Real Estate Market Report October 2020
The Big Question can we keep this momentum up? Mark Fleming, Chief Economist At First American commented, “That we have experienced a V-shaped recovery”.
Take a look at the housing market index. That’s something created by National Association of Realtors. We have saw a dip in April, today, exceeding pre-pandemic levels looking at demand, supply, price and time on market. So, when we look at the real estate business, we can confidently say we have experienced a V-shaped recovery.
The challenge we have in the market is inventory. Existing home sale inventory and new home sale, new home inventory is down 33 percent for new homes and 39 percent for existing homes. During the Pandemic many people re-evaluated their living situation and decided to make a change.
So the million dollar question is, can we keep this momentum up?
Since we are in an election year, there are sentiments to hold off on buying or selling because of uncertainty in the market. Many many homeowners have equity in their homes which was not the case during the downturn in 2008. In 2008, there was an over- supply of homes on the market. And you can see today, we’re in a sellers market where there is low inventory. This graphic goes all the way back to 1999, and we’re below that in the available inventory for the number of people that want to buy those homes, so a very different market than what we saw. When we saw over supply back in 2008 that led to price depreciation where today, we’re in very much an appreciating market because of the lack of supply in homes across the country.
Equity gives people options today, John Burns Consulting tells us that 42.1 percent of the homes in this country are owned free and clear today and that 90 percent of the homes have at least ten percent equity, so significant equity in homes across the country. People were underwater where they owed more on their home than it was worth, and they just walked away. So, the equity position of homeowners today is very, very strong and gives them options relative to going into some sort of distressed sale.
Bill McBride from Calculated Risk says this. “This is very different from the increase in delinquencies following the housing bubble,” just like we said. “Lending standards have been fairly solid over the last decade, and most of these homeowners have equity in their homes, and they will be able to restructure their loans if they are employed.”
Many experts are saying we’re looking at appreciation coming in the next 12 months. Take a look at our market. We have high demand and low inventory.
In the Tucson area, there are so many people want a home and can’t get them, and it’s driving the price up. This is happening across the country. We are in an accelerating market. We have more sales than we have literally inventory coming into the market creating this challenge. More people are buying. Less people are listing or less available homes on the market. The trend since the pandemic is people wanting to move from urban areas to suburban areas.
“Hey, look. We can work from home now. We may be downsizing, moving to another home in a community, with the lifestyle I want to live.”
Quote from The Wall Street Journal, “Truth is attainable by laying fact upon fact and then fact upon fact.”