It is no new news, that the COVID-19 pandemic has changed the lives of billions of people around us. All within one year! Early last year during the beginning phases of the pandemic, economic fears starting to rise and nearly every country faced significant losses in their financial markets. This was largely because of the stay-at-home restrictions, extensive lay-offs and furloughs, retail business failures, and illness spreading. Everyone prioritized having cash on hand and personal financial security. People decided to wait and see how the pandemic would play out, before spending any money on assets such as real estate. Now, over the last few months, especially as the hope of “normalizing” back to pre-pandemic life has continued to grow, economic growth and consumer spending has also followed a positive trajectory. Between September 2019 and September 2020, homeowners accumulated a collective $1 trillion in additional home equity. The exploding demand of the past year, in conjunction with a historically low supply of housing, has led buyers to desperately bid up the prices of available properties, sending home prices soaring. Today I am going to discuss how Covid-19 changed the housing market.
Housing prices rising rapidly
The price of a house is tied to the supply and demand for housing. If there are fewer houses available, prospective buyers bid up the price in order to get one. If fewer people are looking for a home, the price will drop because buyers have fewer competitors. Covid-19 has affected both supply and demand. It seems as though it may be more of a demand situation. People are rushing to take advantage of plummeting mortgage rates that make the cost of buying a home much cheaper. Due to falling mortgage rates, the cost of borrowing money to buy a house is also dropping. Mortgage rates have been falling steadily for a while, but they fell dramatically in 2020 — reaching a record low of 2.65 percent in January 2021.
Not enough homes
Here is the supply end of things. Simply put, there are not enough homes! More people looking to buy, compared to what there is to sell. Going into the pandemic, there was already a shortage of homes. What is the reason for this? Firstly, after the pandemic hit pretty hard-many people decided not to see their homes. With much uncertainty on the horizon, some chose to take their homes off the market. Secondly, Covid-19 also made people nervous about showing their homes. They didn’t want a stranger coming in their living room with potential of contracting a highly contagious disease.
We saw an increase in people buying homes in new places. Imagine that you are living in the city, and suddenly everything has closed down and you are working from home. Now add on top of this, having two children at home. Well, for this exact reason, many families chose to relocate. They now had the time while still employed but working from a distance. Why not move somewhere outside of the city, that’s beautiful…where you can enjoy the outdoors? Click here to read an article that shows the statistics on how many people moved during the pandemic.
Why choose Heroes San Diego?!
Heroes San Diego, is a nationwide program, serving our heroes! We would like to say thank you, by assisting you and providing the right services so that you can buy a home! What better time than to start today? There are so many benefits that you can utilize, and we can help you learn the ins and outs of all of them. Our free webinars and seminars will give you the tools and information that’s needed to get started. Then our team that is available to you round the clock, will work on finding you that perfect home! Are you looking to sell? Relocate? We have got you covered!
We thought that this information on how covid-19 changed the housing market would help answer some questions and curiosity. Feel free to comment below if you have any questions!