Market Update October 2020
2020 is anything but typical
Normal selling cycles have been negated by continuous demand.
Ever since May 9th, when in-person showings once again became possible, the pace of the market has been incredulous. The typical summer slowdown never took place and as we head into November, momentum is still quite strong
Odds of selling are historically high.
Less inventory – has not been anywhere near the current level since 2017 and then it was 1.7 months.
Over 58% of newly listed properties have gone under contract in 7 days or less.
Interest rates below 3%?
I remember a few years back when I felt deprived because I missed a small window of time to lock in a 3.25% 30-year rate. I thought I had missed a once in a life opportunity. Fast forward to 2020 and now rates below 3% are commonplace.
The reduction of interest rates over the last year have more than compensated for the affect of higher purchase prices. Affordability has actually improved by .4% from September 2019 to September 2020.
Is this too good to last?
The phrase “real estate bubble” has reappeared lately. Let us use factual data to assess the situation. It would take about a ten-fold increase in inventory to get us into an excess supply situation like what we saw in the Great Recession. Also with the strong appreciation that has taken place, if you bought 12 months ago and put just 5% down, the market value of your house could drop by 10% from where it is today and you would still have equity in your house, even after factoring in the cost of selling. Take into account the stricter underwriting guidelines in place over the last several years and there’s every reason to believe we are in a far better situation that we were in 2008.
