Friday, September 25, 2020 / by Vanessa Saunders
By Vanessa Saunders, MBA, MIMC , Broker Owner, Global Property Systems Real Estate.
We’ve learned a few new words since the coronavirus struck last March. “Pandemic.“ “Covid -19.” “Social Distancing.” All these and more were not part of the real estate lexicon until the viral parasite shut the world down.
This fall, there’s another new term, one that offers hope in a crazy housing market. That phrase is “Extended Spring Cycle.” It means the real estate market experts using it think housing demand is going to continue strong into the fall. “Instead of experiencing their usual fall decline, home prices will at least hold at their current “record high levels” for the next quarter, according to Mike Simonsen, CEO of housing market analytics firm Altos Research.
There are multiple reasons that contribute to this, all happening at once to fuel the hot real estate market:
-Record-low mortgage interest rates.
Due to the pandemic, the Federal Reserve has kept interest rates low in an effort to shore up a faltering economy, and rates for 30-year fixed-rate mortgages have been hovering around 3 percent.
-The increased need for more spacious, multifunctional homes during the coronavirus pandemic.
Working from home and tele-commuting have driven the need for larger homes. Buyers discovered the ease of working from home and the joys of not commuting during the initial stages of the shut-down.
-Timelines no longer necessarily revolve around the start of the school year.
This has fueled homebuyer demand so much that fall is looking more like a new spring in the housing market this year.
-New buyers are unafraid of rising prices.
For the first time we’re seeing the new entrants into the market — first time homebuyers — not really being scared off by climbing prices. Real estate data firm CoreLogic saw home prices rise 5.5 percent year over year in July — the highest rate since 2018.
-Less travel over the holidays.
While there is usually a dip in mortgage volume around the holidays, whether there is one this year is up in the air, in part because people are less likely to travel extensively until there’s a vaccine, Fewer people are planning to travel over the holidays, giving buyers the opportunity to shop for homes instead of presents.
Additionally, companies with work-from-home employees may decide to extend that arrangement, allowing people to ditch their previous commutes and open up to an area that’s more where they want to live because it’s closer to relatives or a particular school.
Whatever the reason for an extended spring cycle, we’re hoping it extends itself from the late spring market through the fall, through the winter, and into the following spring, Now THAT’S what I’d call an Extended Cycle.