As the coronavirus pandemic has put much of society at an
economic halt these past few months, a scarcity of residential real estate on
the market has driven the median sales price of existing homes to an all-time
high in April, according to Barron's.
The National
Association of Realtors' April Existing Home Sales Report demonstrated that the median sales price had
increased 7.4 percent year over year, climbing to a new historic high of
$286,800 this April. National Association of Realtors Chief Economist Lawrence
Yun told reporters that this all-time high is due to the growing lack of homes
on the market during this time of pandemic. In April, the seasonally adjusted
annual rate of existing homes dropped by 17.8 percent from March to 4.44
million, the greatest month-over-month decline observed since July 2010.
Analysts and those in the real estate industry were not shocked by this, as
existing home sales have waned due to the overall economic crisis inextricably
linked to the global pandemic.
This sales slump and the overall lack of inventory on the
market has caused the observed price gains, according to Barron's. Inventory
for the trade group decreased by 1.3 percent from March to 1.47 million units
at the end of April, an amount 19.7 percent lower than it was in April of last
year. Yun told reporters that a burst of new listings and home construction
will be necessary to restore the price growth, though the coronavirus and its
consequential restrictions have slowed down this process.
However, now that many states are beginning to open
economies again with looser restrictions, the housing market may be headed on
the road to recovery. "What we are hearing from realtors is that they have been
very busy as many governors opened up their economies," Yun said, according to
Barron's. "Listings are popping up; they're showing clients those homes."
In New Orleans, the loosening of restrictions as a part of
Phase 1 of the governor's plan for reopening businesses has also helped open
back up the real estate market. "People are definitely not as scared as they were
before, initially, so we've had more homes come on the market and more being
sold," local real estate agent with Keller Williams, Sonnie Harmon, said.
Harmon has been clocking progress in the market since the
start of the pandemic restrictions, with weekly market activity posts on her business Facebook page
showing a recent incline in new listings, properties under contract, and
properties sold. The latest update on May 22 boasts 388 new listings, 466 new
contracts, and 229 sold houses in the Greater New Orleans Metro Area, a
significant increase even from the week before.
As for prices, Harmon said she hasn't really seen much
of an adjustment but foresees a lowering of prices if the market becomes
flooded with foreclosures due to homeowners losing jobs and not being
able to pay mortgage forbearances when they are due.
Interest rates have
fallen, however, which Harmon believes will create more of a buyer's market
if the trend follows a normal pattern.
"The interest rates went back down again to the low threes with everything that's happening," Harmon said. "So, the buyers who still have jobs and can buy are still buying, and people obviously still need to sell." In other words, with the interest rates staying so low, buyers who are in the position to buy are buying right now because they are able to buy more house for the same monthly note. Historically speaking, Harmon explained, we should have been in a buyer's market already, but the pandemic has slowed that down.
Nevertheless, as the future remains uncertain, Chief
Economist Yun asserts that we will not know for sure the economic impact or
growth until we can see the closing figures and reports a couple months down the
road.
