As buyers return to the housing market, there aren’t enough homes for sale
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After weeks mostly stuck in her 960-square-foot condo in Newark, Ohio, with her husband, two dogs and a cat, Amber Simpson is ready for an upgrade. She manages a dental office, which is gradually reopening. He’s back at work as a barista. Now the challenge is finding a place to buy for under $180,000.
“It’s so competitive right now,” Simpson, 24, said. “Houses in our price range, they’re up for 24 hours, they’re in contract, they’re gone. They disappear.”
The same scenario is playing out in much of the country. As parts of the economy reopen, buyers are coming back. Purchase applications for mortgages rose 11% last week, the Mortgage Bankers Association said Wednesday, the fourth weekly increase in a row. But sellers have been more cautious. New listings are down about 40% from this time last year, according to Realtor.com.
Some are worried about having strangers come through their homes during a pandemic, said Susan Wachter, a professor of real estate and finance at the University of Pennsylvania’s Wharton School. Others are concerned about selling in a down economy.
“Many, many properties that were planned to go on the market have been pulled and the for-sale signs taken down,” said Wachter. “So if you are in the market to buy, it’s very difficult to find a home.”
And, increasingly, a mortgage. As more homeowners struggle to pay existing mortgages, lenders have tightened their credit standards for new loans.
“I think there is concern about borrower risk and the ability of borrowers to actually make their payments in view of the sharp increase in unemployment,” said Michael Neal, a senior research associate at the Urban Institute.
That increase could turn a dip in home sales into a longer-term slide.
In a new forecast, Realtor.com predicts sales will rebound through the summer, before falling again later in the year, as the effects of high unemployment sink in and coronavirus infections potentially resurge.
“We expect the economy and the housing market to be on again, off again, throughout the remainder of 2020,” said Chief Economist Danielle Hale. “So that is going to be a challenge for people just to kind of navigate a situation that’s constantly changing.”
There is a silver lining for those hoping to get into the housing market. Hale expects home prices to grow more slowly, or even fall, by the end of the year.
COVID-19 Economy FAQs
What do I need to know about tax season this year?
Glad you asked! We have a whole separate FAQ section on that. Some quick hits: The deadline has been extended from April 15 to May 17 for individuals. Also, millions of people received unemployment benefits in 2020 — up to $10,200 of which will now be tax-free for those with an adjusted gross income of less than $150,000. And, for those who filed before the American Rescue Plan passed, simply put, you do not need to file an amended return at the moment. Find answers to the rest of your questions here.
How long will it be until the economy is back to normal?
It feels like things are getting better, more and more people getting vaccinated, more businesses opening, but we’re not entirely out of the woods. To illustrate: two recent pieces of news from the Centers for Disease Control. Item 1: The CDC is extending its tenant eviction moratorium to June 30. Item 2: The cruise industry didn’t get what it wanted — restrictions on sailing from U.S. ports will stay in place until November. Very different issues with different stakes, but both point to the fact that the CDC thinks we still have a ways to go before the pandemic is over, according to Dr. Philip Landrigan, who used to work at the CDC and now teaches at Boston College.
How are those COVID relief payments affecting consumers?
Payments started going out within days of President Joe Biden signing the American Rescue Plan, and that’s been a big shot in the arm for consumers, said John Leer at Morning Consult, which polls Americans every day. “Consumer confidence is really on a tear. They are growing more confident at a faster rate than they have following the prior two stimulus packages.” Leer said this time around the checks are bigger and they’re getting out faster. Now, rising confidence is likely to spark more consumer spending. But Lisa Rowan at Forbes Advisor said it’s not clear how much or how fast.
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