2020 3rd Quarter Market Report
Michael Guthrie, Broker/CEO
Roy Wheeler Realty Company
Where is the real estate market headed and why has it not been affected by Covid19? Thus the topic for my October 3rd radio show which can be listened to here.
The coronavirus continues to have a negative impact on many aspects of our local economy. Surprisingly, the housing market is not one of those industries. Here is a quote from my summary after the 2nd quarter:
“We expect the 3rd quarter of 2020 number to look more like a normal 2nd quarter spring market. The buyer demand is strong especially because of the continuing low interest rates. What could prove this projection wrong is lack of homes to buy. For example, in June, 508 new listings hit the market compared to 613 in June of 2019. We are seeing a few open houses which means sellers are becoming more comfortable with having their homes on the market.”
When looking at the end of the third quarter numbers, this has proven to be quite true. The uptick in June sales rolled right into July and created a summer season that absolutely reflected what normally happens in the spring.
1486 homes were sold from July 1st through September 30th with an average sales price of $427,500 and a median sales price of $327,450. This showed an almost 9% increase in the number of homes sold compared to the previous year. The median sales price also reflected a 9% increase. The average price rose 16% which shows the impact new construction continues to have on home sales. Interestingly, the percentage of new homes sold compared to existing homes decreased. This could be because many of the homes under contract are already scheduled out into early 2021 for delivery.
On my radio show mentioned earlier and my most recent conversation with Les Sinclair on WINA’s Charlottesville Right Now, I shared several reasons as to why we are at a place presently no one would have ever expected in April and early May. Here is the link to that conversation https://wina.com/podcasts/update-on-real-estate-market-in-our-area/
Here are reasons I believe the 4th quarter will remain as strong as the last three months.
*Real estate professionals, lenders, title entities, buyers and sellers have shown how they have successfully adapted to this new way of doing business. It has been shown that buying and selling property can be done safely and efficiently.
*The number of listings (1679) taken were slightly more than the same three months in 2019 (1667). This shows that sellers are becoming more comfortable with having their homes on the market. The caveat here is we will be going into the holiday season. With Covid though, folks won’t be traveling or entertaining as much so they may be more willing to have their home marketed during these months.
*New home prices will continue to rise. Not only because there is continued demand, but the rising costs of materials and labor, will cause builders to raise their prices. This should give folks who want to sell their home a window to not have to compete quite so directly with a new home community. One negative is the number of homeowners who have decided to stay put rather than sell. This can be seen in how in demand home renovators are these days. Some have shared that it would be 6 months to a year before they could take on a new project.
*Interest rates will remain low and attractive loan products will encourage folks to purchase vs rent. There is no better way to hunker down should we experience inflation sometime in the future than by having a fixed monthly housing payment. Jay Domenic writes, “I do expect them to stay in a range where they would not be an impediment to home buying. With an economic recovery expected to take quite some time until we return to normal, or whatever normal may be in the future, the consensus is the rates will stay relatively low.”
In summary, look for 2020 to end up being a significantly better year than 2019. If someone who is a lot smarter than me had made that bet, I would have taken it and lost 😊
What Do I Expect With Mortgage Rates?
I’m often asked about what I think will happen with mortgage rates in the future. This should be a relatively easy time to predict, largely due to the current stance on rates by the Federal Reserve and the current state of the economy. Of course, the Fed does not control mortgage interest rates directly but the rate market is influenced by what the Fed says and does. The Fed is on record as saying that they’ll basically do whatever it takes to keep rates low during these unusual times. They’ve been doing that by buying mortgage backed securities which helps keep them low.
That does not necessarily mean that rates will continue to drop or not go up at all. But I do expect them to stay in a range where they would not be an impediment to home buying. With an economic recovery expected to take quite some time until we return to normal, or whatever normal may be in the future, the consensus is the rates will stay relatively low.
Just a word of caution, though. These things can change quickly. Any news or reports about the economy improving could cause upward pressure on the rates. Even just talk of a stimulus package can move the rate market. In short, anything that is inflationary is bad for rates. The real wild cards in this are of course the COVID pandemic. As long as that drags on the economy, the rates will likely stay low…and that could be for some time. The other wild card is the upcoming election. The markets will react to whomever is elected and what they perceive will be the effect of the president’s policies on the economy.
So if you’re looking to buy this fall or in the spring, I can’t predict exactly what the rates will be. I do expect that if you’re buying in that time frame, you will likely get a rate with a “3” in front of it. By all measures, that would be an incredible interest rate!
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Michael Guthrie, CEO/Broker
Roy Wheeler Realty Company
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How to Safely Sell Your House in a COVID-19 World
1) Take it Virtual
As we’ve seen, technology has played a pivotal role in keeping us connected during these trying times, and that doesn’t look to change anytime soon. There are several ways that technology has helped in the real estate industry as well.
For starters, virtual tours are a must - https://www.roywheeler.com/360-virtual-tours-step-inside-before-you-buy/
A video of your home should be available online, and in lieu of open-house style tours, you can provide live, virtual tours of your home. You can stream this through YouTube, Facebook Live, or any other available service. To get started, set an appointment time and share the necessary links to the interested parties through your contacts. They should be able to connect and take a live tour at the appointed time and interact or ask questions.
2) Keep Technology at the Forefront
Tours aren’t the only step in the home-selling process that can benefit from technology. In combination with your agent, you can review offers virtually through software like Google Hangouts, Zoom, and WebEx without ever getting out of your pajamas. Documents and proposals can be shared and discussed on the spot with all relevant parties. While the pandemic is ongoing, multiple different platforms are offering free trials or free use of features, so take advantage of it while you can.
Technology is also helping with the document signing process. As of now, 23 states allow notaries and signers to complete a document while in separate locations, and that number looks to multiply. Even as states open up, it’s best to continue social distancing and to stay at home whenever possible. If you can avoid meeting with your buyer or agent in person, it’s a good idea.
One way to do this is by signing your documents virtually. Software companies like DocuSign offer a platform for secure document signing and sharing without any technical expertise needed. You can exchange and sign many different documents, like closing agreements or offer-letters using these programs.
3) Take Extra Care During In-Person Showings
Inevitably, you’re going to need to show your house to interested parties, as no one is going to want to buy a home they’ve never stepped into. The first preventative measure you should take is limiting these types of showings to buyers who show they are serious by providing a loan pre-approval letter. They should have also already made a virtual tour and viewed any relevant documents before proceeding to an in-person visit.
Next, you’ll need to take proper steps to make your home safe, yet keep it welcoming. Many agents have put together showing kits that contain gloves and sanitizer for potential buyers to use to keep them safe and help them feel more comfortable during the process. All parties should wear masks whenever possible.
4) Take Sanitation Seriously
While a home should always be clean before you show it off to a prospective buyer, sanitizing is just as important. Make sure that you’re sanitizing all high-touch areas like doorknobs, drawer pulls, countertops, and light switches. Better yet, leave whatever necessary lights on so that no one has to touch a switch. On that same note, you can leave all doors and cabinets open so that there is less unnecessary contact. Once the showing is complete, another thorough sanitation should occur.
It’s also a good idea to keep disinfecting wipes in your car so you can wipe down the steering wheel and your hands before and after each interaction. While the days of having appetizers and full-house tours are over, for the time being, the real-estate show must go on, and these tips can help keep you safe.
5) Minimal-contact Inspections and Appraisals
As the pandemic carries on, more and more options are becoming available for inspections and appraisals. Sellers should generally stay secluded away from the inspector who will follow all social distancing guidelines. Some lenders even allow for appraisals to be done by driving by the home and viewing photographs of the property. Talk to your lender to see if any of these options are available to you.
*Courtesy of https://www.hendersonproperties.com/2020/08/sell-house-covid19/