- Look to low mortgage rates, low inventory, pent-up demand and home prices
- Look to stable international markets
- Buyers must be ready to jump as competition is fierce given possibility of more lockdowns
- Sellers must be willing to price smart and negotiate
Housing markets during the late summer have been sizzling hot. July and August have been the new May with record prices and record sales. Will the market maintain its resilience going into the fall? Here are some things to look for.
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According to the Savills Prime Residential Cities report, the most stable markets internationally have included Berlin, Amsterdam and Paris reporting price growth of +3.1% +3.0% and +1.2% respectively. Savills attributes this stability to high demand and low inventory throughout the pandemic.
The Knight Frank Global Buyer Survey released in early August indicated that one in four people said they were more than likely to move within the coming year due to the pandemic. The United Kingdom, Spain and France were named as the most desired countries in which to purchase a home.
Both at home in the US and abroad, real estate experts say that resilience in housing markets will vary based upon local conditions pre- and post-COVID. According to James Harris of The Agency in Los Angeles, “Every deal we’re witnessing is circumstantial to COVID.”
In New York, for example, an oversupply of high-end units drove values down pre-COVID. Post-COVID in New York where the city took a major hit from the pandemic, values dropped further. To compare, Seoul saw soaring home values pre-COVID, a better containment of COVID once the pandemic hit and then an increase of +5.5% in home values post-COVID. Bottom line, whatever had been going on in housing markets pre-COVID was exacerbated and intensified post-COVID, according to the Savills report.
Beyond low mortgage rates, limited supply and motivated buyers, real estate experts point to additional factors for buyers and sellers to watch including:
- Momentum – In regions such as Australia and New Zealand that successfully contained the pandemic, pent-up demand is now being actualized.
- School re-openings – According to Lisa Chajet, a broker with Warburg Realty in New York, “If schools (banks and corporate offices) are not committed to reopening until January, I don’t think people are going to come rushing back (into the market on either side.)
- Knight Frank points to peoples’ comfort-ability with traveling. An uptick of +25% in global travel points to resilient housing markets.
Buyers and sellers are encouraged to…
- Keep an eye on the stock market, the subprime mortgage world and currency markets. When economic health appears shaky, people feel safer when their dollars are in brick and mortar, ie. real estate.
- Buyers must be ready to act fast by having their funds in order and must anticipate a competitive bidding process due to low inventory and high demand.
- Sellers need to be prepared to price smart.
- Sellers nee to be realistic. Turnkey homes with extra square footage on larger lots with swimming pools and generous office space will have greater appeal.
Thanks to MansionGlobal.