QUICK HOUSING NEWS, OPINIONS, STATS:
- Things are sitting on the market longer. (Average is about 45+ days). The beginning of June wasn't great with the aftermath of the looting and riots, this hurt momentum, but the end of June saw some mild recovery in prices and activity.
- Signs of change. Never has the knock-on effect of events been so apparent until this pandemic. The lockdowns ended up causing a slew of businesses to stop cold turkey. This caused unprecedented unemployment in the US. As lockdowns eased, unemployment claims eased. This points to companies stabilizing (maybe the CARES Act helped?), and some are even rehiring. June 2020 stats showed the 4.8 millions jobs were added, though unemployment still remains high. See NYTimes article here:
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- Possible V-shape recovery in housing. Real estate has been "open" for 3 months now. April was the worst month so far, with COVID lockdowns fresh in people's minds. As lockdowns eased in May, real estate started to bounce back and May was great in terms of activity, and most importantly, prices. June was about the same as May, if not slightly better as pent up demand and low interest rates drove some buyers out there. See some optimistic housing news here from Business Insider:
- Possible plateau or dip in housing early next year. Three big unknowns that could rock the boat in the coming months. FIRST, if there's no vaccine anytime soon. SECOND, Interest rates rise, shutting out a lot of potential buyers. THIRD, unemployment remains high and stunts consumer activity.
- Less foreign buyers, more domestic buyers. Those who've been priced out are becoming more able to buy due to less competition from foreign money.
- Mortgage applications fell since May. In June, super low interest rates helped the housing market, A LOT. This is seriously the single biggest thing helping buying activity right now. However, the number of mortgage applications fell, and this could because taxes are due on July 15, continued uncertainty in the market, job insecurity.
- There will likely be an influx of renters in the next 3-12 months. We know that with job instability and unemployment, there is a percentage of the population who will continue to rent, or sell and decide to rent. Rent prices have dropped as well, but minimally. About 1-2% on average.
- Inventory is still low. I mentioned this before, and this, along with low interest rates, is what's keeping prices afloat. People aren't selling because many don't have to. The majority of people who own now are special in that many have equity in their homes, unlike back in 2008, when no one had equity and the tiniest shift in the market caused people to be upside down on their mortgages. That was ugly.
- Real estate as a good bet against inflation. It's hard to know where to park cash these days, and with inflation and interest rates so low, keeping it in a savings account isn't ideal. But buying a house is looking like a safer bet against the falling dollar.
- Virtual home shopping on the rise. Lockdowns have forced people to pivot, and now more people are touring homes via virtual tours, videos, and photos. According to Zillow, virtual tours for buyers has increased by 600% in the past couple of months.
- Working and playing from home is the new norm. It's not just a tech industry thing anymore. Every large company is rethinking their work culture and it's predicted that the majority of white collar jobs will become remote in the near future. Same goes with some of the non-work related stuff. Interesting article about virtual activities partnering with online retail. And it makes sense.
- Brace yourselves for the long haul. The days of 15-30% ROI within a year or two of holding real estate are gone for now. You have to think conservatively, like 2-3% gains per year, with micro fluctuations in between. Too many factors that affect housing are keeping growth at slower pace, but hey, I'm grateful that there is growth at all in these times.
- Malls may become the new housing solution. Interesting article on how malls may become housing, since as we know, the shopping mall is definitely going the way of the dinosaur. This could solve the housing shortag,e maybe?
