In “normal” years, the housing market slows as summer ends, kids go back to school, and buyers and sellers alike decide to stay in their homes for the school year and looming holidays. As we all know at this point, however, 2020 is anything but normal. As fall approaches, sellers are reporting multiple open houses, busy on-site and virtual open houses, and crowded bidding wars. In short, the fall 2020 housing market is likely to be just as “abnormal” as the rest of the year has been.
“There is a record level of buyers competing in the housing market right now. In a typical year, buyer-seller activity would be dwindling down heading into Labor Day,” said Realtor.com director of economic research Javier Vivas. He added, “2020 has been nothing short of abnormal.”
In fact, while the pandemic continues to affect every aspect of daily life in most areas of the United States, Vivas’s metrics seem to indicate the housing market has fully recovered, exceeding its pre-pandemic baseline established in January of this year. In fact, the Realtor.com Housing Market Recovery Index is 6.6 points above that baseline right now, with median listing prices flying upward by 10.3 percent over this time last year. This is the fastest pace of growth since January 2018.
In fact, 15 markets have achieved double-digit recoveries. These markets are now posting double-digit demand, although the housing supply component of the index is still falling across the board:
- Las Vegas, Nevada
- Seattle, Washington
- San Jose, California
- Denver, Colorado
- Los Angeles, California
- New York, New York
- Philadelphia, Pennsylvania
- Boston, Massachusetts
- Riverside-San Bernardino, California
- Phoenix, Arizona
- San Diego, California
- Rochester, New York
- Portland, Oregon
- San Francisco, California
- Baltimore, Maryland
Susan Wachter, professor of Real Estate and Finance at the Wharton School of the University of Pennsylvania and co-director of the Penn Institute for Urban Research, optimistically predicted new-home starts would begin to heat up by the end of 2020, thereby slightly cooling demand sometime in 2021 or 2022. “Almost everything housing-related – new home sales, home-improvement spending, home prices, and, as of July, new construction – are in a V-shaped recovery; everything that is, except inventory,” Wachter told CNN Money. According to her analysis, new housing will play a crucial role in the future housing market because households “who are happy in their homes are not anxious to trade up” during COVID-19.
How are you dealing with the current demand for new housing and skyrocketing listing prices?
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