by Khalil Alexander El-Ghoul
As the summer market ends and the start of the fall real estate season begins it looks as though the historically fast-paced summer and spring seasons will carry over to the colder seasons. So, does that mean fall is the new spring real estate season? It sure seems to look that way. With record-low mortgage rates, accelerated activity, high demand for homes with less inventory, and a change of buyer needs, get ready for a strong fall housing market in the D.C. metro area.
Record-Low Mortgage Rates Hovering Around 3%
In the last month, D.C. sale prices grew by 13.8% and the current median price of U.S. homes climbed to $323,807 which is a 5.6% increase from this time last year. In four short months, the U.S. housing market has fully recovered and is even looking better than in 2019. However, mortgage rates have stayed at record lows. The Federal Reserve has kept interest rates low throughout the pandemic in an attempt to keep the economy moving. Their attempt has been successful as 2020’s housing market has outperformed 2019 with a prediction from the National Association of Realtors Chief Economist Lawrence Yung that this year’s home sales will surge past the 5.34 million homes sold in 2019.
Accelerated Activity: High Demand With Less Inventory
The fall real estate season should drastically surpass previous seasons particularly due to increased activity. Along with low mortgage rates comes less inventory. Realtors across the country are seeing a surplus in clients and a decrease in available homes. Simply put, there just aren’t enough homes to keep up with the current demand. Because of the incredibly high demand, current projections forecast the aggressive competition among prospective buyers seen this summer to continue into the fall season. Average homes for sale are expected to continue the trend of multiple offers, causing the average home price to jump considerably. Along with the current trends, we are also seeing first-time homebuyers fearlessly make the jump to homeowner status.
While our current norm of daily living has evolved so have the needs of our home. The need for multifunctional, spacious homes has increased. Before the pandemic, a three-bedroom, two-bath, kitchen with upgraded appliances, and a comfy living room was enough for homebuyers to sign their name on the dotted line. However, as the world-wide pandemic carries on life as we once knew homeowners’ needs have altered. With an unprecedented number of Americans working from home and the strong indication that this will continue after the eradication of the COVID-19 pandemic, homebuyers are looking for a home, workplace, and school all in one. With the increase of Americans working from home, location becomes less of a deal-breaker as it once was allowing prospective buyers to expand their search parameters.
“Zoom rooms” is an increasingly popular phrase being thrown around when searching for a new home. Zoom rooms are considered aesthetically pleasing rooms that are ideal for virtual meetings, not just rooms with 70-inch displays, camera, and noise-canceling microphone arrays, which is what a Zoom room technically is defined as. With students at home while virtually learning, having space for children’s various needs such as a safe space outside has homebuyers altering their needs.
With the fast pace at which homes are being sold, mortgage rates likely to remain at record lows, and a pandemic that has altered how Americans live it is safe to assume that fall may be the new spring for real estate in 2020.