The million dollar question: "How has Covid affected the market?" Phew, y'all. You ready for this?
Covid has amped up the market in a way we never saw coming. The industry is unofficially booming right this very moment, at a time the market would "typically" be on the decline as we head into fall and winter months. Initially in March, when the virus shut down our entire economy and virtually every industry - we saw a serious decline in real estate activity. And that was scary. But since being deemed an "essential service," Real Estate is thriving, and here's why.
People are redefining what "home" means to them. They not only live in their homes now, they work in them, they go to school in them, they attend church in them, they work out in them. I myself have not been finding myself turning my home into a gym quite yet - but you betcha I home a home office set up. All of this has translated to many people looking for a different (and new!) kind of "home." So with all this interest in expanding what "home" means, why did so many of us think that Covid would tank the housing market?
We millennials tend to link real estate to the economy directly. Because the financial crises of 2007 was real - and many of us were young adults navigating a very difficult time. The '07 market crash was a result of a faulty system, lack of regulation, and corporate corruption. But if we can reframe our understanding of the economy we will understand that housing is a substantial piece of overall economic health, but it is only one piece of the puzzle. Other factors include employment rate, inflation, consumer spend, stock/bond markets, Fed policies, and more. Home values nearly tanked by half in some case back during the '07 era, but today? They're dramatically increasing due to Buyer demand and low inventory.
Here, have some nerdy stats:
- SoCal home prices are up 12.1% this year over last year, the highest rate since 2014
- The median price of a home in SoCal is now $600,000 (higher in LB and LA!)
- Sales are up 2% over last year - not down
- Mortgage rates are at 2.625% for a 30-year fixed-rate mortgage, which is historically low
Without doubt, the Fed lowering their rates to 0% has translated to drastically lower interest rates for ready home buyers - enabling them to afford more and pushing them into the housing market sooner rather than later. That's great for demand, but what about supply?
Supply is down. Supply is so down, down to party, down for the cause, it's so down it's...gone? For real though, national supply has declined by 39% year over year. A lot of people are truly hunkering down, and holding on during this time. This puts us in a MAJOR Seller's Market right now - with multiple offers from eager Buyers, and raising home prices for Sellers. Homes are on the market for much less time too, indicating that what little inventory there is out there doesn't stay out there long. All of this is good and bad. Keep an eye out for the break down of a Seller's Market vs Buyer's Market soon. Until then, we'll be wearing our masks and watching these debates like - is that a fly on Pence's head?
In Community, Allie
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