It’s no secret that the real estate market is experiencing a boom! For the past four months existing home sales have experienced an upward tick with no sign of slowing down just yet. All across the United States, we are seeing a month-over-month gain as total existing home sales and completed transactions rise 9.4% from August to September. Year-over-year, the numbers are even more substantial with an increase of 20.9%, according to the National Association of Realtors.
We put this clear increase down to low-interest rates, and people spending more time at home as the world transitions to a remote, work-from-home culture. Many buyers are seeking larger homes with an office or den that gives them a place to work from home.
With that being said, while many predicted a slump in the market come the fourth quarter, experts have instead reported a pickup in the market. Home sales are not the only thing on the rise though, the median existing home price for all housing types also rose 14.8% year-over-year. This signifies 103 consecutive months of increases.
While these numbers continue to rise, the inventory continues to lag behind, with September being down 1.3% from August, and down 19.2% from last year. The typical home is on the market for just 2.7 months, which means homes are moving rapidly — selling two weeks faster than they were just one year ago.
The Future for Home Buyers
Bidding wars are pushing prices up, which could potentially reverse the benefits of low mortgage rates, says Ruben Gonzalez, chief economist for Keller Williams. Gonzalez also notes that the fast-paced market and lower rates are likely to follow us well into the new year. However, for first-time, entry-level buyers, the time to buy is now, before home prices increase too drastically and make purchasing a home virtually impossible.
Vacation Homes Are Hot Right Now
Because mortgage rates are especially low (Freddie Mac reports a 2.89% decrease in September from August for a 30-year conventional, fixed-rate mortgage) and because we are experiencing a period of uncertainty, vacation destinations are moving quickly. Since July, we’ve seen a 34% gain year-over-year! Don’t worry though, the homes typically remained on the market for just 21 days in September, an all-time low.
High Earners Prop Up the Housing Market
Due to the pandemic, many layoffs are impacting lower income families, while the high earners seem to be especially well. “Higher earners have been more likely to retain their incomes, allowing the housing market to continue booming despite extremely high unemployment levels,” says Gonzalez. He also warns that should unemployment levels continue to rise or remain high, high earners may start to see layoffs spilling into their executive levels, thus impacting the housing market.This, paired with the higher home prices, could be why first-time home buyers slightly slowed in September, also why the rate of investment properties dropped very minimally.
