Global Pandemic and Its Impact on Real Estate Market

Global Pandemic and Its Impact on Real Estate Market

Increased demand, low mortgage rates (declined from 4.5% to 2.8% just over the year) and a shortage of supply contributed to the rapid growth of prices on the Real Estate market. According to the monthly report of the portal, in the same period in 2020, housing prices increased by 15% and currently the median offer on the market is about $ 346,000 per house moreover mortgage rates have not risen above 3%. For the record, in December 2020, rates were even lower, about 2.65% — the lowest mortgage rate in the last 50 years.

In December 2020, the volume of supply on the market decreased compared to November by 16% (from 1.28 million houses and apartments to 1.07 million) and by 23% in annual terms (in December 2019, 1.39 million residential units) with the supply and demand ratio about 1.9. Specialists of the NAR (National Association of Realtors) noted that such situation never occurred in the entire history of observations.

Housing prices are rising not only in the large metropolitan areas of the East and West Coasts, but also in smaller cities in the heart of the country. For example, in Tennessee, housing prices rose by 10% according to the Federal Housing Finance Agency. From information provided by Attom Data Solutions, in the end of 2020, homes in more than half of the country's counties (55%) became less affordable for people with average earnings. Three years ago there were only 33% of such districts in the country and year ago — only 43%.

Economists believe that the rapid rise of housing prices will soon minimize the benefits of low mortgage rates. This situation will require potential buyers across the country to make even more efforts to accumulate a down payment, which will become a serious obstacle for people who want to buy their first property.

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