Robust Home Buying in April
The month of April is turning out to be quite a month in the real estate business. Sales of existing homes continue to be robust, and we see in our own data from Bergen County how that activity is translating into an increasing pace of homes going under contract, which means that buyers are quickly placing offers on homes in order to lock in the deals. So this leads one to wonder, what is driving this demand and can it be sustained? Let's dive into a few clues as to why this is happening:
The Evidence is in the Mortgage Data
Even as the pandemic continues to place a damper on the economic outlook for many businesses and by extension, the people behind them who also are homeowners and/or homebuyers are still very much active in the real estate scene. According to a recent report by the Mortgage Bankers Association, new mortgage applications for the week ended April 18th jumped up 8.6 percent compared to the previous week, which correlates with the higher bidding volume we have observed recently.
Normally, we would want to corroborate our pending home sales data with the stats published by the National Association of Realtors, but their report for the month of March is not due out until April 29th. But the mortgage bankers data referenced in the previous paragraph, combined with our own weekly data, appears to indicate that the outlook is promising nonetheless. While this is exciting news for us realtors, it does beg the question, is this sustainable given that there is talk of mortgage interest rates rising in the second half of this year?
This Rally Has Legs and Will Keep Going
As it turns out, there are other ways to correlate our data about real estate activity with the data shared by others in this business, and their analysis of the same. For instance, the folks at Norada Real Estate Investments are convinced that the prospect of rising interest rates will not deter the markets in the remainder of this year. They determined that the inventory of available homes for buyers to bid on equals only about 4.8 months worth of supply. This figure is normally higher, and they noted that since home building continues to be on the weaker side due to rising lumber costs, there is no reason to expect a big boost in inventory anytime soon. Thus we are sort of stuck with the ongoing reality that people need homes for a variety of compelling reasons, and even the threat of rising interest rates will simply not hold them back.
The Waiting Game is Not Worth the Risk
Given the seller-dominated markets we are seeing, and buyers continuing to line up to bid on homes, we do not think it is wise for those waiting on the sidelines to keep waiting. This is especially true now with the need for people to work from their homes more than ever, and also to enjoy the summer season to cope with the stress. Since buying a home can take a month or two to complete, it would be wise for homebuyers to get started today. If you do decide to jump in, please be sure to reach out to me with your questions or requirements and I would be happy to help!