The Real Estate Industry and COVID-19

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It goes without saying that the country, and the world, is navigating unprecedented circumstances. While the issues before us are very real and demand an intentional approach to healthy precautionary measures, life continues, which means there are customers that still have real estate needs that require a trusted advisor as a guide through the process more than ever before. The Mortgage Bankers Association reported This Week in Real Estate that mortgage applications rose 55% last week from the prior week and refinances rose to an almost 11-year high. Below are a few highlights from the second week of March that influence our business: 

COVID-19 Beginning to Affect Real Estate, But It’s Not All Bad News. The National Association of Realtors (NAR) conducted a flash survey on March 9 and 10 among its members to find how their customers were reacting. Realtors reported that there has been only minimal change in seller interest in selling and about 10 percent reported that the problem has affected the number of homes on the market. Among agents operating in California, about 14 percent say they have noticed a decrease and about 15 percent said this in Washington. Those two states have, thus far, had a higher number of confirmed COVID-19 cases. However, in California, 12 percent of members cited the number of sellers has increased because they can take advantage of lower interest rates upon moving. NAR found this to be true for 9 percent of sellers nationwide while 4  percent have decided to remove their home from the market and refinance instead of selling. About a quarter of sellers have changed the way they want potential buyers to view their homes because of the outbreak. The changes include suspending open houses, requiring visitors to wash their hands or use hand sanitizer, or asking buyers to remove shoes when entering and/or wear footies. The percentage of sellers adopting these kinds of changes jumps to 44 percent in Washington State and 34 percent in California. Potential buyers seem to be more reactive. Thirty-seven percent of respondents said the lower mortgage rates have excited home buyers much more than the stock market correction while 16 percent have noticed a decrease in buyer interest due to the epidemic. Almost 8 out of 10 (78%) said there has been no change in buyer interest due to the coronavirus. Reports of decreasing interest were more numerous among Realtors working in California and Washington at 21 percent and 19 percent respectively.

A Quickening in Home Price Appreciation Boosted Home-Equity Wealth. The amount of equity in mortgaged real estate increased by $489 billion in the fourth quarter of 2019 from the fourth quarter of 2018, an annual increase of 5.4%, according to the latest CoreLogic Equity Report. Borrower equity hit a new high in the fourth quarter of 2019, and borrowers have gained over $6 trillion in equity since the end of 2011 when equity stopped declining. Years of home price increases have led to record levels of home equity and pick up in price gains in the fourth quarter of 2019 boosted home-equity wealth further. The nationwide negative equity share for the fourth quarter of 2019 was 3.5% of all homes with a mortgage, the lowest share of homes with negative equity since CoreLogic started tracking it in the third quarter of 2009. The number of underwater properties decreased by 330,000 from the fourth quarter of 2018 to the fourth quarter of 2019.

Mortgage Applications Skyrocket to Highest Level Since 2009. Mortgage applications soared 55% last week from the week prior, and demand for refinances rose to an almost 11-year high, according to the Mortgage Bankers Association. The deluge came after rates fell to record lows because of uncertainty in the markets sparked by a spread of the coronavirus that causes COVID-19, said Joel Kan, an MBA economist. “Market uncertainty around the coronavirus led to a considerable drop in U.S. Treasury rates last week, causing the 30-year fixed rate to fall,” Kan said. “Homeowners rushed in.” The group’s index measuring refinancing applications surged 79% to the highest level since April 2009, he said. Compared to a year ago, it increased by a whopping 479%, Kan said.

Every home listed for sale with Berkshire Hathaway HomeServices Northwest Real Estate is eligible for no obligation seller coverage for the first six months the property is listed for sale with our company.  

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