In this article, we’ll review the 2020 first half and see how the real estate industry has been impacted. With this information, we’ll also give a few thoughts on the coming summer and fall of 2020.
What a year it has been.
And we’re not even to the Forth of July!
If there is one thing we can all agree on, it’s that 2020 has been a wild ride. Our president was impeached by the House of Representatives (right or wrong, it happened), a global virus created enough concern to virtually shutdown the national economy, and social issues have caused us to reexamine countless aspects of our country.
Quite frankly, the first half of 2020 seems to have crammed enough activity, excitement, and turmoil to fill a decade.
But what about our little corner of the economy: the real estate and mortgage industries? How has our sector of the market, one of the most important parts of the national economy, fared so far?
Let’s take a moment to reflect on the first half of 2020 to see what has happened in real estate so far this year. By reviewing the past six months, we might be able to make a few prediction on what to expect in the future.
2020 First Half In Review
The Year Started with High Expectations
To tell the story of the first half of 2020, we first need to look back at the end of 2019. Quite frankly, expectations were extremely high in the real estate industry. Many of the top markers for this sector were positive: job numbers were strong, the stock markets were soaring, and consumer confidence remained at levels that suggested these happy trends would continue.
If you look at the final numbers for 2019, you can see why so many real estate agents, lenders, borrowers, and loan agents were optimistic about the coming 2020 season. According to Statistica, total home sales were trending upward, and although 2018 and 2019 (5.34 million units sold) were down slightly from 2017 (5.51 million), the overall market remained consistent and strong. There was no massive spike in sales, and no drastic fall either, signifying a sturdy industry with a strong foundation.
Interest rates were low, despite a flourishing economy. Home prices were climbing, but were starting to show signs of leveling off, great news for aspiring buyers who were worried about the affordability of housing in their areas. These factors and more led experts to believe that 2020 would see an increase in total sales, possibly the highest numbers since the economic decline of 2008.
January, February Seemed Like a “Normal” Positive Year
While there were the typical declines in overall real estate activity throughout the first two months of the year, it was certainly nothing out of the normal. Winter is always a slow time for the real estate industry, but numbers were along the normal expectations. Nothing significant to report, so all signs showed a positive aspect.
There were still concerns, just not concerns about a strange virus. Incidentally, some of these economic worries included China, but it was worry over a continued trade war between the American and Chinese leaders, not a virus. Overall, the outlook was positive and the chances of a recession seemed unlikely.
Then came the month of March.
Spring Shows Decline, But Not a Terrible Drop
When February closed, there was little reason to believe that 2020 would be a significantly wild and crazy year, at least from an economics and real estate perspective. But then rumors began swirling about a dangerous virus coming out of China, one that could be particularly contagious and potentially deadly to numerous people. And then we learned about the virus coming to the United States and, almost instantly, sporting events were cancelled, schools were closed, and millions of businesses, offices, and public facilities were closed.
The rumors of a virus became a reality.
At this point, we all know how the virus impacted our overall economy, but what about the real estate industry in particular?
It would be dishonest to paint a completely rosy, positive image about the coronavirus’ impact on our industry. But neither would it be accurate to say the numbers are devastating. A report from realtor.com shows that sales of existing homes in March 2020 dropped 17.8% from March of the previous year. In April 2020, sales were down 17.2% from the previous year.
In total, there were 4.33 million homes sold April of 2020 according to the report. After everything that the nation and the economy had gone through, those numbers seem fairly decent. Think about it: after all the scares and uncertainty, over 4 million homes were sold across the U.S. In many ways, those numbers seem incredible!
Home Prices Remain Steady Too
Home prices, one of the most important stats for the real estate industry, actually showed a slight increase. In April of 2020, prices rose about 0.6%, which signals virtually no significant change in price values. The month before, prices had risen about 4%.
After millions of people were laid off, one could easily assume that home prices would take a sharp decline. Concerns about the virus would keep people from shopping, and issues over income would force people to wait until a later time to qualify for mortgages. All of these factors would mean that the seller would see less competition for their house, and less competition inevitably means a lower price.
But prices rose, even if that rise was so small it was barely noticeable to most people in the industry.
Reasons to Be Cautiously Optimistic About the Second Half of 2020
Overall, it seems that the real estate industry, while certainly facing challenges and changes, fared decently throughout the coronavirus scare. The sector was hit but not crippled, and, with stable if not soaring sales numbers and stabilizing home prices, there are reasons to be optimistic.
Whatever 2020 Brings, We are Ready to Help with Your Home Purchase!
If you are considering a home purchase in the second half of 2020, let us be a part of your experience. With a dedication to common-sense underwriting, we can help you get the right financing for your purchase. You deserve the best service, so contact our staff and let us help today!