Remember last March – the week the country shut down – and you raced to the supermarket to stock up on food and toilet paper? My biggest shock was going to Publix on March 17 and seeing about a quarter of the usual supply of fresh meat in the store’s coolers and empty shelves for paper products. I thought, “This is America; where is all the food?” and realized then that life can turn on a dime, or, in this case, on a virus.
Thankfully, we’re almost out of the COVID crisis, but the fallout from this past year will go on for some time, changing lifestyles, work habits and in particular, the real estate market. By now everyone knows that the COVID year has been abnormally good for the housing market. The combination of the ability to work remotely, record-low mortgage rates and the desire for individuals and families to move into less densely populated areas has flooded the market with buyers racing to find a new home.
In addition, working remotely was largely available to higher-income workers who generally make up the majority of homebuyers. Unfortunately, lower-income workers who may not be able to do their jobs remotely have suffered, as well as young millennials who have become priced out of buying their first home.
Florida has benefited from the migration from other states this year – particularly people moving from the northeast who were hit badly by the virus and have endured strict lockdowns. Also, the Florida Realtors Association has recently reported their agents across Florida are seeing a higher number of new clients from California looking for a less expensive lifestyle with the benefit of the good weather they’re accustomed to. Orlando is seeing a flood of buyers from California as well as Miami attracting venture capitalists and finance companies.
The downside of all of this activity is, of course, the lack of inventory. As reported last week, the supply of single-family homes in Manatee County at the end of February was below one month at .09 compared to February 2020, which was 3.4 months, down 73.5% from last year. The National Association of Realtors reports the inventory level nationally was down 29.5% from last February, therefore, Manatee County is way down compared to the national level. The number of sales in Manatee County in February was up by 12.8% compared to the national number of 9.1%, proving that our inventory is being gobbled up as soon as homes hit the market.
Thrown into this potpourri of housing shortage and pent-up buyers is the fact that the mortgage rates have ticked up. The average rate for a 30-year fixed mortgage has risen to 3.09% recently from 2.65% earlier this year, according to Freddie Mac. In addition, they anticipate it is likely to head higher still. Nevertheless, most economists feel this is just a blip in what will continue to be a great housing market that can tolerate an uptick in rates, which will likely remain historically low.
In addition, economists project that Americans have saved during the pandemic – as well as improving their credit positions – and are sitting on a nice pile of cash. As more segments of the economy keep opening and the economy improves, more buyers will be in a strong position to purchase homes even with slightly higher mortgage rates.
I personally never want to see empty shelves in supermarkets again, but I would also like to see an improvement in our level of inventory. As previously stated, prices will go up and sales will go down unless we can convince homeowners across the country that now is the time to list. Stay safe.
