More than nine in ten realtors believe the U.S. housing market is back on track as home buyers returned in droves from their coronavirus enforced hiatus. According to the latest survey (opens in new tab) of members of the National Association of Realtors (NAR), the vast majority believe they are in the process of recovering as states start to reopen their economies.
Ninety-two percent of the residential and commercial agents polled said that a portion of their buyers are either back or didn’t leave the market in the first place. Of those, 18% reported that their buyers had never gone away, and 9% revealed that all of their buyers had now returned, keen to take advantage of the low mortgage rates available from the best mortgage lenders (opens in new tab). Agents in small towns and rural areas were more likely to report either no pause in home buyer activity or a stronger return of buyers to the market.
On the other side of the market, a similar proportion of survey respondents - 89% - said that their sellers had either never delisted their property or have since made them available again. Suburban and urban markets were more likely to have reported fewer sellers returning to the market compared to small and rural markets.
How has the pandemic affected buyers and sellers?
With home sales plummeting (opens in new tab) due to the pandemic, participants on both sides of the market seem keen to make up for lost time as mandatory stay-at-home orders are eased. According to the NAR, 23% of agents reported a greater sense of urgency among sellers to close a transaction, while two-thirds said that their sellers’ timelines had remained the same.
Among those working with buyers, 27% reported more urgency from clients about buying a home, and 54% said that their buyers’ timelines to find and purchase a home has remained the same.
“A number of potential buyers noted stalled plans due to the pandemic and that has led to more urgency and a pent-up demand to buy,” said Lawrence Yun, NAR's chief economist. “After being home for months on end – in a home they already wanted to leave – buyers are reminded how much their current home may lack certain desired features or amenities.”
Has COVID-19 altered home buyer priorities?
Unsurprisingly, agents also noted significant changes in the preferences of buyers in recent months. Almost a quarter (24%) reported vendors had shifted the location of where they intend to buy due to the coronavirus - of these, 47% now preferred to buy in the suburbs, 39% cited rural areas, and 25% favored smaller town markets.
Thirty-five percent of realtors also said buyers had reappraised at least one home feature that is important to them because of the health crisis. Understandably, home offices have now made it onto many people’s wishlists, along with spaces to accommodate extra people, such as older adult relatives and newborns, and larger homes with more personal space and bigger yards that would allow for growing foods.
What is driving the upturn?
For those looking to move home or take their first step onto the property ladder, there is plenty of room for optimism. Despite the ongoing economic uncertainty, 61% of people recently surveyed (opens in new tab) by Fannie Mae felt it was a good time to buy a home in June, a rise of nine percentage points from May.
At the same time, the latest Mortgage Bankers Association (MBA) data (opens in new tab) reveals mortgage applications for home purchases in June soared 54% higher than in the same month a year earlier.
"The new home purchase market continues to recover,” said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. “It is another piece of data indicating that homebuying activity that was delayed by the pandemic in March and April is just being realized later in the season.”
How can you make the most of the recovery?
While house prices have recently been climbing back up - realtor.com reports (opens in new tab) that median prices increased 6.2% year-over-year in the week ending June 27 - there might still be some bargain-priced properties to be found, particularly as many home sellers chose to lower the asking price of their properties (opens in new tab) at the beginning of the pandemic.
The best news for potential buyers, however, is that the interest rates on offer from mortgage lenders and the best refinance mortgage companies (opens in new tab) continue to sit either at or very near to record lows. The latest Freddie Mac data (opens in new tab) suggests that a typical 30-year mortgage loan now comes at a rate of just 3.03%, another new low for a survey that dates back 50 years.
As a result, there has probably never been a better time to either buy a new home or refinance your mortgage (opens in new tab), particularly if you’ve had your existing mortgage deal for a while. Some people seem content to bide their time, and see if interest rates fall even further, but with such low options already on the table, it makes little sense to wait much longer and risk costs starting to go up.
Being prepared is the key to securing a new mortgage, so that mortgage lenders can see you in the best light. As well as locating all your old paperwork, make sure your credit score is as good as it can be, and enlist the help of the best credit repair services (opens in new tab) if you need. Crucially, however, shop around among the best mortgage lenders (opens in new tab) to find the best deal that you can. A mortgage payment usually takes a significant chunk out of anyone’s paycheck, so making sure you pay as little as possible for your new mortgage is a must.