Currently, our understanding of the real estate market’s performance revolves around the ongoing COVID-19 pandemic crisis and its comprehensive effect on the economy. Since the outbreak, the industry has witnessed fluctuating patterns reflecting various fundamental shifts and trends. Among these shifts, the trend of existing home sales catching up from prior historic lows is noticeable and worth exploring. Therefore, this piece aims to delve deeper into the subject, shedding light on the trendline and its inferences.
Over the course of the 2010s, the existing home sale market faced several challenges, compelling it to wrestle with historic lows. Following the global financial crisis in 2008, the market spent most of the subsequent decade clawing back to normalcy. Despite inventory recession limit buyers’ options and rising prices stirred affordability concerns, sales steadily escalated and looked promising until shattering health emergencies turned the tables upside down.
In early 2020, the COVID-19 pandemic hit the world, and it undeniably stunted the initial promising progression of the real estate market. The country’s economic conditions swayed due to nationwide lockdowns. It imposed severe restrictions with ramifications disrupting every business operation, including real estate. For a while, the industry appeared to halt as countless Americans lost their jobs or transitioned to remote work. The initial lockdowns led to a dip in demand, thereby causing a shrinkage in home sales.
Yet, the tides started turning as the pandemic went on, remarkably altering the real estate landscape. With home becoming the new office, a need for comfort and convenience within residential spaces manifested. It sparked a new buying spree, with homeowners seeking to ‘upsize’ their dwellings or shift to suburbs to enjoy more space and privacy in the new norm of working from home. Combined with record-low mortgage rates, the wave of demand led to the housing market’s heated activity, soaring up existing home sales numbers.
Now, let’s dig into the prevalent scenario of the existing home sales market in detail. According to the National Association of Realtors (NAR), the number of existing home sales has managed to rebound impressively despite past circumstances. The market has experienced a surge in activity during mid-2020, which has continually grown up until now. And these patterns offer a vivid image of the state of the existing home sales market.
In March 2020, when the effects of the pandemic began being felt, there was a substantial dip in the number of home sales. As per NAR, the sales fell by about 17.8% compared to the previous year’s figures. Nevertheless, it was only the initial impact. Since then, the numbers have seen a consistent climb. In July 2020, the home sales figure went up by an astounding 24.7 % as compared to June 2020 data, marking the most substantial month-over-month rise since the NAR started tracking the metric in 1968.
However, the picture wasn’t rosy throughout the sector. In the midst of these elevated numbers, the first-time home buyers’ representation shrunk, accounting for only 31% of the total sales in July 2020. While this trend might seem concerning, experts suggest it can be a consequence of the increasing home prices and limited entry-level supply, thereby making the property purchase journey tougher for first-time buyers.
Another enlightening aspect deals with the geographic disparities seen in the numbers. Areas such as Northeast and Midwest states have exhibited robust growth in the existing home sales. The northeastern region recorded an impressive 30.6% rise in sales compared to June, while the Midwest showed a 27.5% expansion. Housing sectors in the South and West also portrayed similar upward trends but at a moderate pace.
Correspondingly, home prices too mounted amid the flourishing sales figures. The NAR data states that the median price for all housing types in July was $304,100, marking a new high since 1968. This appreciation in home prices can be attributed to a combination of a limited existing home supply in the market and home sale demand.
Reflecting on these analysis trends, it appears that the existing home sales market has managed to rise from the historic lows, breathing life into the scenario. However, it’s critical to keep an eye on the continuously evolving market situation, as contrary events, or a sudden shift can swiftly reverse the progress. For instance, prolonged pandemic conditions, rising mortgage rates, or another economic downturn could pose new challenges to the housing market.
In conclusion, the real estate sector’s journey towards recovery from the historic lows appears to be on track as of now. Triggered by a mix of factors including remote working trends, changing home preference, and low mortgage rates, existing home sales have seen an unexpected turnaround from the earlier downfall. However, there’s a long way ahead, with obstacles lurking along the way. The key to triumph would be constant vigilance on economic conditions, thorough understanding of ongoing patterns and shifting trends, and appropriate strategic actions informed by these valuable insights.
While it’s impossible to predict the future of the property market with absolute certainty, the signs are pointing towards the likelihood of an era of steady growth and robust sales, providing more optimism than pessimism in the industry. Despite the challenges that lie ahead, the existing home sales market appears to be well-equipped to face them, given its stunning bounce back from the post-pandemic lows. The impressive resilience it has shown amid less than ideal circumstances is nothing short of inspiring, promising a brighter future ahead.
Now, as we wrap up, stakeholders in the real estate industry must ensure they stay abreast with these evolving market trends and adjust their strategies accordingly. After all, understanding these dynamics is fundamental to navigating the ever-changing landscape of existing home sales during such unprecedented times. This vigilance will not only help in identifying potential risks and opportunities but will also pave the path to progressive growth and sustainable recovery in the real estate sector.
