The pandemic has impacted Americans in a variety of ways. To say the real estate market, in many parts of the U.S., has changed in unexpected ways would be an understatement. The demand for homes far outnumbers the supply in many areas of our country.
According to an article published by CNBC.com, reporter Kevin Stankiewicz finds, “Existing home sales increased 9.4% in September, surpassing expectations, and the median purchase price rose nearly 15% year over year, according to data released earlier Thursday by the National Association of Realtors.”
Consumers are enticed by low interest rates and, those who can afford and are able to, are moving out of major metropolitan areas to suburban areas or even to second homes in vacation areas, where they might be able to work remotely.
Although buyers continue to search for homes and rush to put an offer in when they find the perfect home, the number of homes for sale has tightened up. Nevertheless, it is anticipated that after the election, more sellers may decide to put their homes on the market. One professional, Glen Kelman of Redfin, is quoted in the article, “I think the sellers are just looking long term at the economy and still feeling some anxiety. Many of them are going to put their homes on the market in January and February.”
While many realize the type of demand for homes that has been occurring since the summer of 2020 cannot last forever, its is expected to continue into the new year as more and more Americans find ways and reasons to relocate.
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Real Estate professionals and publications have recently began to educate home owners and potential home buyers with current market trends. The common message is that there is an increase in home buyers but the supply of homes for sale is declining. The natural consequence of this low supply and high demand situation is for home prices to increase. The projected home values are continuing to increase, in fact experts have even adjusted their projections based on current market reports. According to an article published in The Patch, “CoreLogic increased their 12-month projection for home values from 4.5% to 5.6% over the last few months.”
Naturally, buyers become concerned that home prices are causing them to be priced out of a home or a neighborhood. However, the increase in home prices can’t be analyzed in a bubble. Other factors must be taken into account to determine whether or not increasing home prices are really making homes unaffordable.
In the article, written by Keith Kreis, other factors that should also be taken into consideration are discussed. For example, mortgage interest rates have dropped since the beginning of 2019 which has increased home affordability by almost 10 percent. Additionally, American workers are seeing wage growth by as much as 1.5% since last fall. By taking these additional economic factors into consideration, one might argue that, at this point in time, buying a home is more affordable than its been.
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