Wow. What a week it has been. The best way to sum this up is from a meme I saw online. It said, “Anyone else feel like life is being written by a fourth grader right now? ‘And there was this virus and everyone was scared. And then the world ran out of toilet paper. Yeah, and there was no school for like a month!” Sound about right? I hear ya.
So what does this crazy environment we’re currently in mean for real estate? The challenge with reporting data is that most data has weeks of lag-time before it’s reported. So we won’t start to see a real picture on how Covid-19 is affecting real estate for a few weeks.
Mortgage rates went up again this week. Why? Turns out people love to refinance when rates are low and that bogged down the system. Lenders couldn’t process the demand. So, they increased prices to help decrease the demand. It’s likely only temporary as they work through the backlog.
Rates are currently at 3.65% with .7% in fees and points.
If you recall, a few weeks ago I said that I’d start paying close attention to the mortgage application numbers to see how the coronavirus was affecting home buyer demand. This metric is one that has the smallest gap from when the data is collected to when it’s reported of only five days. That means this report that was released on Wednesday covers numbers up through last Friday. It’s one of the reasons I love looking at this data.
Mortgage applications decreased 8.4% from one week earlier. Keep in mind interest rates also ticked up. So the decrease in applications could be from people avoiding buying a home right now or it could simply be a result of the rise in rates.
Joel Kan, Associate Vice President of Economic and Industry Forecasting for the Mortgage Bankers Association said, “Purchase activity was flat but remained over 10 percent higher than a year ago. The purchase market was on firm footing to start the year and has so far held steady through the current uncertainty. Looking ahead, a gloomier outlook may cause some prospective homebuyers to delay their home search, even with these lower mortgage rates.”
National Market News
Today the National Association of Realtors released their Existing-Home Sales report and it showed that on a national level we had an increase of 6.5% in February after a decline in January. We’ve seen eight straight months of increased year-over-year sales data and February was no exception. Sales increased 7.2% from February 2019. In fact, February was our strongest February since 2007. The report revealed that the median existing home-price was up 8% from February 2019 is at $270,100.
I’ll point out the obvious in stating this data comes from February, which is before the Covid-19 news started affecting our day-to-day lives. It’ll be interesting to see how this number changes next month.
Local Market News
In local market news, here are some key takeaways from February’s Monthly Indicators Report provided by North Texas Real Estate Information Systems
If you’re a seller, take comfort in a few facts:
1.If a buyer applied for a mortgage when rates were at record lows and they locked it in, they only have that rate for up to 60 days, depending on the terms of their rate lock. That gives them an incentive to move forward with a purchase.
2.We are hearing that the number of new Covid-19 cases in China are decreasing, giving us hope that we will soon follow that trend.
If you’re a buyer, you’re in a great position. Rates are still very low and sellers may be more negotiable when selling for fear of having to sit on the market while we ride out Covid-19.
That’s the update for this week.
Jennifer Shannon is a Texas real estate agent and broker, licensed since 2006.