Financing rates are higher and more volatile than any time...
The 2019 novel coronavirus pandemic – with its travel restrictions, shelter-in-place orders, and uncertain future – has caused a significant damper on the United States economy. On June 8, the National Bureau of Economic Research officially declared a recession, adding that the economic slump began in February 2020.
This positive stance is not without foundation; according to a recent article from the Wall Street Journal, housing numbers are showing strong recovery after an initial hit because of the virus. This V-shaped recovery demonstrates buyers’ pent-up demand for real estate.
Overall, sales of previously-owned homes rose nearly 21 percent in June over the previous month to a seasonally-adjusted annual rate of 4.7 million. This data, which comes from the National Association of Realtors, recapitulates the strong desire for property on the part of prospective and existing homeowners alike.
Before news of the coronavirus began to spread across the US, the country was already facing a massive shortage of housing. Half of the users on Redfin, for example, faced competition when making an offer on a property in May. This is up 44 percent from April, demonstrating not only confidence in low mortgage rates, but the desire to move as the economy continues to open.
It is no secret that the coronavirus has more intensely impacted urban areas of the country. Cities like New York City, Seattle, and Chicago that have seen heavily-concentrated case counts – paired with widespread concern about the transmissibility of sickness in confined living quarters – has caused a short-term preference for suburban living over urban dwellings.
Although it is unclear, as of now, how long this trend will last, this suburban migration is intensifying competition in the housing market. This tendency is also partially fueled by record low interest rates; buyers are moving COVID-related concerns to the side and taking advantage of an otherwise negative situation.
When comparing the coronavirus pandemic to previous crises – the housing crisis of 2008, for example – government assistance in the form of stimulus and rescue packages has more aggressively assisted US consumers. In an interview with Originate Report magazine, Roc360 Chief Credit Officer Eric Abramovich explained the important distinction of COVID-19 government assistance.
Eric said the amount of stimulus coming from policymakers has been ‘outstanding’ when comparing the ‘institutional response’ of the 2008 crash to the current crisis. He went on to say that more capital is flowing into the hands of ‘Main Street, not Wall Street.’ What we are seeing in the stock market today is a direct result of government stimulus, which is also potentially highly inflationary and in turn, will manifest in higher housing prices.
These are only some of the reasons that our team remains bullish on the housing market throughout the pandemic. Our parent company, Roc360, is known in the real estate world as the firm of choice for investors of every stripe. We arm you with the right set of tools to make sure that every deal goes smoothly. If you are interested in what Haus Lending’s platform can do for you, get in touch with us today!
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