Summer is almost here, which means the busiest season for real estate is upon us. Historically, the months of April through July account for nearly 40% of annual home sales as buyers and sellers alike take advantage of warmer weather to relocate or pursue new real estate opportunities.
This year, however, with the spread of COVID-19 across the United States and the globe, many things have changed in both our daily lives and in the economy. The home buying season traditionally begins in the spring, and while the pandemic has impacted all areas of life, many real estate markets continued to thrive this spring. This is partly due to action taken from the Federal Reserve. The nation is experiencing historically low-interest rates, making home buying more accessible in a time when home is the safest place to be.
Real estate agents have also risen to the challenge presented by the global pandemic. Customer-focused services—from virtual open houses to curbside closings—allow agents to safely show homes and manage transactions while still practicing social distancing measures. The innovative techniques that agents are adopting during this time mean houses are selling, buyers are still buying, and all parties are remaining safe and healthy.
What do these changes mean for home buyers earnestly seeking to purchase this summer? Real estate is an essential service, and as homeowners continue to upgrade or downsize, relocate for new jobs, or move to be near family, the housing market will continue to progress. The stage is set for the 2020 summer home buying season to be especially active as shelter in place orders begin to lift. Sellers are eager to relocate and home buyers are ready to take advantage of historically low mortgage rates.
If you are preparing to buy, sell, or invest in real estate this summer, it is important to understand what factors may influence your experience. Is now the right time to buy? Will low housing inventory, high prices, or COVID-19 slow the market? Designed for real estate agents, new home buyers, and sellers alike, this essential guide highlights the most significant trends and latest predictions for the 2020 summer home buying season. As you pursue real estate opportunities this summer, here is what to expect, how to prepare, and how to get the most out of real estate’s busiest months.
How will COVID-19 impact the Summer Home Buying Season?
Spring has traditionally signaled the start of the home buying season, a season that also stretches through the summer. The most notable reason for increased home sales in this season is the weather. Homeowners are more inclined to make repairs, put their homes on the market, and take on the task of moving as the weather improves, and the days grow longer and warmer.
It is also true that regions with lower housing inventory or warmer climates may experience a year-round home buying season—with minor spikes in home sales caused by factors other than weather. Despite this, however, summer continues to mark an active real estate market across the country, with advantages for both buyers and sellers.
But many homeowners and home buyers are left to wonder how the current global pandemic will impact the summer home buying season. Will home sales slow? Will people be too afraid to purchase? Will housing prices drop?
At the start of 2020, the summer home buying season was predicted to flourish as home prices steadied, mortgage rates dropped, and competition increased due to lower-than-normal inventory. All of these factors are still in effect as we move toward the summer. Buyers will begin to see an increase in housing inventory as sellers grow more comfortable listing their homes. While COVID-19 is certainly impacting the housing market—like everything else—here is what buyers and sellers can expect to see this summer.
Steady Housing Prices
One of the biggest questions home buyers and sellers face right now is whether or not the pandemic will impact housing prices. Our most recent experience with a recession was linked to the largest housing crisis of our generation.
Pandemics, however, don’t necessarily have the same impact on housing as the average economic recession. Zillow did a study on pandemics and the housing market and found that housing prices stayed relatively steady throughout the pandemic. The cause is two-fold. First, the housing market is not as volatile as the stock market and reacts less dramatically to economic changes. Secondly, as homeowners hunker down during shelter in place orders, less inventory listed for sale means that competition is still high and sellers don’t need to drop their price to garner interest.
As we head into the summer home buying season, these trends indicate that we will continue to see steady prices (if not price increases), competition, and home buyers eager to take advantage of the season.
Increased Use of Technology
One of the biggest changes home buyers and sellers will see this summer is the use of technology for the real estate transaction.
Summer home buying season will include many of the digital tools that real estate agents have been adopting nationwide over the past few months. If you’ve never experienced a fully digital home buying or selling experience, this might be your chance.
Statistics indicate that in the third week of March, there was a 500% increase in requests for agents to do a virtual showing/walkthrough for interested buyers. Agents and sellers were happy to comply. With just one person entering the home, rather than entire groups of people, sellers and agents could work together to provide safe, sanitary digital showings. Agents simply use precautions like gloves, masks, and shoe coverings and do a walkthrough with their client on the other end of a video call. The agents can easily answer questions, show the entire home, and hone in on specific rooms or areas the client wishes to see—all while keeping the seller and their family safe.
Virtual tours also saw an uptick in requests. By the second week of April, one-third of requests were for a virtual home tour. Virtual tours made up only .2% of all tour requests the month prior.
New Real Estate Processes
Along with increased technology use, we’re also seeing an entirely new approach to the home buying and selling process. The summer home buying season will likely be marked by many of these changes.
Buyers, sellers, and agents can expect to continue social distancing measures during the summer home buying season. While shelter-in-place restrictions begin to slowly lift, the CDC continues to highlight social distancing recommendations. Here’s what that could look like as you buy or sell your home this summer.
- Remote signing or curbside closing: Using eSignature technology, many agents and their clients are opting to do remote signings. Others are participating in drive-thru, digital, & contact-less closings, where all parties remain in their vehicles and the agent provides the proper documents from the curb.
- Sanitary home tours: Agents and sellers will continue to use caution when opening up homes to buyers. This can look like wearing masks and gloves throughout a showing, not touching surfaces in the home, and agents wiping down light switches and doorknobs on their way out.
- Virtual Open Houses: Much like the virtual home tours, these open houses take place on platforms like Facebook Live as agents show the house to a virtual audience, answer questions, and generate interest in a home.
Depending on your state or region, these new practices may still be in effect throughout the summer. Either way, if you are an agent or experienced home buyer, expect the process to look a little different during the summer home buying season.
Seasonal Trends That Will Remain the Same
Not everything in real estate will be impacted by COVID-19 this summer. In fact, there are several trends in the summer home buying season that will likely remain the same as in previous years.
The nation’s students are finishing their school year online, but that doesn’t mean the summer holidays won’t still have an impact on the real estate market. Families choosing to move will still do their utmost to make the move during the summer break.
In fact, as restrictions begin to lift in some areas, home sales are likely to see an increase. Finding the right house, especially in a new or unfamiliar area, can take several months. Once the perfect home is found, closing can take a minimum of another 30 days—although the most recent reports from Ellie Mae indicate that the average time to close in January this year was 48 days.
This timeline plays a huge role in a family’s decision to move and is even more significant now as families have less time to sell, move, and buy-in their new location. By beginning the home search as soon as possible, home buyers are more likely to locate, buy, and move into a new home in time to get their children ready for the beginning of the school year.
Better Curb Appeal
The old adage about April showers bringing May flowers isn’t far off when it comes to summer and your home’s curb appeal. With summer’s warmer weather comes new life to gardens and yards everywhere, making homes look more attractive to potential buyers.
What are the other advantages of the summer home buying season to a home’s curb appeal? Summer—and in some cases, current stay-at-home orders—brings with it the opportunity to landscape, paint, and ultimately improve the look of a home and its outdoor space. A new study in the Journal of Real Estate Finance and Economics reveals that improving curb appeal could increase a home’s value by at least 7%. If you are hesitant about diving into the 2020 summer home buying season, it may be time to reconsider and take advantage of opportunities for better curb appeal.
Navigating the 2020 Summer Home Buying Season
Despite so many changes in real estate, the many motivating factors to buy and sell in the summer—warmer weather, end of the school year, blooming gardens—are just as important this summer as any other year. And they all lead to two very important outcomes: increased housing inventory and increased competition.
More inventory means more choices for home buyers. For those who may already be browsing the MLS with little success, the increased inventory poses an exciting opportunity to finally find the perfect home. Likewise, first-time home buyers, newlyweds, or those looking to relocate for jobs will benefit from having more options than at other times of the year.
For homeowners looking to sell, summer brings with it a much higher level of competition and motivated buyers. As families look to move before the new school year, newly married couples search for their first home, and people take advantage of moving while the weather is good, sellers can expect more offers, bidding wars, a higher sale price, and faster home sales.
The 2020 summer home buying season will be no different, with increased inventory and competition both playing a role. Yet, other trends in real estate this year will also influence whether or not summer will be the best time to buy and sell. From lower-than-average inventory to fluctuating housing prices, here’s what you need to know about 2020 real estate trends and predictions and what that means for you.
Top 2020 Home Buying Trends
Housing statistics and home buying trends are constantly shifting as buyers and sellers choose to pursue real estate investments—or not. Today, that is more true than ever before as we continue to see how trends play out in the midst of COVID-19. While not all predictions hold true—sales of new single-family homes in January of this year jumped 7.9% from December, far exceeding expected market growth—changes in the economy, pricing, and even construction will influence this summer’s housing market.
Lower Mortgage Rates
The Federal Reserve cut interest rates three times in 2019, exhibiting the first cut in rates since the recession. These cuts resulted in lower mortgage rates, which was good news for home buyers everywhere. In November 2018, the average mortgage rate for a 30-year-fixed loan was 4.94%.
Since the beginning of 2020, and the dramatic impact of the COVID-19 pandemic, the Fed has issued two emergency interest rate cuts, dropping its benchmark rate to 0% and causing mortgage rates to drop to 50-year lows. What does this mean for buyers seeking mortgages? Experts are expecting to see 30-year-fixed loans as low as 3.0%, opening up opportunities for buyers to purchase in areas that were previously unavailable to them.
These lower rates allow home buyers to have more purchasing power, as they are able to afford larger loans, helping them keep up with increasing home prices. Rates are predicted to remain low as we head into the 2020 summer home buying season.
Decline in Inventory
One of the biggest struggles home buyers may face this summer is a nationwide decline in housing inventory. December brought a 12% year-over-year decrease of houses for sale, bringing inventory to the lowest it had been since January 2018. Houses priced below $200,000 saw an even larger decline, limiting housing options for people seeking that price range.
Houses priced between $750,000 and $200,000 also saw a significant decrease in availability, while luxury homes only declined by about 4%. In fast-growing metro areas, the housing decline has been even more dramatic, with annual dips of 31% and 39% in Phoenix, Arizona, and Sacramento, California.
What is causing this seemingly sudden decline? There are several factors at play in today’s housing market, including the average homeowner choosing to stay in their homes for longer periods (tenure is around 13 years) and a majority of homes occupied by owners who are age 50 and older and choosing to stay put.
Similar to the mortgage rates, home buyers are wondering if the housing inventory will remain low and what that means for home purchases this year. Despite the reduced housing options at the end of 2019, the beginning of this year left plenty of room for optimism for the 2020 summer home buying season. Mortgage applications have been at their highest level since 2009, indicating that home buyers are undaunted.
Likewise, the National Association of Homebuilders (NAHB) Housing Market Index—based on a survey of NAHB members who rate market conditions for new, single-family home sales—recently reached a 20-year high. Real estate builders and economists alike are seeing a positive trend in the housing market, indicating the 2020 summer home buying season will provide plenty of opportunities for both buyers and sellers alike.
A New Generation of Buyers
As the majority of millennials have now reached their 30s, they are starting to turn their attention toward homeownership. According to predictions, 51% of mortgages in 2020 will be pursued by millennials, significantly more than both Gen X and Baby Boomer home buyers.
This new generation of homeowners avoided the housing market much longer than previous generations, opting to rent in urban areas while housing prices and mortgage rates remained out of reach. In some cases, millennials will skip the starter-home entirely. Instead, the longer season as renters led to more savings toward larger down payments that will allow them to dive into the market this year, despite the low inventory. The 2020 summer home buying season is set to bring some major changes in real estate purchasing trends.
Shift Toward Suburbs and Exurbs
The new generation of home buyers indicates a likely transition from urban real estate to homes in the suburbs, exurbs, and smaller metropolitan areas. In fact, by the middle of 2019, many suburbs with jobs, conveniences, and accessibility to large cities were growing faster than their nearby metro areas.
The Emerging Trends in Real Estate report from PwC and the Urban Land Institute highlights the emergence of “hipsturbia”, the thriving suburban center that mimics the downtown of any major city, providing a place where you can live, work, and play. As the suburbs and exurbs become more attractive—and housing prices remain more affordable than in urban areas—home buyers are choosing to make the move.
Increased Housing Prices
Housing prices have been steadily increasing over the past five years and despite current conditions, this trend is continuing today. March housing market reports indicate that, while inventory has decreased across most markets, the median listing price was 3.8% higher than this time last year. Not only that, but homes are selling faster.
The summer home buying season will likely bring a continuation of this trend in many—but not all—markets. For cities that are experiencing a more significant decline in inventory, such as Phoenix and Sacramento, the prices will likely jump faster and higher than other markets as more buyers join the search for a new home. Prior to COVID-19, the national median sale price of existing homes was expected to grow by 4.3% during 2020. Only time will tell if this will occur, or if home prices will increase even more than expected in the midst of a competitive market.
Increases in home prices are largely based on region, state, and even local trends that cause higher demand. A local real estate agent is the best resource to help guide you through the specifics of housing price trends in your market for the 2020 summer home buying season.
A Rise in Single-family Home Construction
For home buyers looking to invest in new construction, options are right around the corner. There will be an expected 1 million new single-family home starts in 2020, adding much-needed structures to the housing supply across the country.
Lawrence Yun, chief economist for the National Association of Realtors (NAR) predicts that the median price for a new home will remain steady in 2020, making new construction a viable option for home buyers who may be priced out of the market for existing homes in their area. “In 2020, more home-building activity and consequent growth in supply should tame down-home price gains,” Yun told the Washington Post. “That’s a healthy development for potential home buyers.”
Is Summer 2020 the Best Time to Buy or Sell?
The 2020 real estate trends provide advantages for both buyers and sellers. Despite the decline in inventory of both new and existing homes, supply will increase—perhaps beyond what is predicted—as we shift into the summer home buying season and begin to loosen shelter-in-place orders.
Demand for homes will remain high as millennials choose to become homeowners, giving sellers a chance to move their property faster and at a higher price. In fact, competition is so high this year that buyers in 20 of the top 100 markets have started searching for homes even before the summer home buying season begins. Even as people hunker down at home, they are still making plans to relocate for jobs, downsize, or upgrade their living situation. People still need to buy. This is great news for sellers wishing to get more for their homes.
Do increased prices, competition, or COVID-19 mean you simply shouldn’t buy this summer? Buyers will still be in a great position to find new homes, especially as lower interest rates give you more buying power than previously, allowing you to pursue a wider price range than ever before. Also, if you care more about selection than getting a discount, then summer is a great time to buy.
If you’re planning to relocate and need to get your house on the market, you’re buying for the first time, or you want to take advantage of current market trends in order to invest, this home buying season is ripe with opportunity.
But preparation is key, and with a little help from our resources at LemonBrew, both buyers and sellers will benefit from the summer home buying season.
How to Prepare for the Summer Home buying Season
When it comes to buying and selling a home, one of the first things we do is peruse the market for homes we love, to compare prices, and to find out how much that house nearby just sold for. Research is an important part of the home buying experience, but a few other steps along the way will help you better navigate the process of buying or selling your home this summer.
Before Buying or Selling
Getting your mortgage in order before you begin looking for homes will help you keep a competitive edge over other buyers—an important factor in this competitive summer home buying season. In fact, the further along you are with your mortgage process, the easier it will be to make an offer and close swiftly once you find a place you love.
Look for mortgage lenders with competitive rates and great customer service. Once you’ve found a great lender, get the process started as soon as you know you’re ready to buy.
Choose Your Location
Where you are choosing to move is likely determined by your reason for moving: a new job, marriage, transition from urban to suburban living. Once you’ve narrowed down the city or town you’re choosing to move to, do some preparatory research to decide what neighborhoods or areas are most appealing to you and/or your family. Determine how far from schools, shops, or work you’re willing to be. With a little bit of prep-work, you and your agent will be able to hone in on how the 2020 trends are influencing your location, and where/how to find the best house for the best price.
Find an Agent
LemonBrew’s proprietary matching algorithm makes finding an agent easier than ever. And not just any agent. With LemonBrew you get matched with a hyper-local agent who has exceptional experience in your location. Now that you’ve done the preliminary work to start your mortgage process and research your desired location, your agent will be able to help you discover great homes in your area and within your budget. LemonBrew’s agents are also unique in that you, the buyer, receive a portion of your agent’s commission as a cash rebate when you close on your home.
If you’re preparing to sell this summer, a local LemonBrew listing agent will help you stay ahead of market trends, monitor comparable sales in the area, and determine a list price that will garner competitive returns.
Decide When to List
Studies indicate a variety of ideal times to list your home for sale. Some show May to be the most active month, while another report highlights the first week in April as the best time to list. According to this study, houses listed in April have more views, sell faster, and experience up to 6% higher prices.
Your local market, however, may not follow this exact trend. COVID-19 will also have an impact on this trend as fewer people choose to list in April than in previous years. Ultimately, listing when your home is ready to sell is the best practice for homeowners. If you list right at the start of a month, but still have work to do in order to get your home show-ready, the added traffic and views may not get you the results you are hoping for.
Working with your competitive LemonBrew real estate agent, you can establish a plan to get your home sale-ready and on the market in time for the 2020 summer home buying season.
For both selling and buying, it is important to remember to keep your pricing competitive. Overpricing your home can have a damaging effect on your real estate prospects. If you overprice and your home is on the market too long, buyers will hesitate to consider your property. Dropping the price multiple times will have a similar impact, causing home buyers to question the quality and value of your home.
For buyers, making a low-ball offer in a competitive market could cause you to miss out on a house you love. Do your research and work with your agent to come up with a competitive offer. Don’t feel like you must offer more than the house is worth to you—or list the house for much lower than fair market value—but understand the trends of the 2020 summer home buying season and choose to stay competitive in an ambitious market.
Tips for Newlyweds and First-time Home Buyers
If you’re newly married and eager to buy your first home this summer, a few extra steps of preparation will go a long way in helping you master the summer home buying season. Are you a first-time home buyer taking on the joys of homeownership alone? These tips still apply.
Buying your first home comes with a lot of unknowns, time, energy, and expectations.
Communication, planning, and working openly with your real estate agent are all great ways to ensure you take advantage of the increased buying opportunity this summer.
Do Your Financial Research
If you’ve taken the step toward mortgage pre-approval, then you’ve likely already started your home buying research. If, however, you’re feeling a little overwhelmed at the thought of buying a home, this is a good place to start.
For newly married home buyers, take time to review your financial situation with your partner, going over your credit score, savings, and financial goals. Buying a home is a huge decision, and being in sync regarding your financial present and future will allow for a more peaceful home buying experience.
Once you make the decision to move forward with buying a home this summer, be sure you don’t also have other large purchases that need to be made at the same time. Once you begin the mortgage process, you will need to withhold any other financial decisions or debt that will impact your credit.
If you’re looking for ways to save on your upcoming home purchase, consider getting matched with a LemonBrew agent and earning a cash rebate when you close on your first home. Other tools such as LemonBrew Abstract offer quick, efficient title, escrow, and payment options.
Determine Your Non-negotiables and Must-haves
Communication is essential when it comes to buying a house with your significant other, friend, or family member. Even buying your first home on your own requires a level of self-reflection, honesty, and understanding your own expectations.
Sitting down and making a list of everything you need, want, and expect in a house will allow you—and your partner—to openly reflect on each other’s different needs. When you find yourself adding items that you know won’t match your budget, work together to determine which features of your home are necessary, which ones would be useful, and those that would simply be nice to have. When it comes to buying your home this summer, you’ll be prepared to say no to some items on your list so that you can say yes to a home that meets all of your needs.
Stick to Your Budget
Part of determining your expectations and must-have features is to ensure you are able to stick to your budget without feeling disappointed with what you can or cannot afford. Buying a home should be exciting, and it is even more exciting when you get what you want and need while also managing your money.
If home prices seem outside your budget in the summer 2020 home buying season, ask your agent what options you have or if there are homes to consider just outside your preferred area. Many home buyers are making the transition to up-and-coming suburb or exurb regions that still give them access to public transport, city centers, and great jobs.
Take Your Time
When it comes to buying your first home, or any home, give yourself time to find the right option before making an offer. Buying a home is a huge investment and you want to feel confident in your choice, your budget, and your future in your new home.
In a competitive and cautious market like the 2020 summer home buying season, taking the time to prepare, plan, and establish your financial and home buying needs will allow you to make the right choice at the right time. And when you do find that home you love, you’ll be ready with a pre-approved mortgage, a local agent, a budget, and a clear path to home buying success.