We’re certainly in the dog days of summer here in North County San Diego. But that’s not why the housing market is so hot right now. Even though we’re in the middle of an economic recession caused by a global pandemic, the real estate market remains as strong as ever. Median home prices have increased and eager buyers are snapping up homes faster than they were last year. Bidding wars have become commonplace. So just what is driving this hot market? Let’s dive into the details.
There aren’t as many homes for sale
One of the reasons that the housing market is so bullish at the moment is because there is a shortage of inventory. Recent reports from the National Association of Realtors (NAR) indicate that there are one-third fewer homes on the market now than there was a year ago. And a year ago, inventory was already low. Because of the pandemic, some sellers have either pulled their listings or they’ve been hesitant to list at all. This is understandable given the uncertainty about the economy and the fear of having many people coming into your home when we’re all worried about the coronavirus. In addition to the lack of existing homes on the market, there are also fewer new homes being constructed. The lockdown forced the suspension of many new building projects. Because of this shortage of inventory, home prices have been driven up.
Interest rates have hit all-time lows
Another reason that the housing market is hot right now is that interest rates on home loans have hit historic lows. This is excellent news for homebuyers, especially those who are on a tight budget or want to save money. The average rate for a home loan is hovering at around three percent. This is the lowest the rate has ever been since Freddie Mac began tracking mortgage interest rates in 1971. And if you’re a buyer with an excellent credit score, you might even qualify for a rate of slightly less than three percent. These low rates can save buyers thousands of dollars over the life of the loan. They can also reduce monthly mortgage payments by $100 or more. Even though home prices are on the rise, low mortgage rates are offsetting the higher costs.
Buyers are flooding the market
Finally, one of the most important reasons that the housing market is doing so well is because buyers are flooding the market. We all now know how important our homes are after spending months in lockdown. Buyers who put off their home searches earlier in the year because of the pandemic are now back in the market. They join buyers who discovered during the lockdown that they’d really like to have more space and own their own home. This includes city dwellers who are ready to flee hard-hit urban areas. Workers who didn’t lose their jobs during the pandemic have been able to boost their savings, making it easier to afford a down payment. And virtual closings have made it easier than ever to finalize the purchase of a new home from the comfort of your couch.
Contact the Clark & Gilman Team now!
Are you ready to jump into the market and buy or sell a North County San Diego home? Then contact the Cristine Clark & Jamie Gilman Team at 760-758-1211 or [email protected]. We’re always available to answer any questions you have about the real estate process!