The unfortunate reality is that COVID-19 has severely impacted the world economy. Like many other industries facing hard times, the real estate industry also experienced an initial shock. However, as time unfolds, the effects on the real estate industry are not what you might think.
In this quick breakdown, I’ll share how the real estate industry is still going strong despite the ongoing pandemic.
Interest Rates Are at a 50 Year Low
In mid-March, the Federal Reserve announced they would cut the interest rate to zero. After the initial shock wave of this news settled, the mortgage industry was able to stabilize and adjust. Fast-forward to today, we are currently seeing interest rates at a 50-year low. With interest rates so low, it has drawn a lot of home buyers into the housing market in attempts to capitalize on the low interest rates. With a lot of buyers in the market, we’re continuing to see a very active and competitive market.
Supply is Short
As we’re seeing a lot of buyers enter the market, we’re inversely seeing sellers shy away from the market. On average, home inventory is down fifty percent. As the pandemic unfolds, sellers are finding it difficult to make a move.
What does having fewer homes for sale mean? It means that with fewer homes for sale meeting an influx of buyers looking to purchase a home, we see a trend in the Bay Area we know far too well, overbidding and multiple offers. Even with fewer homes for sale, the overbidding and multiple offer situations are signs of a healthy real estate market.
By Zack Sit