Home Prices: It’s All About Supply and Demand

Home Prices: It’s All About Supply and Demand | MyKCM

As we enter the summer months and work through the challenges associated with the current health crisis, many are wondering what impact the economic slowdown will have on home prices. Looking at the big picture, supply and demand will give us the clearest idea of what’s to come.

Making our way through the month of June and entering the second half of the year, we face an undersupply of homes on the market. Keep in mind, this undersupply is going to vary by location and by price point. According to the National Association of Realtors (NAR), across the country, we currently have a 4.1 months supply of homes on the market. Historically, 6 months of supply is considered a balanced market. Anything over 6 months is a buyer’s market, meaning prices will depreciate. Anything below 6 months is a seller’s market, where prices appreciate. The graph below shows inventory across the country since 2010 in months supply of homes for sale.Home Prices: It’s All About Supply and Demand | MyKCMRobert Dietz, Chief Economist for the National Home Builders Association (NAHB) says:

“As the economy begins a recovery later in 2020, we expect housing to play a leading role. Housing enters this recession underbuilt, not overbuilt. Estimates vary, but based on demographics and current vacancy rates, the U.S. may have a housing deficit of up to one million units.”

Given the undersupply of homes on the market today, there is upward pressure on prices. Looking at simple economics, when there is less of an item for sale and the demand is high, consumers are willing to pay more for that item. The undersupply is also prompting bidding wars, which can drive price points higher in the home sale process. According to a recent MarketWatch article:

 “As buyers return to the market as the country rebounds from the pandemic, a limited inventory of homes for sale could fuel bidding wars and push prices higher.”

In addition, experts forecasting home prices have updated their projections given the impact of the pandemic. The major institutions expect home prices to appreciate through 2022. The chart below, updated as of earlier this week, notes these forecasts. As the year progresses, we may see these projections revised in a continued upward trend, given the lack of homes on the market. This could drive home prices even higher.Home Prices: It’s All About Supply and Demand | MyKCM

Bottom Line

Many may think home prices will depreciate due to the economic slowdown from the coronavirus (Covid-10), but experts disagree. As we approach the second half of this year, we may actually see home prices rise even higher given the lack of homes for sale.

Thinking of buying or selling a home?  Let’s talk-

Kim and Katie

Real Estate Brokers – Naperville, IL

Posted on June 3, 2020 at 3:26 pm
Kim Lawler-Marino and Katie Minott | Category: Covid-19, Selling | Tagged , , , , , , ,

Why this Summer is the 2020 Real Estate Season

With stay-at-home orders starting to gradually lift throughout parts of the country, data indicates homebuyers are jumping back into the market. After many families put their plans on hold due to the COVID-19 pandemic, what we once called the busy spring real estate season is shifting into the summer. In 2020, summer is the new spring for real estate.

Joel KanEconomist at The Mortgage Bankers Association (MBA) notes:

“Applications for home purchases continue to recover from April’s sizable drop and have now increased for five consecutive weeks…Government purchase applications, which include FHA, VA, and USDA loans, are now 5 percent higher than a year ago, which is an encouraging turnaround after the weakness seen over the past two months.”

Additionally, according to Google Trends, which scores search terms online, searches for real estate increased from 68 points the week of March 15th to 92 points last week. As we can see, more potential homebuyers are looking for homes virtually.

What’s the Opportunity for Buyers?

Another reason buyers are coming back to the market, even with forced unemployment and stay-at-home orders, is historically low mortgage rates. Sam Khater, Chief Economist at Freddie Mac indicates:

“For the fourth consecutive week, the 30-year fixed-rate mortgage has been below 3.30 percent, giving potential buyers a good reason to continue shopping even amid the pandemic…As states reopen, we’re seeing purchase demand improve remarkably fast, now essentially flat relative to a year ago.”

With mortgage rates at such low levels and states gradually beginning to reopen, there’s more incentive than ever to buy a home this summer.

What’s the Opportunity for Sellers?

Finding a home to buy, however, is still a challenge, as this spring sellers removed many listings from the market. Though more people are now putting their houses up for sale this month as compared to last month, current inventory is still well below last year’s level.

According to last week’s Weekly Economic and Housing Market Update from realtor.com:

“Weekly Housing Inventory showed continued tightening. New Listings declined 28% compared with a year ago, as sellers grappled with uncertainty and hesitated bringing homes to market. Total Listings dropped 20% YoY, a faster rate than in prior weeks, leaving very few homes available for sale. As Time on Market was 15 days slower YoY, asking prices moved up 1.5% YoY.”

If you’re thinking of selling your house this summer, now may be your best opportunity. With so few homes on the market for buyers to purchase, this season may be the time for your house to stand out from the crowd. Trusted real estate professionals can help you list safely and effectively, keeping your family’s needs top of mind. Buyers are looking, and your house may be at the top of their list.

Bottom Line

If you’re thinking of selling, many buyers may be eager to find a home just like yours. Let’s connect today to make sure you can get your house in on the action this summer.

Kim and Katie

john greene Realtor | kimandkatie@johngreenerealtor.com | 630-732-1299 | 773-750-9535

 

Posted on May 27, 2020 at 2:49 pm
Kim Lawler-Marino and Katie Minott | Category: Buying, Covid-19, Selling | Tagged , , , , , , ,

What You Can Do to Get Your House Ready to Sell

Believe it or not, there are lots of things you can do to prep your house for a sale without even going to the store.

Your real estate plans don’t have to be completely sidelined while we’ve hit the pause button on other parts of daily life.

Tackling small projects from cleaning the corners you may normally skip to tidying up your yard are easy and necessary wins if you’re thinking of listing your house and making a move.

What You Can Do to Get Your House Ready to Sell | MyKCM

Call or e-mail us for more ideas and next steps that you can take to be ready to sell your home and follow your dreams.

kimandkatie@johngreenerealtor.com

630-732-1299 or 773-750-9535

Naperville Real Estate Brokers

Posted on April 13, 2020 at 4:55 pm
Kim Lawler-Marino and Katie Minott | Category: Selling | Tagged , , , , , , , , , , ,