I was scanning our home page yesterday and I came across an interesting article written by Ryan Smith with Mortgage Professional America that was titled “Prices for affordable homes spike during pandemic”.
The reason it caught my eye is that I’m hearing from a lot of people out there, who are NOT in the mortgage or real estate industry, saying they’re “waiting for prices to come down” before they go look at a home or make any offer. In fact, I’m working with a couple of buyers myself who have this mentality.
I mean don’t get me wrong, I completely understand the thought process behind it. We all remember the last crash in 2008 where home prices fell through the floor. But this is different.
I take the time to look at the home page of the NREP every day to see what’s going on out there and yes, there is some data indicating that home prices may be effected negatively in certain areas, but most of what I’m seeing is quite the opposite.
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In fact we did a show titled “The Best Real Estate Day Ever” where we showed multiple headlines indicating that real estate was not only hanging in there, but was thriving and growing with notable price increases.
Ryan’s article further proves this point. Here’s a quote:
“Prices of the most affordable third of US homes jumped 5.5% during the opening months of the COVID-19 pandemic, according to a new report from Redfin. Meanwhile, prices for the most expensive homes rose just 2%.”
So, not only are prices still advancing, but it’s entry level homes that are increasing the most.
For those of us asking why this is happening, here’s another quote:
“Spending so much time at home during quarantine has made a lot of people realize that it might be time to stop renting a cramped apartment in the city and time to start owning their first single-family home,” said Pam Henderson, a Redfin agent in Dallas. “With mortgage rates at record lows and remote work on the rise, some renters are having an epiphany: They could buy a lower-priced home in the suburbs for close to what they’re paying in rent.”
Couple this phenomenon with a lack of housing inventory and you’ve got the recipe for a rise in entry level home prices. But will this continue?
In a recent interview I did with Barry Habib, he feels housing will remain strong, however, we shouldn’t get too excited. He said that we’re still facing insane unemployment, and that it could take some time for the numbers to catch up to reality. But, he still sees housing increasing going forward. You can see it below:
Obviously if a potential home buyer is concerned about their employment, now isn’t the best time to go looking for a home. But for those buyers who are confident in their employment, we need to educate them that the numbers and the sentiment out there is that housing is not only going to continue to do well, it’s probably the main economic factor that’s going to get the country back on track. Simply put, waiting could cost them money, not save them money.
If you’re a mortgage or real estate professional, you might want to share this with your database or on your social sites.
If you’re a consumer who saw this on a social site, and you’re sitting on the fence waiting for prices to come down, you may want to contact the mortgage or real estate professional that shared this with you.
You all have a great day and we’ll chat again tomorrow!
~Frank
