No Holiday Vacation for Home Sales
Winter is usually the slowest season for the real estate market. In a typical year, home sales start to cool as does the weather. However, nothing about 2020 has been a typical year. This is especially true for the real estate market. As we head into the heart of the holiday season, families prepare for extended time off from school and work. Apparently, the real estate market didn’t get the memo that this is supposed to be vacation time. There seems to be no let up in the home market. The team at Streamline Realty is here to breakdown why this year is so different and what we can expect in home sales to close out the year.
What is the Current State of the Real Estate Market?
The real estate market is defying patterns and expectations. Home sales are only supposed to be strong in the spring and summer with a huge dip in the fall. This year that is just not the case. More people are looking for homes than ever. In October, new home showings were up over 60% than last year at the same time. However, people were not just looking at homes that are on the market. They were buying homes. Existing home sales in October were up about 4.3% over September and up about 26.6% over last year’s numbers.
These trends are happening all over the nation and are having an impact here in Massachusetts. The average cost of a single family home jumped 17% in October from the same time last year. That is a huge increase in home prices. Typically, home prices drop during the winter months because demand drops off. But, that is not happening this year. Home buyers are more motivated than ever to buy new and existing homes. Demand is remaining sky high even heading into the holidays.
Why are Home Sales High During the Holidays?
There are a few factors that are causing the 2020 holiday real estate market to buck historical trends. The main factor is also the number one reason behind this year’s red hot real estate market; historically low mortgage rates. Many people who were considering buying a new home at some point are jumping off the fence and rushing to sign on the dotted line. Low mortgage rates are a huge motivation for potential home buyers because it can save you a bunch of money over the life of your loan. There are a lot of different types of home buyers that are taking advantage of these rates, too. Many first time home buyers are getting their dream house, especially millennials. Existing home owners are also buying new homes to upgrade the amount of space they have. Finally, those with the funds are taking this opportunity to buy vacation homes.
The other big factor behind this holiday season’s surging sales is psychological. Potential home buyers have a fear of missing out. They know that these low mortgage rates will not be around forever, so they are choosing to strike while the iron is hot. Rather than wait around for warm weather or even wait until the pandemic blows over, they are buying homes right now. On the flip side of the coin, homeowners who were not expecting to sell their home are thinking that the time is right. Since home values have increased so much since last year, they too are afraid of missing out. Rather than sit back and watch their homes decrease in price, they would rather cash out now while they know they have made gains. This formula means there is sky high demand and just enough new supply to keep the market chugging along.
Final Thoughts
This winter’s home sales surge is unexpected, but then again, so is everything else about 2020. Savvy home buyers sometimes wait until the winter months to buy houses at a discount when demand drops. However, that does not appear to be an option this year. Instead, home buyers waiting for a discount might end up finding themselves paying even more down the road than right now. It is clear that as long as mortgage rates remain this low people are going to want to get the house of their dreams no matter what month it is. If you are like the millions of Americans who have taken advantage of these rates and want a dream home of your own, contact us! The team at Streamline Realty can set you up for success and help you find the property that is perfect for you.
