On Real Estate & More – August 2020

When the coronavirus first brought the country to a standstill, many people believed real estate would come to a halt and prices would drop. However, data released in May from the National Association of Realtors (NAR) shows that home prices increased in the first quarter of 2020 despite the ongoing coronavirus pandemic. The NAR’s quarterly report on home prices shows that the median single-family home price increased year over year in 96% of U.S. markets in the first quarter of 2020, versus 94% in the first quarter of 2019.

Further, home prices for the first quarter of 2020 sat at $274,600, an increase of 7.7% from the same period in 2019. Forty-six metros, particularly in Western and Southern markets, saw price jumps of double digits.

NAR chief economist Lawrence Yun noted: “The first quarter price jumps mostly reflect conditions prior to the coronavirus outbreak and show the strength of the housing demand prior to the pandemic. Even now, due to very limited listings, home prices are showing no sign of buckling.”

So why are home prices holding steady? Real estate is a lagging economic indicator, meaning a slowdown in home price growth will likely be prolonged over the next several quarters and years. And we’ve seen years of tight supply across most U.S. markets, which will help maintain prices. Couple low supply with low interest rates, and demand for housing is looking as though it will remain strong in the short term, keeping prices stable.

In Southern Oregon, the real estate market has remained strong throughout the coronavirus pandemic. The shutdown caused some homeowners to wait to list their homes, which has led to a reduction in inventory and more competition, and home prices have continued to slowly rise.

News reports of homeowners leaving the cities for more rural areas have also impacted Southern Oregon. After weeks of quarantine, the idea of a bigger house with a backyard and a slower lifestyle is more appealing now than ever for many people. And that option is more realistic for employees who have transitioned into working from home indefinitely. That trend has been reflected in the increasing number of rural property sales, particularly the upper end market which traditionally took a prolonged time to sell. Lately, agents have even been looking at expired or cancelled listings in the hope of finding a property for their out-of-area buyers and multiple offers are not uncommon.

A worldwide pandemic and an economic recession have had a tremendous effect on the nation. The uncertainty brought about by both has made predicting consumer behavior nearly impossible. For that reason, forecasting home prices has become extremely difficult. Whether you’re thinking of buying a home or selling your house, know that home prices will not change dramatically this year, even with all of the uncertainty we’ve faced in 2020.