Are you thinking about selling your home and are wondering if the Presidential election will have an impact? Or maybe you are thinking about purchasing a home and are hoping prices will come crashing down. Well, regardless of your political views and how you feel about the outcome of the election, the housing market is not expected to change. Let’s take a look at the top factors expected to continue driving the real estate market forward.
Low Mortgage Rates
Mortgage rates recently fell to their lowest levels in the last 50 years. Does this sound familiar? It is the 12th time this year that rates have fallen to record levels.
“Despite the ongoing pandemic and economic uncertainty, purchase applications have now increased on an annual basis for six consecutive months,” Bob Broeksmit, president and CEO of the Mortgage Bankers Association, said in a statement. Many economists expect the rates to remain low as the Federal Reserve plans to continue to purchase mortgage-backed securities until at least 2023.
Strong Buyer Demand
Buyers are eating up the low mortgage rates and ability to work remotely right now, or at least trying to! In a “normal” year, the housing market tends to slow in September and then drop off the closer we get to the holidays. In 2020, the competition is so fierce for home buyers that we are seeing a strong housing market deeper into the year than we normally do. Sellers no longer need to take the holidays off and wait for the spring. Inventory remains low and buyers are snatching up homes, often times, within the first week on market while competing against multiple offers.
This year the U.S. entered into the worst recession since the Great Depression so how is that housing prices are reaching record levels in many areas? As we have discussed so far, interest rates and inventory levels are at all time lows. Last month, single-family homes in the East Bay had the largest year-over-year gain of 2020 fueled by housing inventory levels being down over 30% from 2019. Buyer demand remands persistent and bidding wars have once again become expected when submitting an offer. All of this helps explain why housing prices have continued to rise, even in what is normally categorized as the “slow” part of the year.
The American dream of homeownership is nothing new and does not simply go away with Presidential elections. In a recent study performed by Meyers Research, the last 13 presidential election years were analyzed. They found that while the real estate market may take a dip in the months leading up to the election, largely concentrated in November, it typically rebounds shortly after the election is complete. In fact, they concluded that the year after the election is often the strongest year during that presidential term.
Coming in to 2020, many people had high hopes for the new year, I know we did at Arrive Real Estate Group! And then COVID hit. No one could have predicted it and it sent everyone spinning with many uncertainties. Instead of seeing continued gains, home prices were then expected to depreciate in 2020. While things did seem to stand still in March, prices quickly appreciated, even skyrocketed in many areas. This goes to show you that while no one can accurately predict the future, life events continue to march on and people will continue to have a need to buy or sell, regardless of the election.
Over the next year, we will likely see home values rise even higher given the continued lack of inventory of homes for sale and low interest rates pushing buyers to reach higher for the American dream of owning a home. As Matthew Speakman, an economist at Zillow explained, “recent trends suggest that the housing market – which has basically withstood every pandemic-related challenge to this point – will continue its strong momentum in the months to come.”
Are you wondering where the housing market will take you in the months ahead? Contact Arrive Real Estate Group to see how we can help you prepare and guide you with your next move!