The real estate market across the US woke up, and it appears we are trying to make for lost time. According to the Mortgage Bankers Association, purchase volume last week was 1.5% lower than it was a year ago — a huge recovery from six weeks ago, when purchase volume was down a jaw-dropping 35%.
In Like a Lamb, Out Like a Lion
Spring is traditionally the time of year with the highest listings and home appreciation time, and now that all 50 states are in some version of relaxing their various lockdowns, the volume of home sales has increased dramatically — most notably in the past two weeks.
So far, pricing seems to be either holding or in some cases increasing. The consensus among the majority of realtors is that we saw a deferral of the spring selling season and not the elimination of it. Usually the market slows dramatically in summer as agents and their clients take vacations. That is unlikely to happen this year. Meanwhile, listings that were planning to come to market during the pandemic are slowly being released and quickly being snapped up.
Why is that happening? In part, catastrophes create activity with more emotional reasons to make a move. Prospective buyers are eager to get back to the business of home buying, and record low mortgage rates appear to be fueling the fire. It also helps that listings and a version of in-person showings are back. Everyone is mandated to start virtually, but in-person showings are now allowed with strict OSHA-ordered protocols in place. These include cleaning before and after each showing, a restricted number of people, and mandatory masks, gloves, and booties.
A Steady Climb
The pandemic made its presence known in every industry, and real estate was no exception. But over the past five weeks, applications for home purchases have climbed steadily. In fact, government loans like FHA, VA, and USDA, are actually 5% higher than they were this time last year.
The Mortgage Bankers Association notes a 6% jump in weekly mortgage applications. The question is whether this rush to buy is related to pent-up demand or if this is the beginning of a new trend.
Buyers who are buying now are capitalizing on record low interest rates and what may turn out to be low pricing. How much homes increase in price depends on how much the increase in demand will be offset by job losses. Still, generally, speaking, buyers of real estate have been disproportionately unaffected by job loss with the majority holding white collar jobs. It’s the service industries that have been profoundly affected by job losses and uncertain futures.
While every market across the nation is up off their bottom, this is what has been happening here in the Bay Area: