Despite record job losses and unemployment claims, American home sales are on the rise. Low mortgage rates and a lack of availability are pushing buyers to engage with the market.
Anyone planning to sell or buy a home in the coming months should take the time to understand the current conditions. These are the reasons why the home market is strong during the Coronavirus Pandemic.
Mortgage Rates are at a Record Low
The biggest driving factor in the market today is the low mortgage rates on offer. Buyers can take advantage of more affordable home loans, especially when looking at fixed rate terms.
The 30-year fixed mortgage rate average fell to a record low of 2.98% this week. This could attract more buyers. Low mortgage rates also benefit the sellers who are looking for move-up homes.
Modest Home Inventories
Home inventories are low, so listings are more likely to move quickly. This benefits the sellers because they can minimize their real estate agent costs and the time that it takes to sell a home.
Smaller inventories in key markets have also pushed home prices upwards. Median prices increased by 4.1% in June. Sellers who have been put off by the Coronavirus Pandemic could now consider listing with the hope of generating a better return compared to earlier in the year.
Job Losses Have Hit Lower Wage Earners the Most
One interesting aspect of the home market boom relates to American job losses. Around 22 million jobs have been lost during the health crisis, although hiring has picked up in recent weeks as some states relax their lockdown orders.
Job losses have been significant in individuals who earn less than $35,000 per year. Only 40% of individuals earning more than $75,000 per year have lost income during the pandemic.
The higher income earners are more likely to engage with the home market. While the unemployment statistics are deeply concerning, the simple fact is that the job losses have done little to stifle buying activity.
The Home Market is a Bright Spot in a Difficult Economy
The economic recovery from the Coronavirus Pandemic will be slow and painful for many Americans. It’s reassuring to see that some areas are outperforming expectations. Previously-owned home sales increased by 20.7% in June.
Whether buying or selling, now is a compelling time to engage with the home market.
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