Key Highlights
- Zillow believes 2021 likely to be best year for home sales since 2006
- Homebuyers throughout California’s largest cities betting on real estate
Nationally in Q3 2020, Los Angeles, San Jose, San Diego, Sacramento and San Francisco saw the biggest leaps of new mortgages, according to ATTOM Data Solutions. Also in Q3, there was a record increase in the number of new residential purchase mortgage originations.
Lenders okay-ed some 1.05M new home purchase mortgages, an increase of +25% from Q3 2019, according to ATTOM. New home loans represented some 34.5% of total mortgage activity.
Todd Teta, ATTOM’s chief product officer, said, “The housing market is still operating as if the recession brought on by the pandemic didn’t exist. Buyers and owners, lured by low mortgage rates, kept lining up for loans at levels not seen in more than a decade.”
Not only did home-purchase lending grow faster on a quarterly basis more than the number of refinance loans for the first time in more than a year, the dollar amount of purchase loans jumped up +35% from Q2 2020 and +36% from Q3 2019, to $336.3B in Q3 2020 or 34.5% of all lending.
Renters and young buyers, some with growing fortunes from the tech boom, are entering the market. According to Jeff Tucker, senior economist at Zillow, said, “The simple fact is that millions of well-qualified Millennials are seriously shopping for houses, and they are competing for a shortfall of homes for sale.” Due to this marriage of low inventory and intense demand, month-over-moth and quarterly home-value growth is soaring to levels unseen since 2005.
According to Zillow, this marriage of intense demand and tight supply is causing for-sale signs and listings to disappear in areas such as:
- Los Angeles – -17.5% from last year
- San Diego – -33%
- Sacramento – 37.2%
- Riverside – nearly -50%
Meanwhile, Teta cautioned that other markets are not outperforming. ATTOM’s data indicates that Pittsburg, Upstate New York’s Rochester and Buffalo, Detroit and New York City have seen mortgage declines in Q3.
Also meanwhile, ATTOM indicated that California homeowners were building equity well above the national level standing at +6.6% in October 2020:
- San Jose – +13.4%
- San Francisco – +5%
- Los Angeles – +7.8%
- San Diego – +9.5%
- Sacramento – +8.8%
- Riverside – +8%
The median down payment on single-family homes and condos nationally in Q3 2020 was $20,775, up +48.9% from Q2 2020 and +68.6% in Q3 2019.
In California, Jason Oppenheim, star of Netflix’s “Selling Sunset” and head of his Oppenheim Group brokerage, said, “Let’s face it, the 1% are doing very well right now…houses are affordable right now and people want to get out of their cramped apartments.” Specific to Oppenheim’s clientele, he said, “Instagram, TikTok, You Tube, young people are killing it out here. I am selling a ton of $5M to $10M dollar homes to people on social media. People have zero apprehension about buying into this market. We’re probably going to see a few good years ahead of us.”
Zillow’s Tucker agrees. According to Bloomberg, Tucker indicated that he anticipates 2021 as being “the best year for home sales since 2006.”
Thanks to ATTOM Data Solutions, Zillow, and BloombergNews.
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