Life in the time of Covid: Oregon Real Estate Market’s Response
In real estate, as with just about everything else, 2020 was an interesting year. Investors and both residential buyers and sellers have watched the market with concern. Surprisingly, the pandemic hasn’t had the effect on real estate that many experts expected. Instead of homeowners hunkering down, they’ve been extremely active as they’ve searched for new homes. Home prices were more than stable — they skyrocketed as pent-up demand aligned with low mortgage interest rates. Let’s examine the status of the real estate market and predict what we may see this year:
Changing homeowner needs
When the pandemic began and many states imposed stay-at-home rules, no one was sure how the market would be affected. However, the constraints of pandemic life and the ability to work remotely have created a demand for larger houses, bigger yards, and secluded country properties — a change from previous trends that favored smaller homes in compact urban neighborhoods. Families are spending more time at home and many previously normal activities (like going to restaurants, socializing with friends, and working out) are drastically different. Many of us need more space in general and, specifically, for specialized activities like exercising, working, and learning. Families have been fleeing urban areas for the suburbs or exurbs to find more space or alternatively, seeking urban properties that have vital elements like versatile layouts, ADUs, or great yards.
In September 2020:
from the National Association of Realtors
- Home sales were up over 9% from the prior month and up 21% from 2019
- Over 70% of homes on the market sold within one month
- The median price of an existing home increased by 15% in one year
Low mortgage rates
Mortgage rates, which have been continually low and even fallen to record lows, are only driving the housing rush. According to Freddie Mac, the 30-year fixed-rate mortgage level of 2.71% is the lowest it’s been in almost 50 years. These low rates are fueling homebuyers’ desire to purchase but the lack of inventory has limited the growth of home sales. The Federal Reserve has promised to keep interest rates close to zero, so it’s fairly safe to assume these low mortgage rates will persist for a while. Unless more houses go on the market, however, homeowners will be hard pressed to take advantage of these low rates.
So what will 2021 look like? Some experts believe the housing market will remain competitive and feature a busy spring season. As a vaccine becomes more available to more Americans, job growth will increase while mortgage rates will remain attractive. What else are we likely to see?
- Rural and exurban areas will continue to be popular as many workers won’t be commuting to an office. Homeowners are looking for more space in the home, larger yards, and more space between neighbors. Ready access to outdoor activities is also attractive since this type of recreation and exercise is considered fairly safe.
- Homeowners will still be looking for larger homes with segmented or detached space for an office and areas for remote learning or working out. Despite being eager to get back to our old way of life, homeowners may be working and schooling children for several months to come.
- With many Americans now working remotely on a permanent basis, we’ll start to see increased migration to destinations that were once considered tourist towns. Without being tied to offices, workers can live anywhere they want, as long as there’s an Internet connection.
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Categories: Real Estate News & Trends