Just the Facts: Four Key Housing Market Takeaways For This Week
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Home-buying demand is making a speedy recovery, down only 15% from pre-pandemic levels
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Buyers are nervous, but continue to pay up. Prices are up 1% compared to last year and affordable homes are selling like hotcakes
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New listings are up from their low-point on April 13, but can’t keep up with home-buying demand. There are fewer than 700,000 homes for sale in Redfin markets; a five-year low
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Mortgages rates are low, but credit is still tight. Lenders are demanding big down payments, especially for high-end homes, forcing some buyers to put their purchases on hold
Home-buying demand continues to climb
Home-buying demand took another step towards recovery, gaining strength for the third week in a row. After plummeting as much as 34% in March, home-buying demand is now down only 15% from pre-coronavirus levels on a seasonally-adjusted basis for the seven days ended on Sunday, April 26.
Will the housing recovery survive re-starting the economy?
While the recovery in home-buying demand is starting to look more and more v-shaped, the question buyers and sellers are asking our agents is what will happen as states begin to lift stay-at-home orders? Will a burst of new inventory from sellers who have been trying to outlast the pandemic lead to lower prices? Or will sellers stay on the sidelines while buyers, hopped up on ultra-low interest rates, bid up the limited number of homes on the market?
So far, the reality is a modest increase in new listings and pending sales. In the seven days ended April 24, almost 53,000 new homes hit the market compared to just over 48,000 for the seven days ended April 13; the date new listings hit their lowest level over the past two months. More new listings have been accompanied by more sales, with pending sales up from fewer than 31,000 in the seven days ended April 13 to more than 32,500 for the seven days ended April 24.
Despite the increase in new listings over the past two weeks, there were fewer than 700,000 homes for sale in Redfin markets across the U.S., which is the lowest inventory level we’ve seen anytime in the past five years.
Some of the new inventory hitting the market may be coming from buy-and-hold investors. Since the beginning of the pandemic, we’ve heard stories of Airbnb landlords with sudden unexpected vacancy putting their homes up for sale. This week, we started to hear of more long-term rentals hitting the market. Marshall Carey, a Redfin agent in Washington D.C., said several clients decided to list because the college students who normally lease their units have headed home early. Across the country in Tacoma, Washington, Redfin agent Amber Allin has clients who are selling several long-term rental properties to free up cash for investments outside of real estate.
Overall prices are up just a touch, affordable homes are still selling like hotcakes
Even though some investors may be headed for the exits, prices have held steady. For the seven days ended April 24, the median listing price was $308,000, up 1% compared to the same period the prior year. Octavia Valencia, a Redfin agent in Atlanta says, “Buyers and sellers are in a deadlock. Buyers are asking ‘is now the right time,’ and making more conservative offers, but sellers are not willing to come down on price.” Graham Rogers, a Redfin agent in South Carolina added, “In the end, buyers are paying up to hit the seller’s bottom-line number.”
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