August 2020 Real Estate Market Update

91% of business and academic economists are agreeing that economic recovery depends on containing the pandemic
“A strong economic recovery depends on effective and sustained containment of COVID-19,”
-The Wall Street Journal

Let’s take a look at consumer spending as compared to January 1st. While the grocery business has grown, other businesses have fallen. You can see things starting to rebound. Apparel and general business is starting to head back, whereas transportation is not recovering as quickly. Going forward, we will see some businesses recover quicker than others.

We’re starting to see economic recovery happen.
“Indeed the worst ever GDP leading could be followed by the best ever growth in the third quarter.”
– Lisa Shallet, Chief Investment Officer, Morgan Stanely
As we look at general economic numbers, we should look forward to seeing some significant improvement going forward. So… what are we hearing about the housing market? You see realtor.com saying an “astonishing rebound”. “Shockingly strong” from HousingWire. ATTOM Data Solutions says, “pulled something of a high wire act in the second quarter”. And Zillow says, “stared the pandemic right in the eye and hasn’t blinked. It’s been nothing short of remarkable.”
“Despite the crippling and ongoing coronavirus pandemic, millions out of work, a recession, a national reckoning over systemic racism, and a highly contentious presidential election just around the corner (we’ve got to remember that), the residential real estate market is staging an astonishing rebound.”
– realtor.com
“Whether in terms of pending contract activity or our proprietary buyer demand ratings, the various measures of demand captured in this month’s survey can only be described as shockingly strong (another one of those quotes we used before), in spite of the resurgence of COVID-19 cases.”
– Ivy Zelman

This is the Housing Market Recovery Index. It combines demand, supply, price, and time on market to create the index. While we are recovering, the question still remains: What’s going to happen to prices?
“The pandemic has not stopped the consistent home price growth we have witnessed in recent years.”
– Quicken Loans

Seven out of these nine leading experts are calling for positive appreciation going in the next 12 months.
“Last month’s forecast of a 6.6% home price decline through May 2021 has been revised as projected unemployment rates through 2020 showed improvement. The recent rebound of home sales suggests the pandemic did not derail home buyers… We continue to be motivated by historically low mortgage rates. This coupled with the declining supply of homes for sale could shield home price growth from the impacts of the current economic uncertainty. As a result the latest forecast reports home prices will decline a moderate 1% between June ‘20 and June 2021.”
– CoreLogic
We can’t bring homes to market as fast as people are coming in and buying them.
“The summer home buying season is off to a roaring start. As buyers flooded into the market, the realtor.com monthly traffic hit an all-time high of 86 million unique users in the month of June 2020, breaking May’s record of 85 million unique users.”
– move.com
“Of American adults considering a future home purchase in the second quarter of 2020, about half (call it 49% there) are not simply planning it, they are actively engaged in the process to find a home. This is a significantly higher share than the comparable figure a year ago at 41%, which suggests that the COVID-19 crisis and its accompanying record low mortgage rates have converted some prospective buyers into active buyers.”
– National Association of Home Builders
Interest rates certainly as we look at forecasts, are forecasted and projected to remain low, but as the economy improves we know that those will start to edge up.
So… why are people moving? realtor.com surveyed people in April and again in July. In April, interior space, outdoor space, kitchen, and better technology were the top reasons. In July, 3 reasons were added to that list: desire to own and move from the city to the suburbs. The home ownership rate in this country has grown over the last quarter, but that desire to own is very important to people. As far as the want to move from the city to the suburbs, surveys are coming back with the fact that people don’t want to live in as a dense environment – maybe because of the fears of maybe being in a tightly congested area or contracting the coronavirus.
Two out of three of the buyers surveyed in this case said they are planning to buy a home that fits their needs for remote work. That may not mean that two out of three are going to be working from home, but it definitely means two out of three are saying I have that need.
“As states, cities, and counties around the country slowly reopen, we predict the great American move. For safety reasons, financial prospects, life change improvements, personal comfort, and employment. We expect a surge in household and business relocations over the next few months that will provide new strategic opportunities for the real estate market.”
– John Burns’ Consulting
“Home sellers nationwide realized a gain of $75,971 on a typical sale.”
– ATTOM Data Solutions
Let’s take a quick look at how we ended August 2020 in Tallahassee: