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Surprise Record Boom in Home Sales

10/29/2020

2020 is a great time to buy or sell your home

After the California pandemic shutdown earlier this year, no one expected the level of home sales and the robust price levels that we are seeing today. So, if you have held back on a decision to make life changes that included selling your current home or buying a new one. Think again. The statistics are quite startling.


The California Association of Realtors (C.A.R.) issued their September report on October 19, 2020. They reported: “California housing market outperforms expectations, breaking record high median price for fourth straight month.”

For existing, single-family homes, sales (489,590) were up 21.2 percent in September over last year’s Sept 2019 sales and the median home price was $712,430 up 17.6 percent over last year’s Sept 2019 price.

Home buying in September, climbed to their highest level in more than a decade. Think about this – earlier in the year the COVID-19 crisis depressed the housing market virtually paralyzing it.

September saw the third straight month with sales over 400,000 in California since the crisis began and was the highest level since February 2009 (the last month before the housing crisis!).

What could explain the increase in home sales?

One factor would be the very low mortgage rates. Low mortgage rates have a dramatic impact on a buyer’s potential borrowing ability. It allows the buyer to spend more and pay less for the loan. The 30-year, fixed-mortgage interest rate averaged 2.89 percent in September according to Freddie Mac.


“As motivated buyers continue to take advantage of the lowest interest rates in history, home sales will be elevated in the next couple of months, and the housing market should remain a bright spot in a broader economy that continues to struggle,” said C.A.R. President Jeanne Radsick.

Another factor is that companies and their newly remote workers have come to the realization a remote work force may exist long after the pandemic subsides. Remote workers are then free to move away from company headquarters and perhaps seek lower priced areas for their new permanent homes.

Why are there price increases?

One reason is that the sales of higher-priced properties have recovered faster than the rest of the market. The higher-priced properties then would increase the overall calculated averages. The yearly price increase recorded for September was the highest since February 2014.


Another reason is the hesitancy of home owners to put their homes on the market, partly because of the uncertainly caused by COVID-19 and the belief that their properties would not sell in this market. Now the overall inventory of homes for sale is low. We all know what happens with supply and demand. If paper towels are not available, the prices go up because more people want the paper towels than are available. The same thing happens with houses.

With the low inventory, the number of days it takes to sell a house is now at the lowest level, 11 days, ever recorded.

Good time to Buy or Sell

As a result of the higher home prices, C.A.R.’s monthly Consumer Housing Sentiment Index reports says that 56% of consumers say it’s a good time to sell.


In addition because of the low interest rates, 28% of consumers say it’s a good time to buy which is up from 22% a year ago.

So, potential home buyers and sellers— make your decision to buy or sell according to your own wishes and needs.

For more detailed information, go to C.A.R.’s website.
https://www.car.org/aboutus/mediacenter/newsreleases


Print Date: 11/25/2020
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