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2020 has brought many surprises, however, the most outstanding was are in the spring selling season. Many investors coming back to the rental market and fighting over a few free properties.
While many sales have dropped, short of inventory has taken under the protection prices and resulted in bidding wars. Meantime economy after negative effects from the COVID-19 and real estate agents try to adapt among new guidelines concerning public health. Now they create a lot of obstructions to successfully market a property.
Many economists notice that since the beginning of the coronavirus outbreak, the demand suddenly dropped down. At the same time, many sellers decided to step back from the instability.
The imbalance between supply and demand has turned into a situation when about 40% of homebuyers from Redfin faced a lot of pressure from other opponents who also wanted to purchase property. This rate goes even higher in cities like Boston, San Francisco, Fort Worth in Texas where approximately 60% of all real estate the company’s customers bid on had many offers.
The United States housing market has faced the pandemic crisis with a property shortage that was perking up prices higher than many purchasers could allow, even if with a period of low-interest rates. Although there is economic instability, that issue has not gone away. Moreover, the number of more or less active listings diminished by about a quarter in April in comparison with the previous year.
Since then the market has calmed down a little bit. Specialists expect sales to build properties to fall by about 20% in April. Such a fall would go after fall by 8.5% in March. The process of development of new properties has gone high in April, while many constructors were waiting out for the pandemic. For homebuyers such a situation means that new real estate will be much slower to materialize.
Some homebuyers are shocked by current market dynamics. For example, Kenzo Teves, a young business analyst from a pharmaceutical firm, chose to begin shopping for his property this spring while the interest rate was quite low. He had saved up enough sum for a down payment and was certain with his job. Young business analysts hoped that these factors were enough to find a good property near Boston.
Late in April, he has done his first bidding on a three-bedroom house in Chelsea, Massachusetts. That house was listed for about $420 thousand. Then, that real estate got, even more, offers and bidding in the amount of $30 thousand over the original price. Kenzo Teves hoped that his offer would be more in favor, however, that was not a case.
The shortage of inventory affected even small cities. Real estate agents from Boise, Idaho, noticed that their business dropped approximately 20% mainly because sales have slowed down previously. They add that it is difficult to find proper or any bargains.
The agents give an example of young families with children. Some of the rental leases are going up for recovery next month. Thus, to purchase property for about $300 thousand these families had to keep at bay other bidders with extra pay in the amount of $10 thousand. Such families can succeed in the case of financing of others failed.
For now, many homeowners from Boise have decided to remain a constant mainly because they are worried about putting potential buyers into trouble during the outbreak of coronavirus or rising the price for rental during the tough situation with employment. Now the market faces a lot of restrictions due to the situation around the world.
If we take into consideration Los Angeles, real estate agents mentioning cases when some of their clients had unsuccessful bids on various properties. One of them was listed for approximately $800 thousand and the other one for about $1.5 million. Each of the properties had about 25-30 offers and now is selling offer for a price far from the original one. As a result, their clients backed out of the offer.
More and more real estate agents support their clients to put their houses back on the market. With a lack of other variants, these clients may take an upper hand.
However, such tough competition is not everywhere. For example, real estate agents from the luxury property market in San Francisco say that many buyers are returners to the market. At the same time agents have difficulties with showing luxury property during the coronavirus. Moreover, there is sometimes a disproportion between real price for property and the one that people think is suitable. While many buyers are ready to do purchases, many sellers have fears about facing a big hit.
According to economists from Moody’s Analytics, prices for houses will be the same until the end of the summer, then they are expecting a decline. As soon as forbearance programs and foreclosure moratoriums end, creditors will start repossessions while unemployment holds on. Moreover, according to the analysis, about 2 million homeowners will lose their houses due to pandemic situations.
In the short term, purchasers will have to fight for homes, especially for those that are in high demand. According to data from Redfin the properties listed less than $1 million were the most desired, because many banks have made more strict standards for jumbo loans. While many want to keep their houses, there are even more buyers who are ready to purchase single-family houses rather than condos
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