A Covid Update Since April 2020
Let’s start by talking about what happened. The US has experienced the longest economic expansion ever and then 10 years of progress was lost in a single month. While we are not back to fully recovered, the housing market has continued to do well. And in general, people who were doing better than average are doing well and people below average are doing worse.
What Happened in the Job Market
(Data from “Economic Outlook,” Nadia Evangelou, Capital Area Realtor Magazine, Jan/Feb 2021)
- 1 in 3 people did some telework at the height of the pandemic (compared to 1 in 20 before)
- 22M jobs were lost in the first few months
- 8 months later 50%+ have been recovered
- 70% recovered in Montgomery County
- Unemployment rate
- 6.9% nation
- 8.2% DC
- 7.5% Montgomery County
- 6.9% nation
What Happened in the Housing Market
(Data from “Economic Outlook,” Nadia Evangelou, Capital Area Realtor Magazine, Jan/Feb 2021)
- Home sales activity 14 year high
- 27% increase in home sales over last year
- 23% DC
- 30% Montgomery County
- Housing inventory decreasing, supply cannot meet demand
- 10% increase in prices DC
- 5% increase in prices in Montgomery County
Mortgages
Mortgage applications are up 20% from one year ago. Mortgage rates are at an all time low. This is the lowest mortgage rates can go, argues economist Dr. Lawrence Yun of NAR, because the bond market is starting to be effected. We should see rates around 3.1% this year.
Housing Prices
Housing price are going up. Those who don’t have jobs who need to sell are less likely to be foreclosures, more likely to be normal sales, because the house has appreciated. Housing is in an expansion phase.
Because of the increase in demand and the decrease in supply, we are unlikely to see prices coming down. they may level off.
Inventory
We need to build more homes because inventory is so low. New construction has been underproducing for 13 years. Building is now back on track. Dr. Lawrence Yun suggests it may take 2-3 years before true balanced market can be realized.
Covid and House Tours
According to Dr. Jessica Lautz, VP Demographics and Behavioral Insights for NAR, most buyers think Open Houses are safe as are private tours. Buyers are being more strategic though and looking at fewer homes in person and doing most of their shopping online.
Effect on the type of house people are looking for
There is a movement away from city centers toward smaller towns and suburbs. People are working from home and there is less need to commute. We are seeing more multi-generation homes – 11% before the pandemic and 15% now. These are not kids at home with their parents; they are aging parents. they are acting as babysitters for their children whose children are at home from school. This has led to an increase in the need for wider doorways for walkers and increased safety precautions in bathrooms and kitchens.
Other interesting market trends
We are seeing clearing of shelters in the country. The price for a dog up 150%. I know a lot of people think this is a great thing. Those of us in the rescue world are worried about the dogs being dumped when “life goes back to normal.”
There is a drop in marriage and divorce rates and a decrease in children under 18 in homes.
There has also been a drop in first time home buyers – 31% 2020. We would like to see this at 40%. Affordability and student loan debt are the biggest issues for first time homebuyers. There is about $1.5T student loan debt. Parental help decreased has decreased – 1/3 down to a 1/4 had gift funds from parents. This may be do to the parents’ financial situation because of covid.
(Data from Dr. Jessica Lautz, VP Demographics and Behavioral Insights, NAR)
