As we settle into the final months of 2020, we have more insight into the health of the U.S. housing market (and what to expect for those looking to buy or move). While it has sometimes felt like there’s been a continuous stream of dark or divisive news this year, the housing market has been a “shining star in the economic recovery.” Let’s break down a few important current trends.
If you’re buying a house
In the market? Many Americans have been (understandably) spurred on by historic low interest rates — but they’ve had to be ready for a hunt. Housing supply has continued to decline throughout 2020, meaning there are fewer homes to choose from than this time last year. Houses are also selling 12 days faster, on average.
In a reversal from the initial dip in March, when the pandemic was picking up, August sales of new single-family homes in the U.S. climbed nearly 5% from the previous month. And in the south, this number jumped to 13.4% — a 14-year high for sales of new single-family residences. Affordability has also been impacted by this undeniably seller’s market. Median existing house prices increased to a record of $310,600 nationally.
What’s happening nationally
While interest rates set by the Federal Reserve are not the same as mortgage interest rates, there’s a correlation. So importantly, the Fed is currently pledging to keep interest rates low, possibly for years to come. This means that mortgage interest rates will likely continue to stay low, as well. And as we move into the end of this year, loans in forbearance have declined nationally for 16 straight weeks.
Across the board, Americans seem to be searching for communities that are “warmer, safer, smaller, stabler,” with “lower taxes, less regulation, and fewer lockdowns.” When Zillow’s research group compiled the top 100 metros in the country for Forbes, using five key metrics, Austin came in first position. Other hot real estate markets included Columbus, OH; Salt Lake City, UT; Boise, ID; and Stamford, CT.
Before the pandemic hit, some of these tendencies were already starting to take hold — Texas, Florida and Arizona, for example, had the highest population growth last year.
Austin continues to recover, expand
Here at Sente HQ in Austin, population growth continues to be record-breaking and the housing market is as competitive as ever.
Austin’s jobs market has recovered to 76% of its pre-pandemic employment level. This year could also see a record set for the amount of jobs brought to the city through corporate relocations. So far this year, 28 relocating companies have announced over 9,000 new jobs. Additionally, the area is set to see significant relocation or expansion projects from Tesla, BAE Systems, and Circuit of the Americas.
The COVID-19 pandemic has accelerated trends that have been in the works since 2010. This includes: significant populations moving west and south, developing preferences for less density, seeing more growth in suburbs and smaller communities than primary cities, and purchasing preferences based more on lifestyle than commute. We should also note the average household income of current homebuyers is $93,000 — a far cry from lower ranges and the workers who have been most adversely impacted by the current economy.
We’re not in the business of predicting the future. Our current situation is that the housing market has limited inventory of homes for sale. The resulting competition pushes sale prices up. Americans are also anxious to get out of big cities and they have more flexibility to work remotely than ever before. This has further catalyzed a wave of demand in warm southern and western markets, and small communities near large cities. So far, real estate has been a significant part of the country’s economic recovery backbone.