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As the country works through the coronavirus pandemic and its effect on the economy, how will the real estate market fare? More specifically, will there be more new home construction this year and next? This article will attempt to answer that question.
After dealing with the COVID-19 crisis for over a year, Americans are ready to move on and go back to some type of normalcy. As the economy finally starts to reopen slowly, many wonder if it will ever go back to where it was pre-coronavirus, and if so, when.
Real estate was one of many industries that were impacted by the coronavirus pandemic, though not nearly as bad as sectors like hospitality and travel. Even though buyers and sellers retreated for a while out of fear of the virus’ spread, things have picked up quite a bit over the past few months. In fact, the real estate market across the entire nation has been healthy. All that pent-up buyer demand seems to be releasing as of late, as buyers enter the market in search of a new home to buy.
Sure, the landscape of buying and selling homes has changed somewhat. For example, buyers may be asked to enter a showing or open house one at a time or to wear a mask. But that doesn’t seem to be hampering the market with numbers pointing to strong national real estate industry.
According to recent Case-Shiller’s National Home Price Index, home prices in January saw their highest gains in almost 15 years with a year-over-year growth rate in home price of 11.20%. That’s not too bad considering the situation the economy has been in.
Even better news comes from the National Association of Home Builders (NAHB), which recorded a jump in new home sales in February 2021. A renewed interest in housing comes as mortgage interest rates remain historically low, making getting a mortgage much more affordable.
New home builder confidence is also increasing, which may result in a slew of newly constructed homes available on the market. More specifically, builder confidence in the realm of newly-built single-family homes remains level at 82 in March 2021, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). Reading over 50 points to a positive market.
There has been an increase in demand among buyers for single-family homes in suburban areas with more sparse populations. They’ve realized that being cooped up in a condo or not having much outdoor space to roam free a safe distance away from others is a real nuisance, which has been brought to life following the COVID-19 pandemic. As such, builder confidence has increased accordingly.
Building permits are also increasing, providing yet another sign that build confidence is among along with an increase in buyer demand. According to the US Census’ Monthly New Residential Construction Report, building permits for new home construction jumped by 17% from February 2020 to February 2021.
It’s tough to tell what the markets in Washington, Idaho, Colorado, and Oregon will do over the next year, but up until now, they’ve done very well. In fact, these markets are still considered very hot.
The average home price in Washington currently stands at $478,015. That’s a 13.3% increase from the same time last year. Zillow characterizes the housing market in Washington as “very hot” right now, and perhaps things will remain that way going forward with renewed homebuyer demand.
In the state of Oregon, the average home price is now $409,182 after having increased 10.9% from the same month in 2020. According to Zillow, Oregon’s real estate market is considered warm.
The average home price in Idaho is $359,546. That marks a 20.9% increase from March 2021, making this particular housing market a very hot one.
Colorado’s average home price is currently $449,182. Prices have increased by 9.6% over the past 12 months. Zillow characterizes the market as very healthy.
Building and permits and housing starts are lower now than they were at the same time last year for obvious reasons. But the trend upward is promising, which should have a positive influence on the US economy as a whole.
And considering the dire housing inventory situation across the country, new housing construction will provide some much-needed relief and access to homes for buyers on the prowl for a new home.
Mortgage applications are also on the rise. That, coupled with low interest rates and increased builder confidence paints the picture of a bright future for real estate.
Are you considering buying a home this year? Sammamish Mortgage can help. We are a local mortgage company serving the broader Pacific Northwest region, including Washington state, Idaho, Colorado, and Oregon. We are proud to offer a wide variety of mortgage programs and products with flexible qualification criteria since 1992. Please contact us if you have any questions or are ready to start the mortgage application process.
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