A worldwide pandemic and an economic recession have had a tremendous effect on the nation. The uncertainty brought about by both has made predicting consumer behavior nearly impossible. For that reason, forecasting home prices has become extremely difficult.
Normally, there’s a simple formula to determine the future price of any item: calculate the supply of that item in ratio to the demand for that item. In housing right now, demand far exceeds supply. Mortgage applications to buy a home just rose to the highest level in 11 years while inventory of homes for sale is at (or near) an all-time low. That would usually indicate strong appreciation for home values as we move throughout the year.
Some experts, however, are not convinced the current rush of purchasers is sustainable. Ralph McLaughlin, Chief Economist at Haus, explained in their June 2020 Hausing Market Forecast why there is concern:
“The upswing that we’ll see this summer is a result of pent-up demand from homebuyers and supply-in-progress from homebuilders that has simply been pushed off a few months. However, after this pent-up demand goes away, the true economic scarring due to the pandemic will begin to affect the housing market as the tide of pent-up demand goes out.”
The virus and other challenges currently impacting the industry have created a wide range of thoughts regarding the future of home prices. Here’s a list of analysts and their projections, from the lowest depreciation to the highest appreciation:
We can garner two important points from this list:
Whether you’re thinking of buying a home or selling your house, know that home prices will not change dramatically this year, even with all of the uncertainty we’ve faced in 2020. Connect with one of our Sales Agents today to help with your Real Estate Transaction.
Green Team Realty’s June 2020 Housing Market Update addresses the economic impact of COVID-19 on the real estate market. However, we know that many individuals, families, and businesses have been personally impacted by the pandemic. To all those diagnosed with COVID-19, or who have loved ones with the virus, we wish you a fast, full recovery. To all who have lost someone to COVID-19, our thoughts and prayers are with you. And, while there are a lot of positives to report this month, we realize that many are suffering financial hardships, stress, and anxiety. These are very difficult times, but to quote Geoff Green,
Together we will persevere!
Geoff Green, President of Green Team Realty, welcomed everyone to the June 2020 Housing Market Update. The webinar was held on Tuesday, June 16 at 2 p.m. Geoff shares both national and local stats. Furthermore, he checks in with those who have “boots on the ground.” Sales Associates from Green Team New York Realty and Green Team New Jersey Realty share what’s happening in their respective states and communities. There are different regulations for the real estate industry in New York and New Jersey. Thus, there are differing impacts on what is happening in each state. In addition, our guest panelist shares information on the current mortgage market.
If you missed the webinar or would like to view it again, it’s available here:
The June 2020 Housing Market Update panel shared their observations, experiences, and expertise in this Covid-19 market. Keren Gonen and Pam Zachowski with Green Team New Jersey Realty talked about Vernon and the Sussex County NJ market. Carol Buchanan, with Green Team New York Realty, discussed Warwick and the Orange County NY market. Laura Moritz, Director of Sales, Northeast Region at Classic Mortgage LLC shared her experiences with financing and refinancing in a Covid-19 market. Watch the above video to hear what the experts had to say.
To see where we were last month, click here for the May 2020 Housing Market Update.
According to CNBC,
The May gain was by far the biggest one-month jobs surge in US history since 1939.
Over 75% of job losses were temporary layoffs or furloughs. The Federal Reserve Bank’s May report indicated there were news reports of large-scale hiring at companies like Amazon, Walmart, CVS Healthcare, Domino’s Pizza, etc., due to increased demand.
The Wall Street Journal reported:
Employers added 2.5 million jobs, blowing Wall Street expectations out of the water. Economists had forecast a loss of 8.3 million jobs.
According to Ivy Zelman, CEO of Zelman & Associates,
Housing will fare better than expected during this severe downturn.
Home prices are expected to continue to appreciate through 2022, according to several respected industry experts.
According to Diana Olick of CNBC,
Mortgage demand from home buyers shows unexpectedy strong and quick recovery… The quick recovery has surprised most forecasters.
Pending sales and new listings are up from the previous month, according to Zillow’s June report. People are becoming more confident in putting their homes on the market than they were in the early days of the pandemic. Foot traffic was practically non-existent.
The percentage of distressed property sales is at a very low number. The projection is that it will continue to decrease, from 4% to 3%. What lead the last downturn in 2008 was that there were so many distressed properties. Another interesting fact is that most American’s choose real estate as the best long-term investment, over stocks, savings accounts, and gold. This is another sign that confidence in real estate is high.
Freddie Mac’s projections through 2021 indicate that rates will remain low. The availability of money drives pricing. Despite all the turbulence we’ve been experiencing, things are looking good in the real estate market.
On the national level, there was a big drop off in units sold in April, compared to the last four years. (National stats lag 30 days behind. We’ll have May stats in the July Housing Market Update). Geoff fully expects the numbers to rise in June, July, and August, perhaps even surpassing previous years’ numbers. Home prices continue to increase, despite the decrease in traffic, a result of supply and demand. There are simply not enough homes available for sale for all the people who want to buy them. Months of inventory is showing an uptick, though we’re still far below having the 6 months of inventory that would indicate a normal market. We are in a seller’s market, with lots of bidding wars and lots of homes selling above asking price.
In Orange County, New York, we have a bounce-back on units sold from April to May. The average sales price is staying level, but at a high level compared to previous years. Supply and demand should keep sales price high. In Sussex County, New Jersey, units sold have been on an upward trend and never really came down. Average price is still up over the past four years.
To reach any of the June 2020 Housing Market Update panelists,
Every year, Gallup conducts a survey of Americans to determine their choice for the best long-term investment. Respondents are asked to select real estate, stocks/mutual funds, gold, savings accounts/CDs, or bonds.
For the seventh year in a row, real estate has come out on top as the best long-term investment. Gallup explained:
“Real estate remains the most favored investment to Americans, as has been the case since 2013, when the housing market was on the rebound. More than a third of Americans have named real estate as the top investment since 2016.”
This year’s results indicated 35% of Americans chose real estate, followed by stocks at 21%. The full results covering the last decade are shown in the chart below:
The belief of the American people in the stability of housing as a long-term investment remains strong, even through the many challenges our economy faces today. In one of our previous articles, we talked about the number one benefit of homeownership. If you’re looking to buy a home, check out the local inventory here.
![Interest Rates Hover Near Historic All-Time Lows [INFOGRAPHIC] | MyKCM](https://files.mykcm.com/2020/05/21093649/20200522-MEM-1046x837.png)
With more U.S. states reopening for business this summer, and as people start to return to work, we can expect the economy to begin improving. Most expert forecasts indicate this economic recovery will start to happen in the second half of this year. As we get back to work and the financial landscape of the country begins to turn around, many experts also agree that real estate has the potential to lead the way in the recovery process.
According to Ivy Zelman of Zelman & Associates:
“Housing will fare better than expected during this severe downturn.”
In addition, CNBC notes:
“Mortgage demand from home buyers shows unexpectedly strong and quick recovery…The quick recovery has surprised most forecasters.”
Robert Dietz, Chief Economist and Senior Vice President for Economics and Housing Policy of the National Association of Home Builders (NAHB) says:
“Overall, the data lend evidence to the NAHB forecast that housing will be a leading sector in an eventual economic recovery.”
One of the big reasons why housing has the potential to be such a driving force is the significant impact it has on the local economy. This impact is particularly strong when a newly constructed home is built and sold. According to a recent study by the National Association of Realtors (NAR), the average new home sale has a total economic impact of $88,416. As outlined in the graphic below, this is a combination of income generated from real estate industries, expenditures, and new home construction.
With so many unknowns today, especially in the wake of a worldwide pandemic, one known factor is the bright spark the housing market can play in local and national recovery. Buying and selling a home goes well beyond personal growth and satisfaction – it supports our economy as a whole.
According to experts, the economy will begin to recover in the second half of this year. With real estate as a driver, that recovery may start sooner than we think. If you’re thinking of buying or selling your home you’ll want an expert guide, our Sales Agents are ready to help lead the way.
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The Green Team is proud to announce that Sol Perry has decided to join our Warwick, NY office!
Sol has been a resident of Middletown, NY for almost 20 years and has seen the amazing growth in Orange County. Sol decided to get into Real Estate because he has helped many of his friends and family members move to the area and really enjoyed the work. In his spare time, he likes to D.J. and do home improvement projects.
Please join us in Welcoming Sol to Green Team New York Realty!
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The travel industry is one of the major sectors that’s been hit extremely hard by the COVID-19 pandemic. Today, it’s hard to know how long it will take for summer travelers to be back in action and for the industry to fully recover. Homeowners who rent their secondary properties on their own or through programs like Airbnb, which has over 660,000 listings in the U.S. alone, have been impacted in this challenging time. Some of these homeowners are considering selling their vacation homes, and understandably so.
A recent CNN article indicated:
“With global travel screeching to a halt during the pandemic, a number of Airbnb hosts are planning to sell their properties…These desperate moves come as hosts face the possibility of losing thousands of dollars a month in canceled bookings while bills, maintenance costs, and mortgage payments pile up.”
If you’re one of the property owners in this position, you too may be feeling the pain of decreased travel, especially as we prepare for the typical busy summer vacation season. A recent survey notes that 48% of Americans have already canceled summer travel plans due to the current health crisis. In addition, 36% indicated they don’t have vacation plans, and only 16% said they did not cancel their summer travel.
The same survey also asked, “How long will you wait before traveling again?” Not surprisingly, only 29% of respondents are planning to travel within the next 6 months. That means 71% are putting their plans on hold for at least 6 months, or are still unsure about future travel. That can continue to add to the significant income loss that many property renters felt this spring.
If you’re considering selling your rental property, know that there are two key factors indicating that selling your vacation home now may be your best move as a homeowner.
The inventory of overall homes for sale is well below the demand from potential buyers, so many eyes may be searching for a home like yours. According to the National Association of Realtors (NAR), total housing inventory, meaning homes available to purchase, is down 19.7% from one year ago (see graph below):
Inventory across the country continues to be a challenge, with only a 4.1-month supply of listings available at the current sales pace. For a balanced market, where there are enough homes available for interested buyers to purchase, that number would need to bump up to a 6-month supply. This means we don’t have enough inventory for the number of buyers looking for homes, so selling in this scenario is ideal. Buyers are looking now, and some vacation homes make a great primary residence or second home for those eager to escape from more populated urban areas.
The lack of inventory is also keeping homes from depreciating in value. Today, prices are holding strong and experts forecast home price appreciation to continue throughout this year. Selling your home while prices are holding steady is a sound business move. You’ll likely have equity you’ve earned working for you as well. If your home has been vacant for the past few months, the forced savings you have built in your equity may help balance out possible rental income loss due to the slowdown in the travel industry.
We don’t know exactly when heightened summer travel will return or what it will look like when it does. If you’re considering selling your vacation home, connect with one of our Sales Agents today to determine your options in the current market.
Are NYC residents moving to the suburbs? Statistics show how Covid-19 has devastated New York City. The number of people with COVID-19 and the number of deaths is staggering. Social distancing is difficult. There is no doubt that crowded streets, elevators, and often apartments are not conducive to sheltering-in-place. So, are people really leaving NYC for the suburbs?
According to both local and national news sources, the answer is a resounding “YES!” The headlines tell the story.
USA Today‘s headline screams, “Get me out of here! Americans flee crowded cities amid Covid-19, consider permanent moves.” According to that article, nearly one-third of Americans are considering moving to less densely populated areas because of Covid-19. On May 8 the New York Times described this phenomenon in “Coronavirus Escape: To the Suburbs.” Then, on May 16 they published “Where New Yorkers Moved to Escape Coronavirus.” According to CNBC, Wealthy New Yorkers flee Manhattan for suburbs and beyond.
Locally, radio station 101.5 WPDH posted two blogs on this subject. The first, “NYC Residents Expected to Move to Hudson Valley in Droves.” And “Sellers market driving Hudson Valley Home Prices Way Up.” Additionally, Straus News just published the following story in all its local papers for Orange County NY, and Sussex County NJ: “Pandemic-driven house frenzy hits local towns.”
Current real estate market conditions and economic trends were major points of discussion during Green Team Realty’s monthly Housing Market Update. We asked several sales associates if they are seeing NYC residents moving to the suburbs as a result of COVID-19.
I have seen a rise of new buyers coming from all 5 boroughs of the city. Most of my clients want municipals verses septic, well or oil tanks, which has opened up many areas to view in Orange County. The pandemic has definitely pushed them to head north quicker than they might have, otherwise.
I am seeing an influx of highly qualified tenants as well as an above-average amount of new buyers ready to move quicker than before. We are seeing many more cash buyers, many more full-price offers with less negotiation from a smart buyer. Experienced buyers to the area are more willing to do some elbow grease in order not to hiccup on the deal. Otherwise, they risk the seller moving onto the backup offer. Buyers and people, in general, are serious about the betterment of their surroundings. And, with what we are currently going through, they are now more apt to pay for it. We are in a seller’s market and here in Warwick NY and Orange County on a whole, there is an exaggerated upswing of interest in our beautiful Hudson Valley.
Interest is trending with buyers looking for a home that meets their needs both for lifestyle and working from home. They like the idea of self-sufficient living. Being just 60 miles from NYC makes the lower Hudson Valley, with its pricepoint, very attractive for primary and secondary homes. Everyone is coming to a realization that home has to meet both work and leisure needs. Also desired are adaptable living spaces. Living through this pandemic has redefined the concept of home for many people. Outdoor space has become a luxury, particularly for City dwellers. However, it’s not just City dwellers who are redefining what “home” means. There are local buyers who are also looking for that change in lifestyle, space and function.
I think that many buyers are coming to the Sussex area because we have had much fewer cases of COVID-19 up here. Most of my clients are buying second homes.
I am seeing a LOT of NYC buyers. They are CASH mostly and looking to run away. Some are buying a second home, but plenty are moving in this direction to get away from the City completely and realizing the advantages of living in “The Country.” Those buyers have a much larger budget than our “usual” buyers and are looking for updated houses mostly. They are ready, willing, able and QUALIFIED buyers. They are all mesmerized by our charm here in Sussex county.
After months of sheltering in place, many people are reexamining their concept of the ideal home. This pandemic has shown us that we can’t take for granted life as usual. New York City has undergone a drastic transformation. That ideal City life is on pause. Broadway shows, restaurants, boutiques, department stores, museums, vibrant nightlife, closed, Families living in cramped apartments, worried about catching the virus, long for privacy, more room, areas to work, and space for the kids. Furthermore, they’re looking for outdoor living space. And approximately 60 miles away is the beautiful countryside of Orange and Sussex Counties.
NYC residents are looking for homes that provide lots of room for their family’s needs, including work from home space. Covid-19 has shown us the possibilities that exist in telecommuting. People and businesses are realizing that it may not be necessary for people to go to the office every day. As noted above, there are also people looking for second homes, so that they have someplace to “escape” to, should another shelter-in-place be required. Even in a seller’s market, they know they can get more house for their money here. Finally, there are unique hamlets, villages, and towns that offer lifestyles and qualities that people have decided are just what they need in this day and age.
One of the biggest questions we all seem to be asking these days is: When are we going to start to see an economic recovery? As the country begins to slowly reopen, moving forward in strategic phases, business activity will help bring our nation back to life. Many economists indicate a recovery should begin to happen in the second half of this year. Here’s a look at what some of the experts have to say.
Jerome Powell, Federal Reserve Chairman
“I think there’s a good chance that there’ll be positive growth in the third quarter. And I think it’s a reasonable expectation that there’ll be growth in the second half of the year…
So, in the long run, I would say the U.S. economy will recover. We’ll get back to the place we were in February; we’ll get to an even better place than that. I’m highly confident of that. And it won’t take that long to get there.”
Nonpartisan Analysis for the U.S Congress
“The economy is expected to begin recovering during the second half of 2020 as concerns about the pandemic diminish and as state and local governments ease stay-at-home orders, bans on public gatherings, and other measures. The labor market is projected to materially improve after the third quarter; hiring will rebound and job losses will drop significantly as the degree of social distancing diminishes.”
Neel Kashkari, President, Minneapolis Federal Reserve Bank
“I think we need to prepare for a more gradual recovery while we hope for that quicker rebound.”
We’re certainly not out of the woods yet, but clearly many experts anticipate we’ll see a recovery starting this year. It may be a bumpy ride for the next few months, but most agree that a turnaround will begin sooner rather than later.
During the planned shutdown, as the economic slowdown pressed pause on the nation, many potential buyers and sellers put their real estate plans on hold. That time coincided with the traditionally busy spring real estate season. As we look ahead at this economic recovery and we begin to emerge back into our communities over the coming weeks and months, perhaps it’s time to think about putting your real estate plans back into play.
The experts note a turnaround is on the horizon, starting as early as later this year. If you paused your 2020 real estate plans, connect with your Sales Agent today to determine how you can re-engage in the process as the country reopens and the economy begins a much-anticipated rebound.
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