May 2020: Market Update and Projections
This year hasn’t exactly gone as planned for the housing market. The COVID-19 pandemic has wreaked havoc on the stock market, housing prices, and interest rates around the world. Buyers and sellers are understandably hesitant to make any big decisions right now. But a rebound may be on the horizon. Find out more…
According to a revised forecast by realtor.com, home sales could rebound in the late summer and fall. The boost may be especially pronounced in smaller, more affordable cities and surrounding suburbs. Simply, big cities could lose their appeal in light of the pandemic.
Realtor.com Chief Economist Danielle Hale said, “COVID-19 has really dramatically changed the way the housing market is going to perform this year. We started off with the potential for the best year in more than a decade for sales. But we’re going to see ups and downs as the market grapples with an unsteady economy. This will affect buyers and sellers across the board.”
At least some of the projected recovery is expected to be driven by millennials taking advantage of historically low interest rates to afford their own home. Realtor.com anticipates that rates will fall to 2.9% by the end of the year. The housing giant expects rates to remain in the low 3% range for the rest of the year, and then fall to 2.9% for all of 2021.
Hale shared, “We expect mortgage rates to stay low and possibly slip lower. We’ll flirt with the 3% threshold for a while before we go below it.”
Yet, anyone hoping for falling prices is likely to be disappointed. The number of homes on the market has fallen, as has the demand for buyers. Instead of lowering their listing price, sellers will probably be more likely to just pull their homes off the market.
Additionally, despite lower interest rates, buyers could have other obstacles to overcome. For example, unemployment rates continue to rise, and lenders are requiring higher credit scores and down payments to secure the lower mortgage rates. Likewise, home construction slowing, which will exacerbate the housing shortage.
A second downturn in the housing market should also be expected toward the end of the year.
Despite the current uncertainty in the realty market, I’m here to help. Get in touch, and we’ll get through this rollercoaster of a year together.
Sources: https://www.realtor.com/news/real-estate-news/revised-2020-realtor-com-forecast/; https://www.realtor.com/news/real-estate-news/how-low-could-mortgage-rates-go-below-3-percent-if-you-know-where-to-look/