As home sales have surged and housing preferences have changed, the pandemic has had some unexpected results on the real estate market.
The chief economist of the National Association of Realtors joined Utah Realtors this week at a virtual conference to talk about trends in the economy and housing market.
“The housing market recovery that has taken place is quite a surprise,” Yun said.
He said that even though he knew the housing market was on much firmer ground compared to 10 years ago, he was surprised by market’s exceptionally strong resilience.
“When the reporters asked me, ‘Are we going to have another foreclosure crisis?’, I said, ‘No, because we have an inventory shortage and fortunately we don’t have bad lending of subprime loans,’ but I never expected home sales would be rolling along during the second half of the year,” he said.
Housing Forecast
Yun, who earlier this year forecasted U.S. home sales to decline 15% because of the pandemic, now expects the number of transactions to increase 0-3% this year.
“Even as we missed the critical spring buying season, the second half will be so strong, we’re going to make up for that. So no decline in home sales in 2020.”
He also expects home prices to rise 3-5% this year.
“Last summer, you had a good market condition,” Yun said. “This year, it is even better. So it’s quite remarkable that the housing market is making this huge upswing.”
The housing indicators also point to a strong fall and winter. The number of contracts signed to build homes increased 10% in July, which will translate into closing activity in September and October that is much higher than one year ago.
“This autumn is going to hold on very well based on pending contracts,” Yun said.
The winter market also looks strong because there are many buyers in the pipeline. Buyers are pre-approved for loans, and mortgage applications are up 30% compared to one year ago as people take advantage of 2.8% interest rates.
“This is going to be some of the best winter activity for home sales based on the trends on the mortgage data,” Yun said.
Moving into 2021, Yun forecasts a 6-10% increase in U.S. home sales, and a 2-3% gain in prices as builders provide more housing inventory.
“2021: positive, positive, positive, especially as more people begin to recognize ‘I can work from home,’ ” he said.
Moving to the Suburbs
The pandemic is changing the types and locations of homes people want. As more companies allow employees to work from home, either full time or partially, buyers are moving to less crowded areas where they can get a bigger home for less money.
The work-from-home trend was already happening, but the pandemic has accelerated the trend and condensed it into one year instead of 10.
“The suburbs will be a key beneficiary of this trend that was happening slowly but has suddenly accelerated, especially in high-cost markets,” Yun said.
With commuting being less important, Yun said people are moving away from very expensive markets.
“Why live in San Jose when people can live in Denver, Salt Lake City or Boise, Idaho?,” he said.
He also expects vacation and secondary home sales to rise because of remote work.
“There could be sizable demand increases in places like Park City and resort destinations to say, ‘If I can work from a vacation home, why not?’,” Yun said. “So you may also see a lift in the many resort areas.”
Finally, remote work is changing the space that people need.
“People who were very happy with their home before the pandemic suddenly say, ‘A three-bedroom home is insufficient. I need a fourth bedroom to make it into a dedicated office space,’ ” Yun said.
These are just a few of the changes the housing market is experiencing because of the pandemic. To stay up-to-date on all the trends affecting real estate in your area, contact your local Realtor. Find a directory of Utah Realtors at MyRealtorStory.com.
Earlier this month, the Centers for Disease Control and Prevention said renters can’t be evicted from their residence if they are financially unable to make payments.
Issued to help prevent further spread of COVID-19, the moratorium extends through the end of the year and applies to specific circumstances.
If you are having a difficult time making rent payments, here’s a summary of the new CDC moratorium as well as information about Utah’s COVID-19 rental assistance program.
CDC requirements
The CDC order contains these key components:
First, the CDC eviction moratorium only applies to situations where someone is unable to make their rent payment. Landlords may still evict tenants based on criminal activity, threatening health/safety, damaging property, violating codes/ordinances and failure to comply with other contractual obligations.
That means anyone seeking eviction relief must continue to abide by the terms and requirements in their lease.
Second, the eviction moratorium is not rent forgiveness. All amounts required under the lease are still due. The landlord is also permitted to charge late fees, penalties and interest according to the terms of the lease.
Renters should regularly communicate with their landlord about what amounts have accrued and work to make as many payments as possible. The CDC order requires renters to have made their “best efforts to make timely partial payments that are as close to the full payment as the individual’s circumstances may permit.” Tenants who owe back rent may face eviction after Dec. 31, 2020.
Third, the moratorium requires renters to have used their “best efforts to have obtained government assistance for rent or housing.”
Fourth, the moratorium only applies to those who expect to earn less than $99,000 (or $198,000 for a joint return), those who were not required to report income in 2019 or those who received a stimulus check as part of the CARES Act. The renter must have also experienced a substantial loss in income or had extraordinary out-of-pocket medical expenses.
Finally, renters must complete the CDC’s declaration form and submit it to their landlord. In this declaration, renters assert that they meet the requirements and would likely become homeless or required to live with other people in close quarters if evicted.
Rental assistance
Utah has used funding from the CARES Act to establish a pandemic rental assistance program for those who need help making their rent payments. Those who qualify may receive up to $2,000 a month to pay for rent and utilities.
To qualify for rental assistance, you cannot make more than the median income in your area. You must also show that you have had a loss of income or financial hardship related to COVID-19. The residence must also be in Utah.
To learn more about the rental assistance program, visit the Utah Department of Workforce Services website at jobs.utah.edu. Look for information on the Pandemic Housing Assistance program. The website will direct you to the local organization in your area that is managing the rental assistance program. Renters may also call 2-1-1 to find their local agency.
Landlords are also allowed to apply for rent assistance on behalf of their tenants. Information about the Landlord Housing Assistance Program is available on jobs.utah.gov. Landlords must apply for the funds each month and rent payments will go directly to the landlord.
The rental assistance program ends Dec. 30, 2020. Funds are only available to tenants and landlords who have not received assistance from other local, state or federal resources.
To learn more about other real estate issues related to the pandemic, contact a local Realtor. Find a directory of Utah Realtors at MyRealtorStory.com.
It may be the end of summer, but Utah’s hot housing market doesn’t appear to be cooling down.
Utah real estate continued its exceptional bounce-back from the pandemic shutdowns with a nearly 8% gain in closed home sales and a whopping 24% increase in pending sales.
Utah Realtors sold 5,966 properties in August, up from 5,544 sales during the same month last year. That’s according to new numbers from the Utah Association of Realtors.
So far, home sales are up 3% for the year. That’s no small feat considering that 2019 holds the record for the most houses sold in Utah in a single year.
“While I did very much expect the housing sector to be stable during the pandemic-induced economic shutdowns, I am pleasantly surprised to see the industry bounce back so strongly and so quickly,” said Lawrence Yun, chief economist of the National Association of Realtors in a press release about U.S. home sales.
The U.S. housing market is experiencing a similar rebound with August transactions up 10.5% from a year ago and pending sales up 24%.
“Home sales continue to amaze, and there are plenty of buyers in the pipeline ready to enter the market,” Yun said. “Further gains in sales are likely for the remainder of the year, with mortgage rates hovering around 3% and with continued job recovery.”
With the surge in pending sales, which represent properties that are under contract, Utah home sales are also likely to remain strong in the coming months as those transactions are finalized. Buyers are also expected to continue to benefit from affordable borrowing rates.
“Tremendously low mortgage rates — below 3% — have again helped pending home sales climb in August,” Yun said. “Additionally, the Fed intends to hold short-term fed funds rates near 0% for the foreseeable future, which should in the absence of inflationary pressure keep mortgage rates low, and that will undoubtably aid homebuyers continuing to enter the marketplace.”
Another sign of the strong interest in the housing market is the surge in prices. The median price of homes sold in Utah increased nearly 11% in August, marking 101 straight months of year-over-year gains. At $360,000, the median is $35,000 higher than it was in August 2019.
On the national level, prices are also up 11% to $310,600.
A lack of housing inventory is pushing prices up. In Utah, the number of homes for sale fell 45%. At the end of August, there were only about 8,000 homes for sale, which is a record low. If there were no new listings, the supply of Utah homes for sale would be depleted in less than two months — another record low.
“Housing demand is robust but supply is not, and this imbalance will inevitably harm affordability and hinder ownership opportunities,” Yun said. “To assure broad gains in homeownership, more new homes need to be constructed.”
While inventory has been scarce over the past few years, the problem has worsened due to home construction challenges.
“Over recent months, we have seen lumber prices surge dramatically,” Yun said. “This has already led to an increase in the cost of multifamily housing and an even higher increase for single-family homes.”
The demand for housing has also surged as people’s housing needs have changed during the pandemic.
“The past few months have shown how valuable real estate is in the country, both to our nation’s economy and to individuals who have been given an opportunity to rethink their location and redesign their lifestyle,” said Vince Malta, president of the National Association of Realtors.
In this competitive landscape, it’s more important than ever for buyers to work with a Realtor who can help them secure a home. To find a Realtor who works in your neighborhood, visit MyRealtorStory.com.
