All You Need to Know About The Record Year For Metro Home Sales in 2020
As other parts of the U.S economy decried the adverse effects of COVID – 19, the real estate sector was surprisingly booming in 2020. The thriving real estate sector was especially evident in the residential subsector, with homes for sale recording a hike in prices and sales. The year 2020 surprised realtors, mostly because the industry expected a considerable blow at the pandemic’s onset.
Of all regions in the U.S, the metro areas recorded the highest number of homes sold between March 2020 and December of the same year. Over 88% of metro areas reported growth in the prices of homes for sale, while the number of closed house sales grew by 7.7% compared to 2019.
Looking at the statistics, you must wonder, “Why is the demand for homes for sale so high when everything else is crumbling?”
Why Was There A Sudden High Demand For Homes For Sale In 2020?
Here are some of the possible factors you can associate with the growth of the demand for homes for sale in 2020:
People Spent More Time At Home Than In Any Other Place In 2020
Americans living in metro areas of the country felt the harshest effects of the pandemic. People’s workplaces moved from the office to their homes, and their children, who would otherwise be in school, were forced to stay at home. The government’s lockdown directive ensured that people only moved out of their houses to get essential items from the stores and back.
Families had to spend the whole day (and night) in the same space. You saw Parents who had previously spent most of their time traveling for business, sitting at home with no offices or holidays to which to go.
The reality hit home, quite literally.
Parents started to realize just how small their homes were. Or dull. Or they lacked facilities for their children to play in. And what did they do? They began thinking of ways to get better spaces, and eventually, the search for homes for sale started.
The rush for homes for sale was so high that by December 2020, the available number of homes for sale in the entire country was just 1.28 million, which is the lowest number witnessed since 1982.
The Economy Slowed Down To Give People Chance For Retrospection
People living in the American Metro generally are busy people. If you live in any of the metro areas, you must have met people too busy to have time for their families or even notice a “Homes for Sale” advert in the newspapers. You had people whose lives were dictated by an insatiable search for business contracts, promotions at work, money to go for vacations and holidays, meetings with investors. You name it. People were always on the move.
Then the pandemic struck, and there was no work to go to or business contracts to chase. And people had enough time on their hands to rest. They finally had the time to evaluate their choices. When they looked around during the lockdown, they could not see their business partners, workmates, or bosses. All they saw was their families.
It must have dawned on them that all they had left were their families after all is gone. They realized just how important a comfortable home is to their families, which pushed them to start looking for better houses for sale.
The Low Lending Rates Had A Great Impact On The Demand For Houses For Sale
Freddie Mac mortgage markets surveys reported a median rate of less than 3% across most lenders for most of the year 2020. Consequently, when the mortgage rates went down, the cost of getting financial institutions to pay for homes for sale went down. People, therefore, took advantage of the low lending rates to buy homes in 2020.
People Had Money They Didn’t Know What To Do With
You, of course, experienced the restrictions that came with the lockdown. People could not travel, and the available entertainment options were mostly in the yard – which cost very little. Additionally, people did not see the need to shop for new clothes, cars, and other items to use outside their homes. Also, they used a fraction of their fuel budget, seeing that they did not need to drive to work and other places.
Therefore, you would be right to deduce that people diverted their previous entertainment, travel, and shopping budgets to help them get the down payment for the new homes for sale.
What Does the Future Hold for Homes For Sale?
Experts predict continued growth for both house sales and the prices of homes for sale. Home sales will grow by over 7%, and the costs of homes will rise by 5.6%. The demand for homes for sale will push the mortgage rates up, although realtors believe that this rise will be gradual and will have a minimal effect on the homes for sale.
Realtors also predict that the rising home prices will significantly impact first-time homeowners looking for homes for sale. Lack of home equity will negatively impact as they try to afford the required down payment for new homes.
About Steve Lehmeyer & Transition Realty
Transition Realty owner Steve Lehmeyer specializes in helping people manage real estate transactions in the Minneapolis/St. Paul area. His experience in the Minnesota real estate market spans 20 years. Steve and his team work with clients to buy & sell single-family homes, townhouses, condos, lake homes, and investment property. Download a free home search app for your smartphone or search the MLS at TransitionRealty.com.