Millennials can’t seem to catch a break. From their late teens through college, many saw their parents suffer from tremendous financial distress, job loss and, for some, even losing their family home. Many of these young adults graduated from college with overwhelming student loan debt as they entered a terrible job market. Now, having settled into career mode and gaining momentum, the home-buying market still remains out of reach for many millennials.
Here we are in the midst of a pandemic, a stagnant economy and less than secure prospects on how long companies can maintain jobs despite reduced revenue. Yet the residential real estate market is still robust. Many areas of the country still enjoy above-market prices due to two factors. First, many builders have put their new-build projects on hold until they see how this economy pans out. Second, homeowners who might have considered selling are unsure about future job prospects, so they are staying put. The outcome is the same as it has been for years now: low inventory keeps home prices high, even in the first-home buyers’ market.1
This is all fairly incongruous given that recent job losses have cash-strapped many homeowners, whom you would think would like to get out from under a mortgage. Additionally, mortgage interest rates remain at historic lows, and have been for quite some time. Traditionally under these circumstances, the housing market would be flooded with homes for sale. That may be coming. According to analysis of the CoreLogic Home Price Index, the national forecast shows annual home price growth slowing until next summer. This is in consideration of potentially more job losses and subsequent distressed-sale inventory once mortgage forbearance and moratoriums on evictions end.2
If you’re thinking about selling your home, sooner may be better than later. If you’re in the market to buy, next spring is looking pretty good. Remember that the decision to buy or rent should take into account your plans to stay in that property for at least four to five years.3 Just be sure to make any big-ticket money decisions within the context of your entire financial picture. You should consult with a professional real estate agent or broker to help decide what’s best for your unique situation.
Also because of the pandemic, many city dwellers are opting to sell their high-priced properties and move out to the suburbs.4 While that may have been an initial trend, the data has borne out that suburban housing markets are no stronger than urban markets. In fact, higher inventory in urban markets is an overall positive, with little movement in price changes to date.5
For the moment, the residential real estate market is benefiting from support by federal and state legislators working to protect homeowners from foreclosure, as well as boosting unemployment benefits and small businesses loans.6 These measures are designed to reduce mortgage defaults and keep distressed properties off of the market, attempting to avoid a repeat of the Great Recession. Interestingly, the fate of the residential market is closely aligned with whether we experience a serious jump in COVID-19 outbreaks during the fall and winter flu season.7
One of the longer-term impacts real estate agents see resulting from the pandemic is the potential for working from home to become the new normal. They say homebuyers have increased requests for spaces that can be used as a home office, even boasting aesthetic backgrounds for Zoom conference calls. In other words, when meeting with colleagues via video, they want to be both distanced from housebound, stir-crazy children and the space should have an attractive backdrop that doesn’t show the laundry room.8
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1 Zillow. July 6, 2020. “Why Aren’t There More Homes for Sale?” https://www.zillow.com/resources/stay-informed/2020/07/06/why-is-housing-inventory-low/. Accessed Sept. 22, 2020.
2 CoreLogic. 2020. “U.S. Home Price Insights.” https://www.corelogic.com/insights-download/home-price-index.aspx. Accessed Sept. 22, 2020.
3 Zillow. July 6, 2020. “Why Aren’t There More Homes for Sale?” https://www.zillow.com/resources/stay-informed/2020/07/06/why-is-housing-inventory-low/. Accessed Sept. 22, 2020.
4 Tim Nelson. Architectural Digest. Sept. 2, 2020. “The Suburban Real Estate Boom Is Only Continuing.” https://www.architecturaldigest.com/story/the-suburban-real-estate-boom-is-only-continuing. Accessed Sept. 22, 2020.
5 Lisa Rowan. Zillow. Aug. 12, 2020. “Zillow 2020 Urban-Suburban Market Report.” https://www.zillow.com/research/2020-urb-suburb-market-report-27712/?newsdataubransuburbreport. Accessed Sept. 22, 2020.
6 Daisy Caballero. ABC KRCR News. Sept. 2, 2020. “Gov. Newsom signs new law to prevent evictions through February 2021.” https://krcrtv.com/news/local/gov-newsom-signs-executive-law-to-prevent-evictions-through-february-2021. Accessed Sept. 22, 2020.
7 Zillow. July 6, 2020. “Why Aren’t There More Homes for Sale?” https://www.zillow.com/resources/stay-informed/2020/07/06/why-is-housing-inventory-low/. Accessed Sept. 22, 2020.
8 Andrew Chamings. SFGate. Aug. 3, 2020. “The ‘Zoom room’ boom: A very 2020 real estate trend.” https://www.sfgate.com/living-in-sf/article/The-Zoom-room-boom-A-very-2020-real-estate-trend-15432349.php. Accessed Sept. 22, 2020.
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