Winter Won't Cool Down Red Hot Housing Market
The holiday season is here and the hot summer nights have been replaced by cold winds and thoughts of snow. For some, 2020 has flown by. For others, it has dragged on and seemed to last for others. For many, it has felt like both at different times throughout the year. Now matter how quickly the year passed for you, it is almost time to turn the calendar to 2021. This year has been memorable for many reasons, not all of them positive. However, one clear brightspot has been the surging real estate market. Home sales have defied expectations as people have been rushing to buy homes because of record low mortgage rates. If 2020 were a normal year, people would expect the housing market to cool down with the cool weather. However, 2020 isn’t a normal year and we expect home sales to stay red hot during the winter.
Why Home Sales Will Stay High In Winter
Traditional wisdom says that winter is the worst time to sell your home. This year is turning conventional wisdom on its head. There are a number of reasons why this winter is an outlier from the usual real estate trends.
Housing Demand Will Remain High
The increased surge in home sales has been mostly due to very low interest rates. Mortgage rates have been at historic lows which has given many different types of buyers an incentive to buy a home. First time home buyers, especially millennials, have seen this as the perfect opportunity to buy a home. Existing home buyers are taking advantage of low mortgage rates to sell their current home and buy a bigger home. Larger homes with more space are in demand because of the pandemic. Home buyers are looking for more outdoor recreation space and more rooms to accommodate working and schooling from home. Homeowners are also using low mortgage rates as an opportunity to buy second homes or vacation homes. All of these factors will remain in place as long as mortgage rates remain low.
While demand for homes is through the roof, the housing supply is very low. Currently, there is not enough inventory to meet the existing demand. The high demand and low supply have pushed housing prices higher in nearly every real estate market in the United States. This might make it the perfect time to sell your home if you have been thinking about it. Because of the increased demand you should find plenty of buyers and have a great chance of getting an amazing offer. On top of that, you could then take advantage of low mortgage rates when buying a new home. Due to the rising housing prices, homeowners have a lot more equity than they did at the beginning of the year. This increased equity can help you afford a larger home or be used for a down payment.
Home Buyers Are Worried Mortgage Rates Won’t Remain Low Forever
Typically, when housing prices increase dramatically, this can put a damper on home sales. This should not be the case this winter. First, even though home prices are increasing, it is offset by the low mortgage rates. Low interest rates means that home buyers are paying less in the long run over the life of their loan, even with the price increase. Second, recent positive news about potential vaccines has some thinking that mortgage rates might increase in 2021. If potential home buyers don’t think low rates will last forever, they are more likely to buy now rather than later. They want to lock in low mortgage rates now, while it is still possible. The desire to take advantage of the current market means this winter’s real estate market shouldn’t slow down.
Final Thoughts
Nothing about 2020 has been typical. So, there is no reason why we should expect the real estate market to act in the same manner it has in previous years. Today’s low interest rates mean that cyclical trends about home sales declining in the colder months are a thing of the past. This winter’s housing market should be red hot, no matter how cold it is outside. However, there is no telling what the future holds and there is no guarantee that mortgage rates will remain this low. If you have been considering buying a home or refinancing your loan to take advantage of today’s low rates, then you shouldn’t delay. Contact us now for a complimentary qualification review to see if you can get a loan for your new dream home.
