Home Buyer Demand is Far Above Last Year’s Pace
Homebuying has been on the rise over the past few months, with record-breaking sales powering through the market in June and July. Buyers are actively purchasing homes, and the momentum is continuing into the fall. It is, however, becoming harder for buyers to find homes to purchase. If you’ve been thinking about selling your house, the coming weeks might just be the timing you’ve been waiting for.
According to the Pending Home Sales Report from the National Association of Realtors (NAR):
“Pending home sales in July achieved another month of positive contract activity, marking three consecutive months of growth.
The Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, rose 5.9% to 122.1 in July. Year-over-year, contract signings rose 15.5%. An index of 100 is equal to the level of contract activity in 2001.”
This means that for the past several months, buyers have signed an increasing number of contracts to purchase homes – well above where the market was at this time last year. Lawrence Yun, Chief Economist at NAR notes:
“We are witnessing a true V-shaped sales recovery as homebuyers continue their strong return to the housing market…Home sellers are seeing their homes go under contract in record time, with nine new contracts for every 10 new listings.”
Below is a graph that shows the impressive recovery of homes sales compared to previous years. The deep blue v marks the slowdown from this spring that turned into an exponential jump in sales that followed through the summer, skyrocketing above years past:
What Does This Mean for Sellers?
If you were thinking about putting your house on the market in the spring, but decided to wait due to the health crisis, it may be time to make your move. Buyers are in the market right now. With so few homes available to purchase, homeowners today are experiencing more bidding wars, creating an optimal time to sell.
Is This Trend Going to Continue?
As CNBC notes, there are no signs of slowing buyer demand this fall:
“The usual summer slowdown in the housing market is not happening this year. Buyers continue to show strong demand, spurred by the new stay-at-home world of the coronavirus and by record low mortgage rates.”
Danielle Hale, Chief Economist at realtor.com, concurred:
“In a typical year in the housing market, buyer interest begins to wane before seller interest causing the usual seasonal slowdown as we move into the fall. Due to a delayed spring season and low mortgage rates, we could see buyer interest extend longer than usual into the typically quieter fall. Whether this means more home sales will depend on whether sellers participate or decide to stay on the sidelines.”
As Hale mentioned, homeowners who are willing to sell their houses right now will play a big role in whether the trend continues. The market needs more homes to satisfy ongoing buyer demand. Maybe it’s time to leverage your equity and move up while eager home shoppers are ready to purchase a house just like yours.
Are You Thinking of Selling?
If your current home doesn’t meet your family’s changing needs, contact The Ransom-McKenzie Team, your local specialists, to help you sell your house and make the move you’ve been waiting for all year.
Just How Strong Is The Housing Market?
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.
Purchase Mortgages
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.
Pending Contracts
Like purchase mortgages, pending contracts are also a powerful indicator of the strength of the real estate market. Zillow reports 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.
Bottom Line
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.
What About the Rest of 2020?
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.
Mortgage Purchase Originations: Joel Kan, Associate Vice President of Economic and Industry Forecasting, Mortgage Bankers Association
“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.”
Home Sales: Lawrence Yun, Chief Economist, National Association of Realtors
“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.”
Inventory: George Ratiu, Senior Economist, realtor.com
“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.”
Mortgage Rates: Freddie Mac
“Going forward, we forecast the 30-year fixed-rate mortgage to remain low, falling to a yearly average of 3.4% in 2020 and 3.2% in 2021.”
New Construction: Doug Duncan, Chief Economist, Fannie Mae
“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.”
Bottom Line
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.
Summer 2020: This Year’s Real Estate Season
With stay-at-home orders starting to gradually lift throughout parts of the country, data indicates homebuyers are jumping back into the market. After many families put their plans on hold due to the COVID-19 pandemic, what we once called the busy spring real estate season is shifting into the summer. In 2020, summer is the new spring for real estate.
Joel Kan, Economist at The Mortgage Bankers Association (MBA) notes:
“Applications for home purchases continue to recover from April’s sizable drop and have now increased for five consecutive weeks…Government purchase applications, which include FHA, VA, and USDA loans, are now 5 percent higher than a year ago, which is an encouraging turnaround after the weakness seen over the past two months.”
Additionally, according to Google Trends, which scores search terms online, searches for real estate increased from 68 points the week of March 15th to 92 points last week. As we can see, more potential home buyers are looking for homes virtually. Our website is a great place to start looking for your new home.
What’s the Opportunity for Buyers?
Another reason buyers are coming back to the market, even with forced unemployment and stay-at-home orders, is historically low mortgage rates. Sam Khater, Chief Economist at Freddie Mac indicates:
“For the fourth consecutive week, the 30-year fixed-rate mortgage has been below 3.30 percent, giving potential buyers a good reason to continue shopping even amid the pandemic…As states reopen, we’re seeing purchase demand improve remarkably fast, now essentially flat relative to a year ago.”
With mortgage rates at such low levels and states gradually beginning to reopen, there’s more incentive than ever to buy a home this summer.
What’s the Opportunity for Sellers?
Finding a home to buy, however, is still a challenge, as this spring sellers removed many listings from the market. Though more people are now putting their houses up for sale this month as compared to last month, current inventory is still well below last year’s level.
According to last week’s Weekly Economic and Housing Market Update from realtor.com:
“Weekly Housing Inventory showed continued tightening. New Listings declined 28% compared with a year ago, as sellers grappled with uncertainty and hesitated bringing homes to market. Total Listings dropped 20% YoY, a faster rate than in prior weeks, leaving very few homes available for sale. As Time on Market was 15 days slower YoY, asking prices moved up 1.5% YoY.”
If you’re thinking of selling your house this summer, now may be your best opportunity. With so few homes on the market for buyers to purchase, this season may be the time for your house to stand out from the crowd. Trusted real estate professionals can help you list safely and effectively keeping your family’s needs top of mind. Buyers are looking, and your house may be at the top of their list. Contact The Ransom-McKenzie Team today to find out about the resources we have to sell your home in this new environment.
Bottom Line
If you’re thinking of selling, many buyers may be eager to find a home just like yours. Reach out to The Ransom-McKenzie Team today to make sure you can get your house in on the action this summer.
Confused about the Economic Recovery?
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.
Don’t Forget the Census
You should have already received your 2020 United States Census notification paperwork in the mail. They were sent out in mid-January and all households have been asked to report in so that we have an accurate count for your community.
Our Congressman, Mark Takano, who represents the 41st District which includes the City of Riverside, recently met with Italia Garcia from the Center for Community Action and Environmental Justice to discuss the importance of an accurate Census count. Here is the video, in case you missed it. Garcia brings up some important issues, that are directly affected by our Census numbers.
The Census results will help the government determine how much funding our community will receive to improve services and infrastructure. This includes everything from schools and hospitals to roads and transportation. In Southern California, and the Inland Empire especially, population numbers are increasing annually. Since the last Census 10 years ago, our region has experienced a lot of change. Because of this, we need to do everything we can to make sure we are all counted.
Our level of participation in the 2020 Census is vital to assuring that we have fair representation for the next 10 years for our community. Participating is easy, you can fill out the forms online. If you have questions or issues filling out your census, call 844-330-2020 for more details or to complete the Census survey via phone.
Shop, Eat, Enjoy Local
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.
Housing Inventory Vanishing
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.
Bottom Line
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!
The “New” Spring is Here! Are You Ready?
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.
The Ransom-McKenzie Team 