A bad time to sell? Well, no. It may not seem like it to those outside the real estate industry, but buyer demand continues to outstrip seller supply. And many people are stuck in the last recession, expecting home prices to drop – but that won’t happen anytime soon.
Some Americans think that high unemployment rates and news about the recession naturally lead to weakness in the housing market. But they’re wrong.
Homebuyers who enter the market may be in for a surprise, and homeowners may be missing out on top listing opportunities if they believe some common myths. Consider these two recent housing report headlines based from the National Association of Realtors®:
- Contract Signings Make a ‘Remarkable’ Move
- Existing-Home Sales Surge to Record Pace in June
Realtor.com listed current COVID-19-related myths:
Myth #1: It’s a bad time to sell a home
Homeowners may be skittish with unemployment so high and a pandemic raging on. How could it possibly be a good time to sell?
In reality, many buyers frantically want a place to call home, but many homeowners are choosing not to sell. New-home listings plunged 14% in early July compared to a year earlier, and total for-sale housing inventory is 32% year-to-year, according to realtor.com’s Weekly Housing Trends report for July 11.
“Given the pandemic and uncertainty it’s caused, the general sentiment [among some owners] is that now is not a good time to sell your home,” says Danielle Hale, realtor.com’s chief economist. “Yet so far, the data suggests the opposite – that buyers outnumber sellers in the housing market, which means it’s better to be a seller than a buyer.”
Homebuyers eager to purchase are creating bidding wars as they compete for limited inventory.
“Multiple offers could be fairly common over the next few months,” says Lawrence Yun, NAR’s chief economist.
Myth #2: Home prices are dropping
This myth could be a remnant of the last recession over a decade ago, but home prices are actually rising. During the first quarter of 2020, the national median price for single-family homes increased 7.7% to $274,600. “We’re seeing home prices (currently) grow faster than pre-COVID-19,” Hale says. “In fact, they are on pace with the home price growth we saw this time last year.”
Record low mortgage rates boost buying power, Yun adds, “and when combined with a lack of supply will result in higher and higher home prices.”
Myth #3: Everyone is rushing to the suburbs
Urban centers pose more challenges for social distancing during a pandemic than less densely populated areas, and there’s generally a higher interest in the suburbs right now. In May, the number of views on properties in suburban ZIP codes rose 13% – nearly double the views that listings in urban areas received, according to realtor.com research.
“We have seen homebuying demand recover faster in the suburbs and rural areas than urban areas,” Hale says. “There’s also evidence of home shoppers in cities hit early and hard by COVID-19, such as New York and Philadelphia, seeking homes in nearby smaller communities at a higher pace, like the Poconos.”
But not everyone is leaving the city. This myth may be partially centered on the wealthy, who can afford to move, but it’s not easy for everyone to pick up and move.
“This pandemic, although bad, will eventually pass,” says Karl Jacob, CEO of LoanSnap. “And when it does, are people really going to stop wanting to be in a city? I just don’t think that’s the case. Even though you can get delivery from GrubHub every night, it doesn’t mean you’re never going to want to go out to a restaurant; and if you have to drive 30 minutes to a restaurant versus being able to walk around the corner, that’s a different lifestyle.”
Source: “5 Coronavirus Real Estate Myths Everyone Thinks Are True – Debunked,” realtor.com® (July 30, 2020)
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