by Brandon Scott
We now have the election in our review; or is it. As you all know, we are in a very weird place with 2020 but, also, in how our democracy operated during the elections. And this means that market forces are watching keenly to see what is taking place in Washington, DC; and it goes without saying that their reaction will dictate moves in interest rates. Pair this with the most recent news that there are positive signs toward a vaccine for Covid-19 and it’s essentially a tug-of-war of news. The economy is still improving and home sells are booming, with sales from October of homes trended higher/faster than September, seeing a 12% increase in values, across the country per Realtor.com.
A cooling off of the market may be coming but don’t bank on that to make a decision. At the moment, there’s not a clear indication when that will hit. The intrinsic value of purchasing a home existed before and, will exist, after the pandemic.
For the US, the median list price was $350,000, up 12% year-over-year with days on the market at 53, down 20% year-over-year; although the number of active listings is down 38% to 813,665. Homes are continuing to sell faster and faster and this trend seems to be forward moving.
Mortgage rates continue to be one of the wildcards at play in 2020. Freddie Mac noted that 30-year, fixed-rate mortgages dropped to 2.78% for the 12th time this year and rates have hit a new low. And this fluctuation isn’t driven by the good will of financial institutions, rather it’s the pause that still exists around the elections and the pandemic (don’t get me wrong, the election results seem to be clear). We all have a front row seat to the political and legal spectacle that is unfolding before our very eyes on top of a pandemic.
The good news is that everyone can benefit from the market forces. Current homeowners should begin looking into refinancing their mortgages. Often, the lender will wrap in the cost of making the new loan. It’s worth thinking about if you used a down payment assistance or closing cost program and the terms of accessing those funds. Whatever they are it may mean that you’ll have to repay the down payment assistance once you refinance. Make sure you talk to a lender and don’t forgot how you accessed the home because it may impact how quickly you can refinance your home, or if you can refinance at all.
Overall, the Mortgage Bankers Association (MBA) noted an 88% year-over-year increase in refinance volume. The volume for those that wanted to purchase a loan, or purchase loan volume, is up 25% year-over-year.
Here’s the bend, when looking more closely at MBA data, the purchase application growth has decreased for the fifth time in six weeks. This is expected with seasonal adjustment and anxiety around the election. However, 2020 is still a strong year for the overall housing market. Additionally, the Federal Housing Administration reports they are seeing a decrease in total applications from 11.7 to 11.1 week over week. It should go a no surprise that VA home loans have seen an increase, as one of the few zero down payment programs left in the market, while seeing a week over week increase from 11.4% to 12.2%.
This is what we know, buying home and making the decisions where that home will be has been based on where we are right now, in the pandemic. As we get closer to a vaccine the question becomes, what is the new point of adjustment for individuals and what does that look like? More and more, I am finding that properties that fit the typical condo or apartment layout remain on the market for a longer period of time, especially here in Washington DC. But, here, locally, and across the country, many individuals have selected to move beyond what they would have typically imagined for their commute time. At the moment, there is more to come regarding the impact all of these factors will have or are having on individuals’ decisions to sell their home or to find a home.
Brandon Scott is a licensed real estate agent in Washington, DC, Maryland and Virginia. His license hangs with Coldwell Banker Dupont-Logan, DC. He’s been involved in the mortgage finance industry for the last 16 years in various fields. You can reach him by email at [email protected]. Subscribe to his YouTube Channel at RealTeaDMV