Prior to COVID-19, the Counselors of Real Estate reported annual job growth in the U.S. had dropped from roughly 3 million in early 2015 to about 2 million in 2019. Industrial production expansion peaked in mid-2018 and had decelerated into negative territory by late 2019. Growth of the labor force had declined from the double-digit pace of the final three decades of the 20th century to less than 8% from 2000 to 2019, driven in part by the reduction in the U.S. birth rate (https:///www.cre.org/external-affairs/2020-21-top-ten-issues-affecting-real-estate/#economic).
In dealing with COVID-19, society has changed how we work as so many businesses have had to embrace employees working from home and meeting online. Socializing has become more distant and less frequent. Some businesses have failed and many jobs have been lost. Our country and its citizens are experiencing higher debt levels than any time in history. Real estate demands in 2021 have been high, partially due to the low interest rates and a lack of homes for sale. Sellers are improving their homes and staying put, which means buyers have become competitive in order to purchase the properties that are for sale. But, statewide, the number of pending sales reported by the Virginia Realtors Association dropped 5.5% between May and June.
Pending sales are listings that have gone under contract in the month and are a leading indicator of where the closed sale numbers will be a month or two out. With demand beginning to slow and inventory inching up (according to the July Real Estate Monitor published by the National Association of Realtors), the median existing home sales price rose 17.8% year-over-year to $359,900, a slower pace compared to the prior month. The median sales price of single-family homes rose 18.6% year-over-year to $367,000. Supply still is tight, with homes continuing to sell more quickly at a median of 17 days, compared to 22 days one year ago.
What does this mean for you and me?
A “cooling off” of the real estate market is healthy for the market in general. However, if you’re thinking of selling your home, you still can expect a quick sale at top price, but you may not see the “frenzy” with multiple offers at 20% more than the asking price within the first three days of listing. If you’re thinking of buying a home, you still can get the lowest interest rate in mortgage history, which likely is to generate a lower payment than renting a similar home.
Your Realtor can guide you through the process, make recommendations and get you connected with other trusted professionals. Your Realtor knows your local market and has your best interest at heart.