Despite uncertainty created by the current health climate over the last few months, economists have noted a distinct pattern in the housing market: instead of slowing down, it is actually booming. According to Bank of America, mortgage purchase applications have risen drastically and are currently clocking in above pre-lockdown levels. Keep reading for the top five explanations for this surge in market activity.
- The Disproportionate Recession: State lockdowns and stay-at-home orders affected lower income populations more dramatically than higher income brackets—and research shows that lower income groups are less likely to be homeowners.
- Interest Rates Are at an All-Time Low: Last week, interest rates plunged to a new historic low. Compared to this time last year, average monthly payments have fallen by $80 due to lower mortgage rates.
- Low Inventory Pre-Shutdown: Home equity was high, inventory was low, and debt levels were reasonable before March. At that time, the rate of homeowner vacancies had tumbled to mid-1990 lows.
- Generous Fiscal & Monetary Policies: Prospective stress from delinquencies was alleviated by widespread forbearance programs. The Mortgage Bankers Association says that as of July 12th, 7.8% of all mortgages were in forbearance—that’s roughly 3.9 million homeowners.
- Increase in Lockdown-Related Relocations: Unsurprisingly, the number of people searching for larger homes with more amenities has grown exponentially in the last few months. Homeowners have also been on the hunt for second/vacation homes after cross-country and international travel plans were cancelled.
The housing market is projected to continue its steady uptick for the rest of 2020. If you have been entertaining the idea of buying or selling, now is a great time. Contact me today—I would love to help you make your real estate dreams a reality.