On April 14th, I penned a blog to help Angelenos better understand the state of the Los Angeles housing market. I come to you once again to address the current rumors and myths surrounding the real estate market. There continues to be low inventory in our city, and homeowners can and should take advantage of the current market. So let’s dive right in! Hopefully, I can clarify any misconceptions along the way.
It’s important to understand how the Coronavirus has affected the market. I’m referring to the current low low refinancing. The option to refinance has almost never been more attractive to homeowners than it is right now. The low refinancing rates are luring would-be sellers and persuading them to hold on to their property rather than put it on the market. Mortgage rates are at historic lows, with economists predicting a drop to 3% this year in Fannie Mae’s Housing Forecast report (mentioned here). They are predicting rates to drop to 2.9% in 2021, which would significantly raise home buying power. The reality of these low rates is that buyers can afford more, and many can buy earlier than previously imagined, which is why listings are receiving multiple offers time and time again.
The seasonally-adjusted annual rate of existing-home sales in April fell to 4.33 million — a 17.8% drop from March and 17.2% fall from the same time in 2019 (read more here). Homeowners are comfortable right now because of these lower payments, which means it is incumbent upon realtors everywhere to find them great buyers.
Now, is there significant fear right now for homeowners? Yes, absolutely. But fear is a very minor factor in the influence of current attitudes towards home selling. I am confident that the refinancing rates are having a much larger impact on the hearts and minds of homeowners today, than any virus.
Homeowners today are likely wary because of the current restrictions and protocol for showing a home. They may believe that buyers will be few and far between because of the hassle to see a home, but that could not be further from the truth!
Another important factor is supply lines for homebuilders, which have been disrupted significantly. One-third of home building material inputs come from China (according to the National Association of Home Builders), causing delays in home construction and further throttling already-low inventory.
I explain this to you so you can recognize the reasons for this dip in inventory. The lack of inventory makes this time ripe for sellers to sell. Until we begin to see some semblance of “normal” or “regular” life, we will continue to have remarkably low refinancing rates — and it’s up to us to combat that attractive option with willing, hungry buyers. Remember: we are smack dab in the middle of the hottest buying season — so whether we can present you with great options, make you comfortable in the home buying process, or show you a more luxurious home within your price range — call one of our agents to get started!