COVID Side Effect You May Not Have Realized
We’re not just lacking toilet paper in 2020…
COVID-19 has rid academic seniors of graduation, wiped out the nation’s supply of toilet paper, short-staffed medical professionals worldwide, and is setting the stage for an unprecedented cashless society; but, no one is talking about one of the greatest shortages of this chaotic year…HOUSES!
Nationwide housing inventory is at an all-time low of roughly 3 months. What does that mean? At the current sales pace, it would take 3 months to sell all of the homes actively listed right now. Let’s put that into perspective – a healthy housing market is considered to be 6 months of inventory and just a decade ago, in 2010, the national housing market held a booming 10 months of inventory.
Still not convinced we’re in crisis? Nationally, as of June 2020…
- Total housing inventory declined 26.5 percent year-over-year
- The number of new listings declined by 19.3 percent
- Home prices show sustained growth, with the national median listing price up 5.1 percent to $342,000, 5.7 percent in metro markets
- The typical home spends 74 days on the market, only 53 days in metro markets
*Statistics are from Forbes, CNBC, and PR News Wire
So why the shortage? Just 12 years ago, no one was buying homes and the housing market was in surplus! A huge factor is today’s low interest rates. In 1981, average interest rates for a 30-year fixed-rate mortgage reached its historical peak of 16.64 percent, in 2000 – 8.05 percent, in 2007 – 6.31 percent, and today 2020 – just under 3 percent. Mortgage rates haven’t fallen below 3 percent in 50 years! Tom Clemmons, local Sales Manager at First United Mortgage Group, states, “Mortgage rates are at some of the lowest points in history and are a vital part of what is driving the hot real-estate market here in Austin. Low rates combined with consistent job growth and a destination city is a recipe for a tight real-estate market.”
Other factors contributing to low inventory are
- Baby Boomers aging in place. Currently, 55.2% of all owner-occupied homes are owned by people age 50 or older, with little-to-no intention of relocating.
- Austin legislation banning construction developments. Although the ban lifted in April, construction companies are weary of exposing their crews and development is slow.
- Surge of homebuyers who have since recovered from the 2008 Recession or are entering the market for their first purchase. According to a recent analysis from credit bureau TransUnion, between 8.3 and 9.2 million first-time homebuyers are expected to hit the market in the next few years.
- With COVID keeping us all at home, people are looking to upgrade their living spaces. Young adults are feeling cramped in tiny apartments, employees are searching for home offices, and growing families are looking for more home amenities in larger houses.
With mortgage rates at record lows and buyers returning to the market armed with post-quarantine housing wish lists, sellers appear to be the missing link to a strong housing market. Realtor.com® Chief Economist Danielle Hale states, “The housing market has certainly demonstrated its resilience during the COVID pandemic. While the new listings trend has improved, inventory continues to decline, indicating that what is coming onto the market is selling.”
We at the Gene Arant Team have a vast database of buyers hungry to purchase their next home. You could hold the missing piece! If you’re looking to move or cash out on the highly demanded investment you’re sitting on, give us a call today (512) 261-1000. There’s never been a better time!