With President Biden’s recent announcement that all American adults will be eligible to receive COVID-19 vaccines by May 1, lockdown-weary citizens are anxious for the world to go back to “normal.” But will it? Even more importantly for would-be homebuyers, will vaccinations and the potential for greater freedom of movement loosen up a tight housing market?
We’ve got the scoop on six things to watch for in the housing market as COVID-19 shots hit the arms of more and more Americans:
1) Available housing inventory will increase.
Plenty of homeowners who have been thinking about selling put plans on hold with the pandemic due to a combination of factors: worry about the stability of the economy and/or their jobs, concerns about virus-carrying strangers entering their homes, and caution over what home values and prices would do with a global pandemic in full swing.
But thanks to federal economic stimulus, a booming stock market, low-interest rates, and ever-increasing vaccine availability, those reluctant sellers are going to start putting their houses on the market in the coming weeks and months.
2) Construction starts will climb.
If you’re looking for new construction to give you more choices when it comes to home design and features or you just don’t want to pay the more premium prices for already-built homes, there’s good news in residential construction. The National Association of Home Builders is predicting builders will construct more than a million single-family residences in the next 12 months in response to tight housing inventory as well as affordable credit.
3) Home prices will level out.
You’ve likely read about the bidding wars in today’s housing market (if not experienced one or two directly). One of the nice side effects of more sellers putting houses on the market and more construction starts will be a loosening of inventory. That, in turn, will cause escalating home prices to level out in the coming months, making homeownership more affordable for more people.
4) Urban living will become more affordable.
Have you been longing to own a trendy loft downtown or purchase a penthouse condo with city views? As the pandemic has driven a lot of wealthier buyers out of the city and into the suburbs and countryside, now might be your chance. With vaccinations on the rise and decreasing concerns about social distance, taking that promotion that requires in-person work at corporate headquarters and buying a luxury condo in the city might suddenly become more attractive to more young millennials who initially couldn’t afford higher-priced urban residential real estate.
And more affordable downtown living could remain a trend for quite a while as the exodus from the suburbs of the previous generation reverses itself.
5) It’s going to be cheaper to buy than to rent.
While conventional real estate wisdom already points to the many reasons it’s often cheaper to own rather than rent a house (mortgage tax deduction, anyone?), this is going to become even more the case in coming months as pandemic-inspired moratoriums on evictions end for renters. In an effort to recoup all the money they lost not collecting rents for months on end, landlords are probably going to start raising rental rates significantly. Before you sign that new lease, consider the cost of renting versus buying.
6) Mortgage interest rates will rise.
With increasing vaccination rates hitting more of the U.S. and global population, the economy will continue its upward recovery, and that means you can say goodbye to the historically low mortgage interest rates of the last few months. If you can fund a down payment and find a home you want now, it’s probably a good time to go ahead and buy before the cost of borrowing for homeownership gets pricey again.
Ready to take advantage of today’s low mortgage interest rates and booming housing market to start planning for that first-time home or an upgrade to a more spacious residence? At OVM Financial, we can help. Jumpstart your mortgage application process with our easy QuickStart application.
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