COVID-19 changed everything, including the real estate market. The unexpected boom in home sales has many homeowners wondering what's going on and how long it will last.
- The COVID-19 pandemic shelter mandates and more people working from home caused a severe drop in housing prices all over the country during the first half of 2020
- Homeowners gained $1 trillion in home equity between September 2019 and September 2020
- People are looking for homes that better suit the new needs they face during COVID-19
- Available housing for sale is at a historic low, which has driven prices to historic highs in 2021
Of the many things that have changed since the onset of COVID-19, the surge in home sales is probably the most surprising. Amid businesses closing and people losing their jobs, they're still buying houses. Factors such as declines in real estate prices, working from home, fewer homes on the market, and people realizing the true value of home have made a major impression on the housing market. The question most homeowners, homeowners' associations, and potential homeowners are asking is,
How long will it stick around, and how can I use it to my advantage?”
Homeowners gained $1 trillion in home equity collectively between September 2019 and September 2020 — which was great news for homeowners, but home and condo owners associations, too. According to S&P CoreLogic Case-Shiller National Home Price NSA Index, housing prices rose 9.5% between November 2019 and November 2020. The average home value was $245,000 at the end of 2019. Its $266,000 in 2021.
Understanding these kinds of market trends is valuable for any homeowner, whether you're buying or selling. Knowing what makes your home market-worthy and what's pushing the hot sellers can mean thousands of dollars and your peace of mind. Let's take a look at why people are buying houses during COVID-19 and how it affects you.
Big drops in real estate prices
Cities all over the country experienced record drops in real estate prices early on during COVID-19. New York saw the largest decline in 30 years, 54%, in the second quarter of 2020. Orange County, California reported its largest drop, 5.2%, since 2009.
COVID-19 related issues, such as quarantine and shut-downs, caused real estate activity to slow at first. The country was unsure of the future, and sellers became desperate as the economy slumped, resulting in a shift to a buyer's market. Buying a home became more affordable than it has ever been before, especially for people who could move to working full-time at home.
COVID-19 revealed the true value of home
Quarantine made some people realize their homes weren't really very homey. Spending more time inside calls attention to things you usually overlook. Cramped spaces, drafty windows, and bad neighborhoods were no longer as tolerable.
Not only that, but shelter-in-place mandates suddenly made home our only safe place. Buyers are willing to push their budget further than before to get a home they feel safe and comfortable in for the long haul.
Productivity is a priority
The business shutdowns that started in March 2020 moved the majority of American workers to home offices. Many people were now expected to work from a home, and those who never intended to accommodate that function found even more reason to make a move. Add distance learning students to the equation and home can feel cramped and inadequate.
When it became clear that American's were going to be working and schooling from home for a while, people began searching for homes that better suited their new needs.
Population decline in urban areas
Shopping, dining, and entertainment venues closed with only a vague idea of when things would return to normal. Many people now working from home or forced to change jobs found all the perks to urban life gone. Many are now moving to the suburbs, where home prices are traditionally lower for more square footage.
Fewer homes on the market means higher prices
The law of supply and demand is perfectly at work here. Many people are happy where they are and don't want to sell their homes, causing a record low in available housing, which drives up the prices of those on the market.
COVID-19 has put up a few roadblocks on the home buying journey, such as social distancing, but 3D home tours and video meetings have gone a long way in minimizing the problem. There is no doubt that COVID-19 turned the country on its ear. Fortunately, it wasn't all bad.
Like all good things, the COVID-19 housing boom won't stick around forever. As we once again venture outside our homes for work and entertainment, real estate prices will be affected. If you're in the market, now could be your best time.
Real estate lawyers are a great help during the home buying and selling process, especially when it comes to the offer process and factors such as disclosures. Call the offices of Peyton Bolin for answers to your questions about the COVID-19 housing boom.