.
What Does This All Mean?
As time goes on, we’ll have more clarity around what the true economic recovery will look like, and we’ll have more information on the sciences that will affect it. As the nation’s economy comes back to life and businesses embrace new waves of innovation to serve their customers, the American spirit of grit, growth, and prosperity will be alive and well. Give The Ransom-McKenzie Team a call if you have questions about our local real estate market as we work through this time.
The Riverside Chamber of Commerce has created a local shopping group on Facebook to feature businesses that are open for business during this time of sheltering in place.
As we all struggle with the reality of business not as usual, this is a good resource to help local businesses that are finding creative ways to still offer their product to consumers. Be sure to check this page when you’re shopping so we can keep our local businesses up and running.
Another great resource is from the City of Riverside. They have created a map that shows businesses that are remaining open during this time. The map is interactive and includes businesses that qualify in Governor Newsom’s essential business list. The map includes businesses throughout the city. Check it out!
The Ransom-McKenzie Team truly believes that we are best served by supporting our local community. Be sure to check these resources first so we can keep Riverside’s economy going in these trying times.
The health and safety of our team members and the clients we serve are our top priority.
While it is difficult to predict the impact coronavirus (COVID-19) will have, we are committed to keeping you, our clients and friends, informed about ways to reduce your risk and protect others. Check out Charlotte’s video message for more details about what we’re doing to help our clients during these uncertain times.
We’ll be keeping in touch through this Riverside Blog as well as through our Facebook and YouTube accounts. We look forward to staying connected, even though we are social distancing.
The real estate market is expected to do very well this year as mortgage rates remain at historic lows. One challenge to the housing industry is the lack of homes available for sale. Last week, move.com released a report showing that 2020 is beginning with the lowest available housing inventory in two years. The report explains:
“Last month saw the largest year-over-year decline of housing inventory in almost three years with a dramatic 12 percent decline, pushing the number of homes for sale in the U.S. to the lowest level since January 2018.”
The report also revealed that the decline in inventory stretches across all price points, as shown in the above graph. George Ratiu, Senior Economist at realtor.com, explains how this drop in available homes for sale comes at a time when more buyers are expected to enter the market:
“The market is struggling with a large housing undersupply just as 4.8 million millennials are reaching 30-years of age in 2020, a prime age for many to purchase their first home. The significant inventory drop…is a harbinger of the continuing imbalance expected to plague this year’s markets, as the number of homes for sale are poised to reach historically low levels.”
The question is: What does this mean to you?
If You’re a Buyer…
Be patient during your home search. It may take time to find a home you love. Once you do, however, be ready to move forward quickly. Get pre-approved for a mortgage, be ready to make a competitive offer from the start, and understand that a shortage in inventory could lead to the resurgence of bidding wars. Calculate just how far you’re willing to go to secure a home, if you truly love it.
If You’re a Seller…
Realize that, in some ways, you’re in the driver’s seat. When there is a shortage of an item at the same time there is a strong demand for that item, the seller of that item is in a good position to negotiate. Whether it is price, moving date, possible repairs, or anything else, you’ll be able to demand more from a potential purchaser at a time like this – especially if you have multiple interested buyers. Don’t be unreasonable, but understand you probably have the upper hand.
The housing market will remain strong throughout 2020. Understand what that means to you, whether you’re buying, selling, or doing both. The Ransom-McKenzie Team is here to help you understand the local Riverside Market. Give us a call today!
Which month do you think most people who are considering buying a home actually start their search? If you’re like most of us, you probably think the surge happens in the spring, likely in April. Not anymore. According to new research, January 2019 was only 1% behind February for the most monthly views per listing on realtor.com.
So, what does that mean? The busiest season in real estate has just begun! Isn’t that exciting? We’re ready, are you?
The same research indicates,
“Historically, April launched the kickoff of the home shopping season as buyers would come out of their winter hibernation looking for their new home. However, the spring shopping season now starts in January for many of the nation’s largest markets.”
We realize that we don’t get snow in Riverside, but the reality is, even in Sunny California we have fewer homes on the market in the winter, and that supply naturally increases as we head to the spring market, waiting for more competition to list in your neighborhood this year might put you behind the curve. We know from experience that NOW is the time to jump into the market.
George Ratiu, Senior Economist at realtor.com says,
“As shoppers modify their strategies for navigating a housing market that has become more competitive due to rising prices and low inventory, the search for a home is beginning earlier and earlier.”
There is a lot of speculation in the market about why the search for a home is shifting to an earlier start. The one thing we do know is if you’re thinking about buying or selling a home this year, the earlier you get started, the better.
Reminder: When should you sell something? When there is less of that item for sale and the greatest number of buyers are in the market. That’s exactly what is happening in real estate right now.
Contact Us Today
The new spring market for real estate is underway. We have an inventory shortage in Riverside right now and there are buyers out there looking for homes. If you’re considering buying or selling, reach out to The Ransom-McKenzie Team today and get started. We’re here to help you through the process.
This coming year the housing market will be defined by 3 things- inventory, interest rates, and appreciation. But the biggest issue the housing market will face in 2020 is an inventory shortage. There aren’t enough homes on the market for buyers, especially on the lower end of the market. This is a topic that has come up frequently within the past several months.
Based on what is forecasted, we know that interest rates are projected to remain low and that appreciation is expected to continue as we move into 2020. Additionally, the upcoming election will provoke many unique perspectives on the health of the US housing market. The challenge will be understanding what is actually happening and how you can best position yourself if you are thinking of buying or selling your home.
Here are several perspectives to consider on the inventory issue facing housing next year:
“Despite increases in new construction, next year will once again fail to bring a solution to the inventory shortage that has plagued the housing market since 2015. Inventory could reach a historic low as a steady flow of demand, especially for entry level homes, and declining seller sentiment combine to keep a lid on sales transactions.”
“Inventory has been falling annually for five straight months, after it recovered slightly toward the end of last year, due to a spike in mortgage rates. Rates began falling again by spring of this year. Homebuilders have been increasing production slowly, but it’s not enough to meet the increasingly strong demand.”
“As millennials — the largest cohort of buyers in U.S. history — embrace homeownership and take advantage of this year’s unexpectedly low mortgage rates, demand is outstripping supply, causing inventory to vanish. The housing shortage is felt acutely at the entry-level of the market, where most millennials are looking to break into the market for their first home.”
The most important thing you can do is understand what is happening in your local market by connecting with a real estate professional. You may not be able to avoid some of the issues brought on by low inventory, but you can be educated and prepared. Give the Ransom-McKenzie Team a call today!
Did you know that each year in the United States, we celebrate “National Roof Over Your Head Day” on December 3rd? We celebrate “roofs over heads” every day, but our friends at Keeping Current Matters reminded us that today is the official day to celebrate.
As noted on the National Calendar, this day was “created as a day to be thankful for what you have, starting with the roof over your head. There are many things that we have that we take for granted and do not stop to appreciate how fortunate we are for having them.”
From bungalows to cottages, and farmhouses to treehouses, today we show our appreciation and gratitude for the places we call home. Owning the roof that shelters us is something many renters still aspire to, knowing there are so many financial and non-financial benefits to homeownership.
“Cost-burdened renters now outnumber cost-burdened homeowners by more than 3.0 million. In addition, renters make up 10.8 million of the 18.2 million severely burdened households that pay more than half their incomes for housing.”
Homeownership drives many benefits, including providing families with a place to feel secure. It also helps promote confidence that they are investing proactively in themselves and their communities. That is why there are 77.7 million owner-occupied housing units in the United States.
Many, however, fear it is too expensive to own a home. In reality, though it’s actually more expensive to rent. Here’s the breakdown as a percentage of income necessary for both – affording median rent and owning a home:
Today as we pause to appreciate the places we call home, and all of the other reasons we have to be truly thankful, think about this: For those who don’t own yet and would like to, it’s a wonderful time to start identifying the steps needed to achieve homeownership. Contact The Ransom-McKenzie Team today to begin creating your plan.
For the second year, the Ransom-McKenzie Team has supported Habitat for Humanity Riverside’s Over the Edge fundraiser. Last year, all three team members went Over the Edge and we raised $5,000. This year, we shot for the same goal with just Connie going over the edge.
We once again raised $5,000 to support Habitat’s great efforts in the Inland Empire to provide affordable housing to at-risk families here. This event is a fun opportunity to raise awareness for a dire need in our community while having a good time experiencing the thrill of rappelling off of one of Downtown Riverside’s tallest buildings, Regency Tower on Orange Street. This year’s thrill was even more exciting because Connie, at 82 years old, was the oldest participant to go Over the Edge in Riverside. She made it look incredibly easy too!
Selling real estate in Riverside, The Ransom-McKenzie Team knows what it takes to be able to afford a home. Connie, together with her team members Charlotte and Bob McKenzie, (who are also her daughter and son-in-law), welcome the opportunity to help people find affordable, safe housing in the community. Habitat for Humanity’s mission statement clearly states that they “believe that everyone should have a safe, decent and affordable place to call home”. This is why we feel it is so important to not only raise money for Habitat for Humanity but to also raise awareness of the need for affordable housing in our region.
Through the fundraising efforts of the Over the Edge event, Habitat for Humanity Riverside raises funds to help bring their mission to fruition. Prospective homeowners put in sweat equity, and go through extensive life skills training in order to qualify for the Habitat for Humanity’s housing programs. This investment of time and effort gives the new homeowners a feeling of accomplishment as well as pride as they turn the key to open the door of their new home for the first time.
The Ransom-McKenzie Team is proud to be able to be part of this community-building organization. Working together with community partners like Habitat for Humanity helps to make Riverside a great place to live.
The Ransom-McKenzie Over the Edge Team on site. (L to R) Sarah Beresford, Bob McKenzie, Charlotte McKenzie, Roger Ransom, and Connie Ransom