Despite the ongoing corona virus and economic uncertainties, the real estate market is sizzling. In the four-week period ending Aug. 9, the average price for homes sold rose 10% – the largest increase in more than six years – to hit a new all-time high of $ 314,000, according to a new report report from the real estate company Redfin. Compared to the previous year, prices increased by 12%.
This jump is unusual at this time of year, when house prices usually fall after a high in late June or early July.
"With the coronavirus and the presidential election, things were anything but typical this year," said Redfin agent Brynn Rea. "I don't feel like it's slowing down at the moment like it usually is."
In addition, houses are selling faster than this time of year. Of the houses under contract, 46% found a buyer within two weeks of being listed – the highest level since at least 2012.
One reason homes are selling so quickly is because of the demand for homes and locations that were considered undesirable prior to COVID.
"There's no area that isn't hot right now because of a shortage of houses for sale," said Darlene Schror, New Jersey Redfin agent, adding, "The houses that surprise me the most are the ones in the Boondocks … before the pandemic, nobody wanted this stuff. Homes listed in these areas would stay in the market for a long time. Now they're hot. "
Houses also sell closer to their asking price. The average price-performance ratio rose to a new record high of 99.1% – after 98.4% in the same period last year.
What is driving prices and demand up is that the supply of available homes is falling sharply. Redfin reports that the active inventory of homes for sale declined 28% in the four-week period ending Aug. 9.
"Right now you have a number of people who are highly motivated to buy – they have the money and they have the want, and they are not afraid of the competition," said Redfin chief economist Daryl Fairweather. “But there are more homeowners who feel very comfortable where they are. . . This imbalance between people who want to buy and people who want to sell drives prices up. "
What could ease the existing crisis is the new Starting September 1st, a 0.5% mortgage refinancing fee will be charged. Because the fee only applies to refinancing, not home purchases, homeowners who want to benefit from low interest rates have a financial incentive to sell their home and buy a new home.
The catch, however, is that this could also increase home demand when these sellers buy.