ShowingTime is the leading company used for residential real estate showings. As we can see from their U.S. market statistics, January and February were a couple of the best months in our business as we began 2020. This obviously dipped down during quarantine. However, now, we are seeing more home showings than we did, week-over-week, in January. That means people are out there looking for houses!
Here we take a quick peek at the week-to-week purchase applications. As you can see, March was in the green, and then four consecutive weeks dip down during quarantine. Then we see all that pent-up demand, and for the last five or six weeks we’ve kind of leveled out. This suggests that we’re through some of the pent-up demand of the summer.
Now, let’s look at purchase applications again, but this time year-over-year. We started the year strong, dip down during quarantine, and now we see a year-over-year increase in purchase applications. So we’re ahead year over year. Now, that’s very good information for the health of the real estate market.
Let’s take a look now at week-over-week pended deals. Again, March was strong, quarantine dipped, and there, again, we see that pent-up demand followed by a leveling out. Now the interesting thing here is the bottom of this graph says pending sales were up 16.5% year-over-year. So, as we are “normalizing” out we are actually ahead 16%.
And here we take a look at pended sales, year-over-year. In recent weeks, we are ahead 15-16%. So, as we being to level out, we are actually ahead of last year.
See here how homebuyer traffic jumped in July, recording a 60.7% year -over-year increase in nationwide showing activity. There is a lot of demand right now, and, according to Danielle Hale of realtor.com, recently year-over-year total inventory was down 38%. This is an economic situation here – high demand and low supply.
Here is a quick look at what experts are forecasting for pricing in the next 12 months. The overwhelming majority, eight of the nine surveyed, are suggesting positive price appreciation from 3-4%. Fannie Mae went from saying we’re going to see appreciation of about 0.4% to 4.4%. Zillow flipped from depreciation to appreciation. CoreLogic, probably the biggest jump, went from negative 6.6% depreciation to positive 0.6% appreciation.
Incredibly low interest rates are driving people to say now is the time that we need to buy a home, and it’s certainly being seen and felt across the country.
“On an aggregate level the housing economy remains rock solid despite the shock and awe of the pandemic.”
– Frank Martinelli from CoreLogic
Housing will likely be one of the factors economically helping to lead the way coming out of all of the economic stress of the health crisis that we faced as a nation. Forbearance is also leveling off, and something we are definitely going to keep an eye on.
“The COVID-19 pandemic will lead to a rise in mortgage defaults and foreclosures.”
– Jeff Ostrowski from Bank Rate
Because of the significant amount of equity people have in their homes now, this is nothing like what we saw in 2008. The percent of distressed property sales is at an all-time low right now. We know coming into the health crisis we were low in the number of distressed sales and we’re even lower now, because of the moratorium on foreclosure proceedings. As we move away from that we will see people move into foreclosure, and we will also keep a close eye on this and update you as we know more. However, remember that the strength of equity across the country is overwhelming.
“Those shopping for a home can afford 10 percent more than they could have one year ago while keeping their monthly payment unchanged. This translates to the nearly $32,000 more in buying power.”
– Black Knight
Not quite two years ago, the average 30-year fixed was 4.94%. Today, we sit just below 3%. Think about this: Two years ago at 5% and your average purchase price, what would that buy in the market? And those same dollars, what would they buy today. It’s significant – $32,000 on average across the country.
Here we look at the mortgage credit availability index from NAR where the higher the index, the more affordable homes are. Over the last 10 to 12 years going back to around 2008, we see that the orange bars there in the middle are the time where distressed properties dominated a lot of the sales in the market – folks that had fallen into some sort of distress sale. Today people can afford more of a home.
“We believe housing will continue to be a sector with relative strength amid the larger downturn. The recently observed increase in purchase demand is largely due to pent-up demand as buyers are acting now after delaying purchases in the spring.”
– Doug Duncan of Fannie Mae
There is also a lot of data to support people are moving from dense areas to less dense areas – from urban markets to suburban markets. They’re looking for a backyard, they’re looking for an office, they’re looking for a place for their kids to do school in. There are just different needs today in a home and that’s certainly driving a lot of the demand that we’re seeing.
We know that, economically, things are improving. The September unemployment report coming out at 8.4% unemployed isn’t a good number, but shows the economy is doing better. Home sales should ramp up again next year, increasing between 8 and 12% as we go into 2021.
Here’s how we wrapped up September 2020 in Tallahassee: