Given the extensive coverage, if you're not physically sick from the virus (stay healthy and strong), you might be mentally exhausted from hearing about COVID-19 (coronavirus). It's undeniable that the pandemic has significantly disrupted our economy and daily lives. However, there are indications that these impacts might be temporary. The housing market provides some promising evidence of this.

Housing is often considered a strong indicator of economic health. This is because the construction sector and spending on home-related supplies and services contribute significantly to the gross domestic product (GDP), averaging between 15% to 18%. GDP is the most widely recognized global measure of economic growth (or decline).

Why should we be optimistic about the housing market, and why might now be an opportune time to buy a home if you're ready? This article will explore the reasons behind our confidence in the housing sector and why you should share this confidence.

Purchase Applications Are Up

Amid the constant stream of negative economic headlines, the housing market tells a different story. Applications to purchase homes are currently 9% higher than they were a year ago on a seasonally adjusted basis. This is noteworthy because, a year ago, the economic situation was much more stable, yet today's consumer demand for housing is even stronger.

Several factors likely drive this trend. First, to stimulate consumer borrowing and spending, the Federal Reserve has implemented measures that have resulted in mortgage rates being at or near historical lows, according to Freddie Mac.

Another factor is the considerable amount of time we've recently spent at home. This extended period has led some people to feel cramped and seek larger homes to gain more personal space while adhering to social distancing. Conversely, others may realize they don't need as much space and consider downsizing.

In conclusion, despite the broader economic disruptions, the housing market shows resilience and potential growth, making it a favorable time for prospective buyers to consider entering the market.

People Are Returning to Work

Despite the gloomy headlines, there are signs of hope in the employment sector. While the unemployment numbers are high and we acknowledge the widespread job losses, there are indicators that we may be starting to turn a corner.

Unemployment Claims and Economic Rebound

Although initial claims for unemployment insurance continue to be high, there are some positive aspects to consider. First, many claims were delayed due to technological backlogs, not because of new layoffs. More importantly, the latest data shows a decline in continuing claims nationwide, suggesting that people are returning to work, either resuming their old jobs or finding new ones. This restoration of income could lead to renewed interest in the housing market from potential buyers.

Rising Prices of Existing Homes

The COVID-19 pandemic has impacted the sales of existing homes, which were down 17.2% in April and 17.8% over the year. However, home prices have been resilient, rising 2.17% in April and 7.4% over the year. This price increase is partly due to a 1.3% decrease in inventory, indicating that sellers believe any downturn will be temporary and that they can secure higher prices in the near future. Despite a slight increase in inventory, options remain limited, making it a good time for buyers to act quickly on desirable properties.

New Home Sales Show Promise

New home sales rose by 0.6% in April, rebounding slightly from a 13.67% drop in March. This indicates continued interest in new homes, and both new and existing home sales could see significant increases in the coming months. Purchase applications are also rising, supporting this trend. Additionally, the prices of new homes have been falling, down 6.49% since February and 8.58% since April last year. Builders are eager to sell inventory, making it a potentially advantageous time for buyers in the new construction market.

Optimism Among Real Estate Agents

The National Association of REALTORS® has been conducting weekly surveys to gauge the impact of the pandemic on the housing market. Despite local variations, 79% of agents surveyed believe transactions can proceed with proper precautions, such as social distancing, masks, and gloves. Interestingly, 68% of sellers had not lowered their prices by mid-May, and only a small percentage had reduced prices by significant amounts. This suggests that while deals are possible, buyers should not expect significant discounts.

Adapting to New Norms

Real estate transactions are adapting to the new normal, with measures like hand sanitizers, masks, and virtual tours becoming standard practice. Appraisers and home inspectors are also following strict safety protocols. If you're ready to purchase a new home, there are resources available to guide you through the process safely and effectively.

For those considering buying a new home, now may be an opportune time to explore your options. Feel free to start with HomeLoansByAli® for assistance with your home buying journey.