When 30 year fixed mortgage rates dropped into the 3’s in 2012 people went crazy, never had they the cost of money so low. Then in 2020 when they dropped into the 2’s, it created a boom.
Home values are at an all time high due to increased demand and a limited inventory. Sellers have the option to pick from multiple offers that are getting increasingly competitive. Real estate markets all over the country are feeling the effect of declining interest rates and the largest first time homebuyer generation we’ve ever seen.
Why is the market so competitive?
The short answer is supply and demand. There is a large demand for hones but a short supply. Interest rates have dropped and we are serving the largest first time home buyer generation since the baby boomers. On top of this the baby boomer generation is retiring. This collision of demand has created a unique market for both.
The Real Estate Life Cycle
Predictions for the Future
It is always difficult to predict the future of these things, I believe it is safe to say we will not see much improvement until the Coronavirus pandemic settles down. Once things start to resemble normal again I can imagine sellers being comfortable with selling their homes. But there will be long term effects we cannot predict yet, it is possible that this pandemic will evolve home buying into something more efficient. There is no doubt the world will conduct itself differently moving forward and how this affects real estate is to be seen.
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