Will the Housing Market Turn Around This Year?

Today, many people are asking themselves if they should buy or sell a home in 2020. Some have shifted their plans or put them on hold over the past couple of months, and understandably so. Everyone seems to be wondering if the market is going to change and when the economy will turn around. If you’re trying to figure out what’s going to happen and how to play your cards this year, you’re not alone.

This spring in the 2020 NAR Flash Survey: Economic Pulse, the National Association of Realtors (NAR) has been tracking the behavior changes of homebuyers and sellers. In a reaction to their most recent survey, Lawrence Yun, Chief Economist at NAR, noted the beginnings of a turn in the market:

“After a pause, home sellers are gearing up to list their properties with the reopening of the economy…Plenty of buyers also appear ready to take advantage of record-low mortgage rates and the stability that comes with these locked-in monthly payments into future years.”

What does the survey indicate about sellers?

Sellers are positioning themselves to make moves this year. More than 3 in 4 potential sellers are preparing to sell their homes once stay-at-home orders are lifted and they feel more confident, which means more homes will start to be available for interested buyers.

Just this week, Zillow also reported an uptick in listings, which is great news for the health of the market:

“The number of new for-sale listings overall has shown improvement, up 5.9% last week from the previous week. New listings of the most-expensive homes…are now seeing the biggest resurgence, up 8%. The uptick is likely a sign sellers are feeling more confident because of improving buyer demand, as newly pending sales have also jumped up during the same period.”

What does the survey note about buyers?

The recent pandemic has clearly impacted buyer preferences, showing:

• 5% of the respondents said buyers are shifting their focus from urban to suburban areas.

• 1 in 8 Realtors report changes in desired home features, with home offices, bigger yards, and more space for their families becoming increasingly important.

• Only 17% said buyers stopped looking due to concerns about their employment or loss of a job.

As we’ve mentioned before, buyer demand is strong right now, and many are simply waiting for more inventory to become available so they can make a move, especially as the country begins to reopen.

Bottom Line

If you’re thinking about putting your house on the market, let’s connect today. There’s a good chance an eager buyer is looking for a home just like yours.

A Surprising Shift to the ‘Burbs May Be on the Rise

Whie many people across the U.S. have traditionally enjoyed the perks of an urban lifestyle, some who live in more populated city limits today are beginning to rethink their current neighborhoods. Being in close proximity to everything from the grocery store to local entertainment is definitely a perk, especially if you can also walk to some of these hot spots and have a short commute to work. The trade-off, however, is that highly populated cities can lack access to open space, a yard, and other desirable features. These are the kinds of things you may miss when spending a lot of time at home. When it comes to social distancing, as we’ve experienced recently, the newest trend seems to be around re-evaluating a once-desired city lifestyle and trading it for suburban or rural living.

George Ratiu, Senior Economist at realtor.com notes:

“With the re-opening of the economy scheduled to be cautious, the impact on consumer preferences will likely shift buying behavior…consumers are already looking for larger homes, bigger yards, access to the outdoors and more separation from neighbors. As we move into the recovery stage, these preferences will play an important role in the type of homes consumers will want to buy. They will also play a role in the coming discussions on zoning and urban planning. While higher density has been a hallmark of urban development over the past decade, the pandemic may lead to a re-thinking of space allocation.”

The Harris Poll recently surveyed 2,000 Americans, and 39% of the respondents who live in urban areas indicated the COVID-19 crisis has caused them to consider moving to a less populated area.

Today, moving outside the city limits is also more feasible than ever, especially as Americans have quickly become more accustomed to – and more accepting of – remote work. According to the Pew Research Center, access to the Internet has increased significantly in rural and suburban areas, making working from home more accessible. The number of people working from home has also spiked considerably, even before the pandemic came into play this year.

Bottom Line

If you have a home in the suburbs or a rural area, you may see an increasing number of buyers looking for a property like yours. If you’re thinking of buying and don’t mind a commute to work for the well-being of your family, you may want to consider looking at homes for sale outside the city. Let’s connect today to discuss the options available in our area.

U.S. Homeownership Rate Rises to Highest Point in 8 Years

For nearly two months, most of us have been following strict stay-at-home orders from our state and local governments. It is a whole new way of life that has put our daily lives on pause. On the other hand, many of us have also found a sense of comfort by slowing down and spending time at home, highlighting the feeling of security that comes with having a much-needed safe place for our families to live.

The latest results of the Housing Vacancy Survey (HVS) provided by the U.S. Census Bureau shows how Americans place immense value in homeownership, and it is continuing to grow in the United States. The results indicate that the homeownership rate increased to 65.3% for the first quarter of 2020, a number that has been rising since 2016 and is the highest we’ve seen in eight years (see graph below):

Why is the rate increasing? The National Association of Home Builders (NAHB) explained:

“Strong owner household formation with around 2.7 million homeowners added in the first quarter has driven up the homeownership rate, especially under the decreasing mortgage interest rates and strong new home sales and existing home sales in the first two months before the COVID-19 pandemic hit the economy.”

The NAHB also emphasizes the year-over-year increase in each generational group:

“The homeownership rates among all age groups increased in the first quarter 2020. Households under 35, mostly first-time homebuyers, registered the largest gains, with the homeownership rate up 1.9 percentage points from a year ago. Households ages 35-44 experienced a 1.2 percentage points gain, followed by the 55-64 age group (a 0.9 percentage point increase), the 45-54 age group (a 0.8 percentage point gain), and the 65+ group age (up by 0.2 percentage point).” (See chart below):

Homeownership is an important part of the American dream, especially in moments like this when many are feeling incredibly grateful for the home they have to shelter in place with their families. COVID-19 may be slowing our lives down, but it is showing us the emotional value of homeownership too.

Bottom Line

If you’re considering buying a home this year, let’s connect to set a plan that will help you get one step closer to achieving your dream.

How to Test-Drive a Neighborhood While Sheltering in Place

Some Highlights

• Staying at home doesn’t mean your search for a new place needs to come to a standstill.

• Check out these tips on how to explore other neighborhoods virtually in the homebuying process. You may find a spot that better suits your needs without ever leaving your living room!

• Let’s connect today so you have help with all of the additional steps along the way, and you’re ready to make your next move.

Buying a Home Right Now: Easy? No. Smart? Yes.

Through all the volatility in the economy right now, some have put their search for a home on hold, yet others have not. According to ShowingTime, the real estate industry's leading showing management technology provider, buyers have started to reappear over the last several weeks. In the latest report, they revealed:

“The March ShowingTime Showing Index® recorded the first nationwide drop in showing traffic in eight months as communities responded to COVID-19. Early April data show signs of an upswing, however.”

Why would people be setting appointments to look at prospective homes when the process of purchasing a home has become more difficult with shelter-in-place orders throughout the country?

Here are three reasons for this uptick in activity:

1. Some people need to move. Whether because of a death in the family, a new birth, divorce, financial hardship, or a job transfer, some families need to make a move as quickly as possible.

2. Real estate agents across the country have become very innovative, utilizing technology that allows purchasers to virtually:

• View homes

• Meet with mortgage professionals

• Consult with their agent throughout the process

All of this can happen within the required safety protocols, so real estate professionals are continuing to help families make important moves.

3. Buyers understand that mortgage rates are a key component when determining their monthly mortgage payments. Mortgage interest rates are very close to all-time lows and afford today’s purchaser the opportunity to save tens of thousands of dollars over the lifetime of the loan.

Looking closely at the third reason, we can see that there’s a big difference between purchasing a house last December and purchasing one now (see chart below):

Bottom Line

Many families have decided not to postpone their plans to purchase a home, even in these difficult times. If you need to make a move, let’s connect today so you have a trusted advisor to safely and professionally guide you through the process.

What Impact Might COVID-19 Have on Home Values?

A big challenge facing the housing industry is determining what impact the current pandemic may have on home values. Some buyers are hoping for major price reductions because the health crisis is straining the economy.

The price of any item, however, is determined by supply and demand, which is how many items are available in relation to how many consumers want to buy that item.

In residential real estate, the measurement used to decipher that ratio is called months supply of inventory. A normal market would have 6-7 months of inventory. Anything over seven months would be considered a buyers’ market, with downward pressure on prices. Anything under six months would indicate a sellers’ market, which would put upward pressure on prices.

Going into March of this year, the supply stood at three months – a strong seller’s market. While buyer demand has decreased rather dramatically during the pandemic, the number of homes on the market has also decreased. The recently released Existing Home Sales Report from the National Association of Realtors (NAR) revealed we currently have 3.4 months of inventory. This means homes should maintain their value during the pandemic.

This information is consistent with the research completed by John Burns Real Estate Consulting, which recently reported:

“Historical analysis showed us that pandemics are usually V-shaped (sharp recessions that recover quickly enough to provide little damage to home prices).”

What are the experts saying?

Here’s a look at what some experts recently reported on the matter:

Ivy Zelman, President, Zelman & Associates

“Supported by our analysis of home price dynamics through cycles and other periods of economic and housing disruption, we expect home price appreciation to decelerate from current levels in 2020, though easily remain in positive territory year over year given the beneficial factors of record-low inventories & a historically-low interest rate environment.”

Freddie Mac

“The fiscal stimulus provided by the CARES Act will mute the impact that the economic shock has on house prices. Additionally, forbearance and foreclosure mitigation programs will limit the fire sale contagion effect on house prices. We forecast house prices to fall 0.5 percentage points over the next four quarters. Two forces prevent a collapse in house prices. First, as we indicated in our earlier research report, U.S. housing markets face a large supply deficit. Second, population growth and pent up household formations provide a tailwind to housing demand. Price growth accelerates back towards a long-run trend of between 2 and 3% per year.”

Mark Fleming, Chief Economist, First American

“The housing supply remains at historically low levels, so house price growth is likely to slow, but it’s unlikely to go negative.”

Bottom Line

Even though the economy has been placed on pause, it appears home prices will remain steady throughout the pandemic.

How to Buy and Sell During our Stay at Home

By: Dream Town Realty

The Chicagoland area has been under a ‘stay-at-home’ order for over a week now, but as an essential business, Dream Town brokers have been continuing to find creative and safe ways to conduct business for their clients. While the executive order does permit brokers to engage in real estate showings, there are some additional safety measures that have been put in place during this unprecedented time. 

• Clients and brokers must maintain a distance of 6 feet from one another during showings. 

• Individuals present should bring hand sanitizer or sanitizing wipes to all showings. 

• To limit the number of individuals, sellers should not be present, and listing brokers may opt to use a lock box to grant access to buyers and their brokers. Individuals present on showings should be limited to the buyer’s broker and the primary decision maker for the buyers. 

• Sellers should turn on all lights and open doors to any rooms/closets prior to the showing.

• Brokers and buyers are encouraged to drive separately to and from showings.

• Individuals with any sign of symptoms should stay home. 

While in-person showings and open houses are not restricted by law, the Chicago Association of Realtors strongly urges brokers to find alternative ways to show properties during this time. Dream Town brokers have been leveraging property videos, 3D virtual tours (Matterport), video conferencing software, and even virtual open houses to safely show their listings to prospective buyers. 

Dream Town broker Aaron Masliansky is now conducting his business almost exclusively through video conferencing and lockboxes. This past week, he conducted a final walk-through with an out-of-state buyer and the listing agent via a 3-way Zoom call. “The listing agent had the keys to the property and walked my client and I through the home on a video call, which I recorded,” Aaron said. “After seeing the property at our virtual final walk-through, the listing agent mailed my buyer the keys so we could proceed with closing virtually.” 

We have even seen our brokers hosting virtual open houses, providing members of the public with an opportunity to tour the home during a pre-specified time, just like a traditional open house. “I am able to bring the house to our potential buyer, even those who may not have looked at the house initially, while keeping everyone safe,” says Dream Town broker Abby Powell. “Potential buyers can literally tour the home while in their robe and slippers, in the comfort of their own home.” Abby has been hosting her virtual open houses via Facebook Live, showcasing a pre-recorded on-screen walk-through and answering questions in real-time from her viewing audience. Abby has also relied on Dream Town’s Matterport program to create 3D walk-throughs that buyers can access at any time. 

Aaron has been utilizing Matterport for his own listings, too. But what about his buyer clients that want to tour properties listed by other brokerages? “I’ve been asking listing brokers for videos or virtual walkthroughs to share with my buyer clients,” he says. “During this time, everyone is working together to come up with creative solutions – not just other real estate brokers, but industry partners like attorneys, lenders, and title companies, too.” 

With so much technology at our disposal, the stay-at-home order isn’t stopping sellers from listing their homes. Dream Town broker Nicole Hajdu still has many active listings and listings under contract. She even just listed her own home for sale, and spent the first week of the stay-at home order cleaning, staging, and photographing her house… at a distance. “The stagers came in with booties and gloves, and were out of my house within an hour. The photographers came in at a different time, wearing gloves and masks,” she says. “We all stayed 6 feet away from each other at all times as we moved through the home.” 

However, Nicole understands that listing a home during the stay at home order is not the right decision for everyone. She says she is taking it day by day, and client by client. “For seller clients, this is a great time to clean and prep their homes to go on the market. For buyers, it’s a great time to do as much preliminary research as possible to narrow down their areas of interest and what they are looking for in a home,” she says. “Sometimes we need to take a few steps back to move forward in a better, more favorable direction.” 

If you’re thinking about buying or selling a home during the stay at home order, talk to your broker about the timeline that makes the most sense for you. Ultimately, health and safety is the number one priority.