After stalling in the first few weeks of the pandemic, U.S. home sales have surged in recent months to the highest level in more than a decade. The strength in housing has been driven by ultra-low mortgage rates, fierce competition for a chronically low inventory of properties on the market and a wave of millennials and others increasingly vying to become homeowners.
The Perfect Storm
Several factors have contributed to a “perfect storm” of sorts in the real estate market in the past six months. For starters, the pandemic shut down occurred right as the spring buying season was just ramping up. This forced a lot of buyers to wait until the summer months to compete for homes. With an already tight inventory of homes for sale, many sellers decided to not move forward with selling their homes to limit their exposure to the virus. Additionally, mortgage rates have also been a key driver for the market. They’ve fallen this year to record lows, increasing buyers’ purchasing power. The average rate on a 30-year home loan was 2.90% last week, according to data from mortgage buyer Freddie Mac. A year ago, the rate averaged 3.64%. Lastly, the dearth of homes for sale has come at a time when more millennials are entering their 30’s, getting married, and looking to buy a home. Ultimately, this has helped push up home prices. The median price for a previously occupied single-family home reached $315,000 in August, up 11.7% from last year, according to a recent analysis by The National Association of Realtors.
The Future
Most importantly, the question on everybody’s minds is what the future of real estate prices looks like? A global pandemic in a presidential election year certainly does not make it any easier to forecast. With this said, the persistent low inventory of homes for sale combined with low mortgage rates for the foreseeable future point to continued strength in real estate prices.
According to a recent survey sponsored by Zillow, more than 100 economists and real estate experts are forecasting home prices to increase 3.7% this year and continue growing in 2021. This bullish sentiment also extends to the home building sector. Moody’s Investors Service expects the U.S. home building sector to be stable for the next 12-18 months, citing the strong demand for homes, though the ratings agency flagged concerns about the “stubbornly high” unemployment rate.
Summary
In closing, all real estate is local. Therefore, there are additional factors to be considered in the South Florida market. All in all, South Florida will continue to be one of the most desirable places to live in the country. In addition, we are continuing to see a mass exodus of Americans fleeing high tax states such as New York & New Jersey. Now with the pandemic, many more are realizing that South Florida is an ideal place to social distance as well.
With agents throughout Palm Beach, Broward, & Dade counties, Live South Florida Realty, Inc. has professional real estate agents ready to assist you. Contact us today to buy or sell your property in South Florida!
