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
Which businesses are allowed to reopen right now? And which businesses are actually doing so?
As a patchwork of states start to reopen, businesses that fall into a gray area are wondering when they can reopen. In many places, salons are still shuttered. Bars are mostly closed, too, although restaurants may be allowed to ramp up, depending on the state. “It’s kind of all over the place,” said Elizabeth Milito of the National Federation of Independent Business.
Will you be able to go on vacation this summer?
There’s no chance that this summer will be a normal season for vacations either in the U.S. or internationally. But that doesn’t mean a trip will be impossible. People will just have to be smart about it. That could mean vacations closer to home, especially with gas prices so low. Air travel will be possible this summer, even if it is a very different experience than usual.
When does the expanded COVID-19 unemployment insurance run out?
The CARES Act, passed by Congress and signed by President Donald Trump in March, authorized extra unemployment payments, increasing the amount of money, and broadening who qualifies. The increased unemployment benefits have an expiration date — an extra $600 per week the act authorized ends on July 31.
You can find answers to more questions here.
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