The economy continues to bounce back but is recovering at a moderate pace. While many economic indicators are clearly showing signs of improvement, it will take time to get back to the pre-pandemic level as many uncertainties remain unanswered. The housing market, on the other hand, remains a rare bright spot even as it transitions into the traditionally slow time of the year. While the market is showing signs of leveling off in recent weeks, it is still stronger than normal as low rates and renewed interest in home buying continue to fuel housing demand. In California, buyer demand remains strong as borrowers file mortgage applications at an unreasonable pace. However, COVID cases have started to ramp back up in the past few days in California, unemployment remains high, and the inventory situation, which is the biggest obstacle to ongoing growth, continues to deteriorate.
The Mortgage Bankers Association reports that fewer homeowners were in forbearance last week as the percentage fell to 5.9%. Data from CoreLogic shows that 41% of COVID-related forbearances have already exited. Some have gotten current on their mortgage payments again, and roughly 6% have paid off their mortgage in full since entering forbearance. As a result of extremely tight inventory (just 2.0 months of supply statewide with a median time on market of just 11 days from listing date to escrow date), it can be challenging for buyers to actually find and close on a home at these all-time low-interest rates. This could be starting to take a toll on buyers as the percentage of California consumers responding that now was a good time to purchase a home in a monthly survey fell for the first time since the onset of the crisis. Many Buyers are experiencing what many call "Buyer Fatigue".
COVID has made our homes more important to us than ever before and low rates have put the American dream within reach for more potential homeowners, but the lack of homes to put them in is the major barrier to the market today. I believe that supply is likely to increase in the early 1st quarter of 2021 after the presidential election when uncertainty decreases somewhat.
Call me to discuss your real estate needs and questions.
Ben Anderson
License DRE# 01369906
Broker DRE# 01767484
1111 Prospect Street, Suite 100, La Jolla, California 92037
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1111 Prospect Street, Suite 100, La Jolla, California 92037
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