Home prices in March were 13.2% higher in March, compared with March 2020, according to the S&P CoreLogic Case-Shiller National Home Price Index.
The 10-City Composite rose 12.8% year over year, up from 11.7% in the previous month. The 20-City Composite increased 13.3%, up from 12.0% in February.
Home prices in March were 13.2% higher in March, compared with March 2020, according to the S&P CoreLogic Case-Shiller National Home Price Index.
That is up from the 12% annual gain in February, and it marks the 10th straight month of accelerating home prices.
The March gain is the largest since December 2005 and is also one of the largest in the index’s 30-year history. Prices are being pushed higher by incredibly strong competition in the market. High demand is butting up against near record-low supply, resulting in bidding wars for the vast majority of listings.
The 10-City Composite rose 12.8% year over year, up from 11.7% in the previous month. The 20-City Composite increased 13.3%, up from 12.0% in February.
Cities with the strongest price gains continue to be Phoenix, San Diego and Seattle. Phoenix sits at the top with 20% year-over-year price increase, followed by San Diego with a 19.1% increase and Seattle prices rising 18.3%. All 20 cities reported higher price increases in the year ending March 2021 versus the year ending February 2021.
“These data are consistent with the hypothesis that COVID has encouraged potential buyers to move from urban apartments to suburban homes,” said Craig Lazzara, managing director and global head of index investment strategy at S&P DJI.
“This demand may represent buyers who accelerated purchases that would have happened anyway over the next several years. Alternatively, there may have been a secular change in preferences, leading to a permanent shift in the demand curve for housing,” he added.
Mortgage rates began rising during this period, with the average rate on the 30-year fixed just below 3% in February and then ending March at around 3.4%, according to Mortgage News Daily. Higher mortgage rates cut into purchasing power, and usually put a chill on home prices, but clearly unusual competition in the market is overwhelming the usual mechanics of the market.
There were just 1.16 million homes on the market in April, a 20% drop year over year, according to the National Association of Realtors. The continued shortage of homes, especially at the lower end of the market, forecasts that home prices will not cool off any time soon.
Sales are beginning to weaken, and prices usually follow, but again, the usual trends are not dependable in this very unusual housing market.
Hudson Valley Lost 58,000 Private Sector Jobs in Past Year
The New York State Department of Labor reports that the Hudson Valley lost 58,100 private sector jobs between March 2020—the start of the COVID-19 pandemic in New York— and March 2021. During that one-year period the region’s workforce shrank by 7.3%, to 732,800. The Hudson Valley region did gain 9,200 jobs as of March 2021 as compared to a month earlier.
Employment losses year-to-year were greatest in educational and health services (-16,500), leisure and hospitality (-15,800), trade, transportation and utilities (-8,500), other services (-5,700), natural resources, mining and construction (-3,800), financial activities (-3,500), manufacturing (-2,400), information (-1,400) and professional and business services (-500).
Within the region, Sullivan County’s private employment sector declined the fastest year-over-year, down 8.2%. It was followed by the Dutchess-Putnam MSA and the Kingston MSA, both respectively down 8.1%, and the Orange-Rockland-Westchester labor market area (-7.1%). Access the latest state labor statistics.
In September, national home price appreciation accelerated, while all 19 major markets reported home price gains.
The S&P CoreLogic Case-Shiller U.S. National Home Price Index, reported by S&P Dow Jones Indices, rose at a seasonally adjusted annual growth rate of 18.3% in September, faster than a 17.0% increase in August. It marks the highest annual growth rate since March 2013. On a year-over-year basis, the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index posted a 7.0% annual gain in September, up from 5.8% in August. It is the fastest pace of home price appreciation since May 2014. Home price appreciation continued with strong demand, low interest rates and tight inventory. In September, existing home sales surged to the highest level since May 2006, while the inventory decreased to a 2.7-month supply.
Meanwhile, the Home Price Index, released by the Federal Housing Finance Agency (FHFA), rose at a seasonally adjusted annual rate of 22.7% in September, following a 20.1% increase in August. On a year-over-year basis, the FHFA Home Price NSA Index rose by 9.1% in September, after an increase of 8.1% in August. It confirmed the acceleration in home price appreciation for this month.
In addition to tracking national home price changes, S&P reported home price indexes across 19 metro areas in September (Detroit metro area data was missing in September 2020 because there are not a sufficient number of records for the month of September for Detroit).
In September, all 19 metro areas reported positive home price appreciation and their annual growth rates ranged from 10.1% to 31.2%. Among all the 19 metro areas, seven metro areas exceeded the national average of 18.3%. Seattle, San Diego and Phoenix had the highest home price appreciation. Seattle led the way with a 31.2% increase, followed by San Diego with a 29.8% increase and Phoenix with a 26.4% increase.
New home sales declined in September for the first time since April. The U.S. Census Bureau and the Department of Housing and Urban Development said sales of newly constructed homes were sold at a seasonally adjusted annual rate of 959,000 units, a 3.4 percent decline from the prior month. Further, the 1,011,000 sales reported in August were revised down to 994,000. Nonetheless, sales are still up 32.1 percent from one year ago.
Sales were below all the predictions from the Econoday panel of analysts. Those ranged from1.0 million to 1.05 million. Their consensus was 1.016 million units. Econoday said its consensus forecast had fallen short of actual sales in each of the previous five months.
On a non-adjusted basis there were 75,000 new homes sold during the month compared to 82,000 in August and 56,000 in September 2019. Slightly less than one-third of the homes sold (24,000) were ready for occupancy while the remainder were almost equally divided between homes under construction and homes for which construction had not been initiated.
For the year-to-date 618,000 homes have sold. This represents a 16.9 percent increase over the 529,000 homes sold in the first nine months of last year.
The median price of a home sold during the month was $326,800 and the average price was $405,400. The respective sales prices in September of last year were $315,700 and $372,100.
At the end of the reporting period there were an estimated 284,000 new homes available for sale, a 3.6-month supply at the current sales pace. A year earlier the 321,000 available homes were projected to be a 5.3-month supply.
Sales of newly constructed homes declined by 28.9 percent in the Northeast compared to August and were 5.9 percent lower on an annual basis. In the Midwest sales were down 4.1 percent for the month but rose 34.8 percent year-over-year. There was a 4.7 percent decline in the South although the annual increase was 27.4 percent. The West posted the only monthly gain, 3.8 percent, and sales were 49.7 percent higher than in the prior September.
Sales activity continued to strengthen in NYC, with July 2020 up 40% M-o-M and down only 33% Y-o-Y
Weekly sales surpassed 500 transactions for first time in 15 weeks, monthly sales top 2,000 for first time in four months
Queens median sale price marks first Y-o-Y drop, down 10% in July
At $1.065 million, Manhattan YTD median slides 15% below 2019 figures
The Bronx has highest price growth with July median up 7% Y-o-Y
Brooklyn median drops 9% Y-o-Y, virtually erasing year-to-date gains
After a tumultuous first half of the year, all of the state of New York is now in Phase Four of reopening, which means the performance of the residential market performance is of heightened interest. The year actually started off well, promising increased sales activity — until projections and expectations were shattered by the uncertainty and upheaval of March. It was followed by an April marked by historical lows in sales activity and the strongest pricing trends of 2020 up to that point.
However, as the curve flattened and the general public started readjusting to the new normal, the state’s gradual reopening brought a tentative return of transactional activity in May. Then, June presented a whole new picture with strengthening sales trends and the first significant year-over-year (Y-o-Y) price drop, despite recording the highest median sale price this year at $717,733.
July, however, posted the sharpest decrease of the four boroughs’ median sale price, and also marked the strongest month of sales since March.
Transactional activity, of course, has trended negative since the beginning of the crisis. March kicked off with sales activity 15% higher than the same period last year, only to see it drop 36% Y-o-Y by month’s end. Later, sales activity bottomed out in April — its 1,549 deals equated to a 61% Y-o-Y drop. And, while May’s 1,337 recorded sales were certainly a drop in sheer numbers compared to April, they also represented a decrease of only 52% Y-o-Y, promising a tentative return of transactional activity.
In June, sales trends strengthened even further and, at this point, the monthly sales activity was the highest since the beginning of the crisis in March. Specifically, there were 1,670 residential sales for the month, coming in just 41% lower Y-o-Y. However, it must be noted that June 2020 figures were skewed beyond just the pandemic’s effects – sales activity and the median sale price surged artificially in June 2019 as buyers and sellers rushed to close deals before the new mansion tax went into effect in July 2019.
Similarly, July marked only one week with fewer than 400 sales. What’s more, two weeks of the month surpassed 500 transactions — a level of transactional activity not seen since late March. In fact, the second week of the month totaled 562 sales, just four deals shy of equaling the last week of March.
What’s more, the third week of July recorded a 23% Y-o-Y drop — the smallest rate of contraction in sales activity since the third week of March. All in all, July’s sales activity was the most dynamic in the last four months, closing a total of 2,343 deals across the four boroughs for a drop of just 33% Y-o-Y. Moreover, compared to June, sales activity experienced a month-over-month surge of 40%.
While pricing trends remained firmly positive at the beginning of the crisis and the NYC median sale price remained steadily above the same period last year, that trend started shifting in June and reversed completely in July.
Specifically, both March and April boasted a 5% Y-o-Y price expansion. Moreover, each week in March also posted a median sale price higher than the same period in 2019 — a trend that remained steady throughout April. Overall, May kept up with that trend, as well, and closed with a median sale price of $705,000 for a 4% gain over May 2019.
Along the same lines, June 2020 kicked off with the strongest pricing trends so far this year. The NYC the median sale price was $743,000 in its first week, which pushed the month’s overall median to $717,700. This also made June 2020 the most expensive month YTD, even as it closed with a 2% Y-o-Y drop in its median, which was influenced, once again, by the artificially inflated pricing in June 2019.
July, however, presented a whole new picture. While the $780,000 median of July 2019 also reflected the pre-mansion tax sales frenzy that had occurred in the upper end of the market, this was not the sole cause of the 13% Y-o-Y drop that was recorded in July 2020. Rather, at $680,000, July 2020 featured the lowest median sale price since March, bringing down the YTD median for the four boroughs.
So, while the elevated pricing trends of Q2 resulted in a H1 median sale price of $690,000 and a 3% gain over H1 2019, the contrary pricing trends of July almost completely erased that. In particular, July 2019’s artificially inflated median — paired with a July 2020 that was more in line with pre-pandemic figures — brought the YTD median sale price in NYC to $687,419, representing a negligible .35% Y-o-Y gain.
At the same time, year-to-date sales activity stood at 16,559 transactions, down 26% compared to the same timeframe last year. As a result, July’s recovering sales activity also decreased the YTD sales activity by only 1% Y-o-Y.
Manhattan was the hardest hit residential market in the city in the first half of the year. Here, sales activity was down 31% Y-o-Y and the median sale price dropped 13%. Specifically, the first half of 2019 totaled 5,487 residential sales for a median sale price of $1.2 million, while H1 2020 recorded 3,775 sales for a $1.05 million median. While pricing trends remained firmly positive in the other three boroughs throughout Q2, for Manhattan, that was the exception rather than the rule.
In fact, only April saw prices increase Y-o-Y reaching a YTD high of $1.34 million — while both March and June slipped under the $1 million mark, reaching $950,000 and $966,000, respectively. June’s median also resulted in a Y-o-Y price contraction of 37% — due, in part, to the rush to close high-end deals prior to the mansion tax during the year prior. From a sales activity perspective, July’s 633 sales made for Manhattan’s strongest month since the beginning of the crisis. That figure represented a 36% Y-o-Y drop in sales — the least-drastic decrease since March.
At the same time, the median sale price for NYC’s most expensive borough came in at $1.15 million, down 26% Y-o-Y. But, it must be noted that of all the boroughs, Manhattan’s year-ago metrics were the most influenced by the spike in sales of higher-priced assets prior to the mansion tax, pushing July 2019’s median to $1.56 million. Additionally, Manhattan was the only borough to record M-o-M price growth in July, gaining 19% for a $1.15 million median in July.
On the other hand, Queens seemed to navigate the crisis in the calmest manner, all things considered. Its sales activity was down 22% Y-o-Y in the first half 2020, but its median sale price went up 10%, for the highest price increase across the four boroughs. In fact, although sales activity growth in the borough bottomed out at a negative 58% in April, the median sale price jumped 19% to reach a YTD high of $630,000, followed closely by June’s $619,000.
July, however, reversed the upward trend in price growth observed in the first half of the year, becoming the first month in 2020 so far with negative price growth Y-o-Y. More precisely, at $576,500, Queens’ July median sale price was 10% below July 2019 — which, at $640,000, was 2019’s most expensive month up until that point. As a result, July 2020’s median was more in line with early 2020 pricing trends as opposed to the elevated medians recorded in Q2 and brought the borough’s YTD median to $584,500
Sales activity, however, strengthened in July, reaching 855 transactions and making this Queens’ most active month since March. In particular, July sales were down 28% Y-o-Y, resulting in the lowest rate of contraction in four months. Meanwhile, sales were up 55% compared to June — a promising sign in what is usually the most active borough for residential sales. Overall, that brought Queens’ YTD sales activity to 5,992 deals — 23% lower than the same period last year.
In the meantime, Bronx sales activity remained in negative growth territory Y-o-Y, coming in 22% below July 2019 for the lowest Y-o-Y decrease in sales activity across the four boroughs. But, the Bronx’s 260 sales recorded in July also represented a 60% increase M-o-M. That brought the borough’s number of sales to 1,679 YTD, for a 24% decrease compared to the first seven months of 2019.
Although the Bronx closed the first half of 2020 with the lowest median sale price of the four boroughs as usual, it actually recorded the second-highest price increase. Specifically, its 8% Y-o-Y gain took its H1 median sale price from $420,000 in 2019 to $455,000 in 2020. In fact, May brought a 33% price surge to the Bronx and lifted the median sale price to a YTD high of $531,000. Likewise, although July’s median was a more modest $493,500, it was still up 7% Y-o-Y – a notable achievement considering that July was 2019’s priciest month by that point.
From a pricing perspective, Brooklyn performed somewhat weaker in the first six months of the year. Its $750,000 median sale price was just 3% higher than it was in the first half of 2019. And, while 2020 transactional activity bottomed out at only 395 sales in May, Brooklyn’s median sale price surged to a YTD high of $820,000, followed closely by June’s $799,000 median sale price.
July’s median came in at $742,500, down 9% compared to the July 2019 median of $815,000. As a result, the borough’s YTD median of $750,000 also represented a 1% increase over the same period last year.
However, Brooklyn’s YTD sales activity was down 24% compared to the same period last year, with a total of 4,480 sales recorded in the first seven months of the year. Sales activity here contracted at the least sharpest rate in H1, coming in 21% below the first half of 2019.
July sales activity, however, did not experience the same influential increase in Brooklyn as the other three boroughs. It came in 41% lower than July 2019. But, compared to June 2020, sales were up, with its 595 sales representing a 19% gain M-o-M.
For this snapshot of the COVID-19 pandemic’s influence on the NYC residential market, we considered all sales of condo, co-op, single- and two-family homes registered between January 1, 2019, and August 2, 2019, as well as January 1, 2020, and July 31, 2020. We excluded all sales below $10,000, as well as all package deals. We defined NYC as the four boroughs of Manhattan, Brooklyn, the Bronx and Queens.
Newsday RM via Getty Images Photo of home for sale in Huntington, New York on August 5, 2020. New York City suburbs are seeing a huge increase in real estate demand amid the pandemic.
New York City apartment sales plunged in July, according to a report from the real-estate firm Douglas Elliman.
But in neighboring suburbs, home sales are surging as wealthy New Yorkers seek greener pastures.
For Connecticut — which has struggled to rebound even from the last recession — the migration could be a boon for its struggling finances.
Only one Manhattan condo sold for more than $10 million in July, according to a new report, as many wealthy New Yorkers continue to flee the city for greener pastures.
Overall apartment sales fell 57% in July compared to the same month in 2019 as for-sale listing soar, real estate firm Douglas Elliman said in its monthly report, a highly-watched data source for the nation’s largest housing market.
As the US largely fails to stop the spread of the coronavirus, short-term escapes appear to be turning in to long-term moves, potentially fueling a rebirth for struggling suburbs. In Westchester County, directly north of the five boroughs, overall single-family sales were up 112% over last year, with those over $2 million more than quadrupling.
And in Connecticut, the areas closest to New York City saw a similar uptick in-step with Westchester. The state was hit hard by the housing crisis more than a decade ago, and has struggled to recover in the years since. Connecticut is one of just two states in the country where gross domestic product has yet to recover from the previous recession and its employment numbers have lagged neighboring states, according to data from the Bureau of Economic Analysis and the Federal Reserve Bank of St. Louis.
“We are going to market ourselves more to those individuals as opposed to marketing ourselves to the company,” a state economic-development official told The Wall Street Journal, assuming that the days of commuting to an office in Manhattan’s core or corporate parks are on the skids for now. People working from home in Connecticut could be a much-needed boost to the state’s income tax base — and its lawn-laden towns and countryside feel all the more attractive in the middle of a pandemic.
But while the shift in high-end housing is shaping up to be a boon for some towns and brokers, investors are circling distressed assets at depressed prices as unemployment remains above 10% and out-of-work Americans struggle to pay rent.
“Real-estate investors — when you take the emotion out of it — many of them have been waiting for this for a decade,” David Schechtman, a broker with Meridian Capital Group, told The Wall Street Journal in April. The economy has seen little improvement in the months since.
Sales of new U.S. single-family homes increased more than expected in May and business activity contracted moderately this month, suggesting the economy was on the cusp of recovering from the recession caused by the COVID-19 crisis.
But a resurgence in confirmed coronavirus cases across the country threatens the nascent signs of improvement evident in Tuesday’s economic data. Many states have reported record daily increases in COVID-19 infections, which health experts have blamed on local governments reopening their economies too soon. The economy has stabilized as businesses reopened after closing in mid-March to control the spread of the respiratory illness.
“The renewed upsurge in COVID-19 cases across the South and the West poses a clear downside risk over the coming months but, with a second wave of state-wide lockdowns appearing unlikely for now, we are assuming this will act as a modest drag on the economic recovery, rather than resulting in a renewed downturn,” said Andrew Hunter, senior U.S. economist at Capital Economics.
New home sales jumped 16.6% to a seasonally adjusted annual rate of 676,000 units last month, the Commerce Department said. New home sales are counted at the signing of a contract, making them a leading housing market indicator. Last month’s increase left sales just shy of their pre-COVID-19 level.
Sales dropped 5.2% in April to a pace of 580,000 units. Economists polled by Reuters had forecast new home sales, which account for about 14.7% of housing market sales, rising 2.9% to a pace of 640,000 in May.
New home sales are drawn from building permits. Sales surged 12.7% from a year ago in May. The report followed on the heels of data last week showing home purchase applications at an 11-year high in mid-June and permits rebounding strongly in May.
The broader economy slipped into recession in February, leaving nearly 20 million people unemployed as of May.
In a separate report on Tuesday, data firm IHS Markit said its flash U.S. Composite Output Index, which tracks the manufacturing and services sectors, rose to a reading of 46.8 in June from 37 in May. A reading below 50 indicates contraction in private sector output.
The improvement was led by an ebb in the manufacturing sector downturn, with the flash Purchasing Managers Index climbing to 49.6 from 39.8 in May. The survey’s services sector flash PMI rose to 46.7 from 37.5 in May.
Activity is also picking up around the globe. The IHS Markit’s euro zone Flash Composite Purchasing Managers’ Index recovered to 47.5 from May’s 31.9.
Stocks on Wall Street extended gains on the data and hopes of more fiscal stimulus. The dollar fell against a basket of currencies. U.S. Treasury prices were lower.
The market for new homes is being supported by historic low interest rates and a preference among buyers for single-family homes away from city centers as companies allow employees more flexibility to work from home amid the coronavirus crisis.
But with record unemployment and companies freezing hiring to deal with weak demand and keep costs under control, a sharp rebound in the housing market is unlikely.
“If the overall economy seems to be slowing, the public may not be quite as confident about putting a down payment on an expensive new home,” said Chris Rupkey, chief economist at MUFG in New York. “Many businesses are insolvent and there will be less spending from unemployed Americans as well that could keep this economic recovery in the slow lane for some time.”
Last month’s increase in new home sales did little to offset a plunge in sales of existing homes in April and May, leaving intact economists’ expectations for a record tumble in residential investment in the second quarter. Homebuilding also rebounded moderately in May after slumping in April.
Last month, new home sales shot up 45.5% in the Northeast and advanced 29% in the West. They rose 15.2% in the South, which accounts for the bulk of transactions, but fell 6.4% in the Midwest.
The median new house price rose 1.7% to $317,900 in May from a year ago. New home sales last month were concentrated in the $200,000 to $400,000 price range.
New homes priced below $200,000, the most sought after, accounted for about 15% of sales.
There were 318,000 new homes on the market in May, down from 325,000 in April. At May’s sales pace it would take 5.6 months to clear the supply of houses on the market, down from 6.7 months in April. Nearly two-thirds of the homes sold last month were either under construction or yet to be built.
New York COVID Hospitalizations, Deaths Hit Record Low New York Gov. Andrew Cuomo, who announced the opening of the 3.6-mile shared bicycle and pedestrian path on the new Gov. Mario M. Cuomo Bridge today, reported that the total number of hospitalizations (1,607) and 27 COVID-19 related deaths (Sunday, June 14) were the lowest since the pandemic began in March. In connection with the reopening process, he said he would be raising the maximum amount of people allowed at gatherings in regions in phase three of the reopening from 10 to 25. Western New York enters phase three tomorrow and the Capital Region will progress to that stage on Wednesday. The Mid-Hudson is eligible to enter phase three on Tuesday, June 23. For further information on the new bicycle-pedestrian path on the bridge, go to the governor’s announcement. NEW YORK STATE NEWS Governor Threatens to Reverse Reopenings if Safety Rules Not Followed On Sunday Gov. Andrew Cuomo, frustrated over 25,000 reports of reopening violations, predominantly in Manhattan and the Hamptons, warned that the state would take action against businesses and localities that violate or fail to enforce safety regulations. He stressed that local governments are charged with compliance and that a region’s reopening could be reversed or delayed if these violations are allowed to continue. “Lots of violations of social distancing, parties in the street, restaurants and bars ignoring laws,” Cuomo said on Twitter. “Enforce the law or there will be state action.” Today, he told local governments: “Do your job.” See governor’s announcement. Local Sales Tax Collections Down $437M in May The coronavirus pandemic continues to batter the New York State economy. Sales tax revenue for local governments in May fell 32.3% compared to the same period last year, according to a report released Friday by New State Comptroller Thomas P. DiNapoli. Sales tax collections for counties and cities in May totaled $918 million, or $437 million less than 2019. The sharp decline in revenues was widespread across the state, ranging from a drop of 19.5% in Westchester County to a 41.5% decline in Tioga County. New York City experienced a 31.9% decline, calculating out to $196 million in lost revenues for the month. View further information on the sales tax report. NATIONAL NEWS CMBS Delinquency Rate Posts Highest Increase Since Great Recession The CMBS delinquency and special servicing rate in May recorded the largest increase since the metric was introduced in 2009, according to a Trepp report. The delinquency rate in May for commercial mortgage-backed securities increased to 7.15%, according to the Trepp May CMBS Delinquency Report. A total of 5% of those troubled loans were identified as 30 days past due. In May, $9.4 billion involving 243 commercial loan notes were sent to special servicing, according to servicer and watchlist data compiled by Trepp. The Trepp report states that initial reports in June indicate troubled commercial mortgages are centered on single-asset or single-borrower deals, most backed by hotels or malls. Click Here for further coverage. Multifamily Rents Continue to Struggle In what is normally prime leasing season, multifamily rents continue their decline thanks to the coronavirus. In May, rents declined nationally by .3% month-over-month, with the largest drops in gateway markets, according to a report released by YardiMatrix. The May numbers were an improvement over the previous month when rents fell by .5%. The markets that were hit the hardest included Boston and San Francisco, each down 1%; Chicago was down .9%; and Los Angeles saw a decline of .7%. For further details, see Globest.com report.
It’s the surprise of a spring selling season that’s been anything but normal: Buyers returning to the housing market have been battling over the few available properties.
While sales are way down, the lack of inventory has propped up prices and led to bidding wars, even as economic fallout from the pandemic mounts and real estate agents adjust to new public health guidelines that have made it more difficult to market homes. You can read the full info here to know how to find real estate agent.
“Since the pandemic began, demand fell off a cliff,” said Taylor Marr, an economist at Redfin Corp. “What most people overlook is that sellers also pulled back.”
The supply-demand imbalance meant that roughly 40% of homebuyers that Redfin agents worked with recently faced competition when they tried to purchase a home. The rate was even higher in cities like San Francisco, Boston and even Fort Worth, Texas, where more than 60% of properties the company’s clients bid on received multiple offers.
The U.S. housing market went into the Covid crisis with a supply shortage that was driving up prices beyond the reach of many buyers, even with years of low interest rates. That problem hasn’t gone away, despite the economic uncertainty. The number of active listings shrank by almost a quarter in April, compared with a year earlier, according to Redfin.
Still, the market has cooled. Sales of existing homes are projected to fall 20% in April from a month earlier, according to estimates compiled by Bloomberg. That would follow an 8.5% drop in March. Construction of new houses plunged by the most on record in April, with builders waiting out the virus. That means new supply will be slower to materialize.
The market dynamics are a shock to some buyers. Kenzo Teves, a 24-year-old business analyst for a pharmaceutical company, decided to start shopping for his first house this spring, because interest rates were so low. He had money saved for a down payment and was secure in his job — factors he thought would help him find a home near Boston.
In late April, he made his first bid on a three-bedroom house in Chelsea, Massachusetts, that was listed for $420,000. The property got six other offers and even bidding $30,000 over the asking price wasn’t enough to cinch the deal.
“It’s pretty strange,” he said. “I would have thought that it would have tipped more to my favor as a buyer.”
The inventory shortage is being felt in smaller cities, too. Kim Park, an agent with Keller Williams Realty in Boise, Idaho, said her business is down about 20% because sales have slowed. But bargains are still hard to find.
She’s working with a young family with two kids and a rental lease coming up for renewal next month. To buy a house for almost $300,000, they had to fight off three other bidders and pay $10,000 above asking price, Park said. They got it only because the winning bidder’s financing fell through.
Homeowners in Boise are staying put, worried about about letting potential buyers in during the pandemic or upgrading to a more expensive property when employment is so tenuous.
“It’s made our tight market that much tighter,” Park said.
In Los Angeles, Sally Forster Jones said two of her clients bid unsuccessfully this month on two different houses. One was listed for about $800,000 and the other for less than $1.5 million. Each received more than 30 offers and are now in escrow at above the listed price. Jones declined to share specifics on the homes because her clients made backup offers and she doesn’t want to invite more competition.
“I’m encouraging my sellers to put their property back on the market,” she said. “The fact that there’s limited inventory is to their advantage right now.”
Not all real estate agents see cutthroat competition. Nina Hatvany, a luxury agent with Compass in San Francisco, said buyers are coming back to the market but the complications of showing houses during a pandemic has weeded out all but the most motivated people. And, even then, there’s sometimes a mismatch between what people think a property is worth.
“I’ve got plenty of buyers saying, ‘I’m ready to buy if it’s a good price,’” she said. Meanwhile, “the sellers are worried about taking a big hit.”
Home prices will hold up, at least through the summer, but declines are coming, said Mark Zandi, chief economist at Moody’s Analytics. Once foreclosure moratoriums and forbearance programs end, lenders will start repossessions as unemployment persists. Ultimately, as many as 2 million homeowners will lose properties because of the the pandemic, he said.
In the near term, buyers are going to have to slug it out, especially for the types of property that are most in demand. Redfin’s data show that houses listed below $1 million were the most competitive, partly because banks have tightened standards for jumbo loans, said Marr. With everyone sheltering in place, buyers are also more eager to buy single-family houses than condos.
Freddie Mac (OTCQB: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing that the 30-year fixed-rate mortgage (FRM) averaged 3.23 percent, the lowest rate in our survey’s history which dates back to 1971.
“The size and depth of the secondary mortgage market is helping to keep rates at record lows. These low rates are driving higher refinance activity and have modestly helped improve purchase demand from their extremely low levels in mid-April,” said Sam Khater, Freddie Mac’s Chief Economist. “While many people are benefitting from low mortgage rates, it’s important to remember that not all people are able to take advantage of them given the current pandemic.”
30-year fixed-rate mortgage averaged 3.23 percent with an average 0.7 point for the week ending April 30, 2020, down from last week when it averaged 3.33 percent. A year ago at this time, the 30-year FRM averaged 4.14 percent.
15-year fixed-rate mortgage averaged 2.77 percent with an average 0.6 point, down from last week when it averaged 2.86 percent. A year ago at this time, the 15-year FRM averaged 3.60 percent.
Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Visit the following link for the Definitions. Borrowers may still pay closing costs which are not included in the survey.