The pandemic left us plenty time at home to think about where we live and if it fits our current work/life needs. Many have decided to move, fueling what could be considered the largest home buying boom since 2003–2004. How long will this real estate boom last? Experts see some of these market changes as temporary, while others may be here to stay.
Here are two major pandemic trends to think about as you consider buying or selling a home.
Trend #1: Home prices are rising.
According to the National Association of Realtors, the median price of existing homes for sale rose to an all-time high of $334,500 in March 2021—a 17.2% increase from March 2020’s median price tag. What’s behind this spike?
- Low mortgage rates mean increased demand for homes. Mortgage rates for a 30-year fixed-rate are now hovering at about 3%. More attractive interest rates inspire many homeowners to think twice about the possibility of moving, so they can buy more house for less money. Of course, increased market activity also means higher prices.
- Fewer available properties spur bidding wars. There’s more competition, even for properties previously considered average or sub-par. Homes that might have sat on the market for months are now launching auction-like bidding activity, with amounts exceeding the asking price. Suddenly, you may find yourself in a bidding war for that fixer-upper adjacent to a six-lane highway you would have never considered before.
- New-home construction faces continued challenges. Supply-chain issues from raw materials to appliances and furniture, including a lumber shortage, made it harder for builders to meet housing demands in 2020, resulting in higher prices.
Trend #2: People are shopping for and buying homes in new ways.
Open houses and seasonal trends have been upended, and some of the changes make the homebuying process faster and easier.
- Virtual home tours instead of in-person visits. Home sellers are reluctant to have people touring their homes, and buyers are equally unwilling to venture indoors. This has made video and virtual tours the must-have in 2021.
- Digital documentation is streamlining the purchasing process. Anyone who’s ever bought a house can tell you about the endless document signing and initialing, from application to closing. But what if you e-sign those papers and have them all notarized from your desk? These already-emerging technologies have been adopted enthusiastically during the pandemic—and their convenience may keep them popular long after the COVID-19 threat subsides.
The many challenges of COVID-19 have spurred some welcome changes in the home buying process. What hasn’t changed are the personal financial criteria you need to consider before making a major purchase. Before you start house hunting, it’s important to know how much you can afford. Use our handy calculators or contact us to get in touch with one of our loan experts to find out more.
Until next time,