Despite a global pandemic, national unrest caused by protests, and the upcoming election, America’s housing market is experiencing a remarkable run. Median home prices are up and homes are selling faster than they did at this time last year. Bidding wars are becoming common in many neighborhoods and Americans are feeling confident about buying and selling homes. So just what is driving this bullish housing market? Let’s take a closer look.
Historically low interest rates
Mortgage interest rates have hit historic lows, which is great news for homebuyers – especially those with tighter budgets. The average mortgage rate on a 15-year fixed-rate mortgage for the week ending August 13th was just 2.46 percent. Rates have not been this low since Freddie Mac started tracking rates in 1971. Those with excellent credit scores have been able to qualify for rates at just below three percent. This can save homebuyers tens of thousands of dollars over the life of a loan and reduce monthly payments by more than $100. And the low rates help to offset the cost of higher home prices in today’s market.
Large number of buyers
The pandemic has thrown into sharp relief how important a home can be to our safety and well-being. Buyers whose plans to purchase a home early in the year were stymied by the pandemic are now back in the market. They’re joining those buyers who were already planning to buy a home this spring or summer and urbanites who suddenly feel the need to escape hard-hit cities, like New York. Having lived in lockdown for several months, many buyers want to set themselves up in a home with more space. In addition, those with good-paying jobs who didn’t get furloughed during the lockdown have been able to boost their savings over the last few months, making it easier to have a sizable down payment on a home.
Shortage of inventory
Finally, while there are many buyers in the market, there is a severe shortage of inventory. In Houston, there is approximately 24% less inventory now versus this time last year. Many sellers have been understandably concerned about selling their homes during the pandemic. With homes in short supply, it has driven up home prices, even amidst a pandemic and the subsequent economic slowdown.
While Americans may have been worried about the housing market early in the year during the beginning weeks of the pandemic, the market has remained strong. In fact, evidence suggests that the real estate market is poised to lead our nation into economic recovery in the months to come.If you would like to speak a Realtor about the current state of the market in your neighborhood, feel free to give call us at 713-869-7500 or email us at [email protected]. You can also fill out the form below to get matched with an agent.