As states went into quarantine at the beginning of the pandemic, the housing market came to a standstill. No one could have predicted what would happen in 2020. With people being shut away in their homes and houses for sale not being able to be shown, and the job market and economy in question, the real estate market took a hit in El Paso and the rest of America.
Continuing to be a Seller’s Market
The small number of homes available and the high demand has led to a clear seller’s market across America. El Paso is no exception. There has been a housing market boom due to the high amount of people in search of a new home. Homes are being bought quickly. They’re flying off the market faster than they have in the past. This is just one of the contributions that has led to such a competitive seller’s market in 2020 and what will lead to those trends maintaining throughout 2021.
While we all began to understand the seriousness of the pandemic, there was a lot of uncertainty. That uncertainty was held in regard to the future of the economy and the job market. This caused people to be quite hesitant when buying a home. They were right, and the economy and job market did end up suffering quite a bit as we braced ourselves against the pandemic. The biggest dip happened in March of 2020. People rarely left their homes unless they had to and people weren’t able to show their homes in person until more precautions would be put in place. In response, mortgage rates ended up falling to an all-time low.
Freddie Mac discovered in a survey that they ran that mortgage rates have been at record lows ever since the early part of the summer of 2020. In January of 2021, this hit another record-low at 2.65%. This is the lowest reported rate since they began recording this data in 1971.
So far, this has risen a total of 3.04% as of April 2021 and many expect these rates to continue making small increases as time goes on. People have, in turn, been looking to take advantage of the opportunity of having such a small mortgage rate.
A big part of what has caused such a competitive housing market for buyer’s is the high demand that has resulted from these low mortgages. Combine that with low supply and you have too many people trying to buy too little homes. High demand has led to houses selling quick. In fact, houses are coming off the market at record times. To make up for this, buyer’s have to put in their offer fast, and be quick about the entire process. In many places, El Paso included, homes will be listed and end up with half a dozen offers by the end of the week, many of which will be listing price or better.
In March 2021, Norada Real Estate Investment says that houses for sale were moving off the market 6 days less than they were this time last year, on average. We have found no sign that supply will be able to catch up with demand soon, which means that those that are on the market will continue to be bought up at record times.
Inventory of homes for sale as of March 2021 has fallen by 52% since last year, and there appears to be a low number of homes looking to enter the market. Due to the the spike in demand, which was a result of the lower mortgage rates, supply isn’t able to keep up with what people want.
This limited supply will be a big factor in homebuying negotiations. Specifically, it will give the seller a leg up on the buyer.
The economy took a pretty big hit during the Coronavirus pandemic. While some businesses thrived with the change to virtual life, many were hit hard and were forced to make cutbacks. These cutbacks took a toll on the entire economy. Now, the economy is beginning to strengthen.
As vaccines have rolled out and life has gotten closer to normal, the economy has trended upwards. The job market has opened up as a part of this. There have been 380,000 jobs created in February of 2021. Unemployment has fallen. The rate is now at about 6%, which is less than half of what is was in April of 2020. The better economy, combined with a stronger job market, is putting more people in a position to buy a home.
More Working from Home
Most industries weren’t home to much remote working before the pandemic. As that has become the normal for so many companies during the pandemic, many will be continuing to work from home post-pandemic. This rise of remote working has led to offices across the United States looking to rightsize their workplace. This is becoming common for those companies who are having workers completely remote or partially remote.
This trend means that many people have to worry about their commute significantly less or not at all. People in this position are able to look for homes in different cities and sometimes even different states.
A survey by Redfin in December of 2020 found that 67% of home buyers and sellers have either moved to a different city already or would be interested in moving to another city with the option of remote working.
A Rise in Median Home Prices
With all of these factors in mind, it’s understandable that median home prices have been on the rise. When supply can’t meet demand, price will go up. Research from Norada Real Estate Investments shows that this is true. They found that the median home price was $370,000 in Mach of 2021, which is 15.6% higher than March of 2020.
Don’t expect this to go down any time soon. The National Association of Realtors is predicting a rise in median home prices of 8% in 2021. With no end to the high demand and low supply in sight, it’s safe to assume that prices will only get higher.
This is a great time for those selling a home. In fact, this may be your best time to sell a home. Trends point to a continuation of a seller’s market all the way throughout 2021. Expect low supply and high demand to continue to work in your favor.
Looking to buy a home in the El Paso area? It may be tough. Do your research on how to navigate this type of real estate market by reading our blog on How to Take Advantage of a Seller’s Market.