Dr. Yun, Chief Economist, reinforces that real estate will lead the recovery from the Covid-19 shutdown. Listen to his facts.
Home sales in the month of April declined by 18%. It is largest monthly decline since 2010 when the home buyer tax credit had expired.
In some states, it is very difficult to show homes, so there is no surprise that the home sales have declined significantly in April.
Market listings also have declined because many of the home sellers have either delisted during the corona virus outbreak or want to hold back and wait until the situation improves before listing.
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With fewer listings and fewer transactions the home prices rose to a record high.
They increased by 7% from last year with the report showing a strong price appreciation and it marks the third consecutive month of a better than 5% price appreciation.
We need to assure buyers that there is more supply coming on to the market because even with the tough unemployment situation, the unemployment rate is running close to 15%. It may even be a possible 20%, but we expect many of the lost jobs will return in the second half of the year.
For example, people that were laid off at dental offices or a daycare center most likely they will be back to work by the end of the year.
Nonetheless even with the difficult unemployment situation we need to be mindful that 70% of Americans have a secured employment.
And now they are facing record low mortgage rates. The mortgage rate is at about 3.2% - 3.3% which is extremely attractive. People want to lock in at these rates and not float the rate.
One indicator is that the housing market is improving and filing for mortgages to buy a home. Filings for more applications mean home buyers are considering purchasing soon.
Down 35% from one year ago in middle of April, but with each passing week it is becoming less severe and in fact the most recent week in early May is showing down only by a hair.
Only a hair is 3% from one year before, indicating that buyers are ready to return to the market as they are filing mortgage applications.
Naturally we need more listings. Listings has been held back since 2019 even before the pandemic.
We have fewer listings during the pandemic but as the economy steadily reopens, buyers will be returning to the market and we need to assure that there's sufficient inventory to satisfy the demand. With the inventory shortage, it is hoped that the home building activity can also get restarted with the opening of the economy .