Home prices in the pandemic: dig deeper into the data

Dated: October 9 2020

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See why the U.S. housing market continues to thrive, six months into the COVID-19 pandemic

In the early days of the COVID-19 pandemic, we were faced with a world of unknowns. Lockdowns across the country created lack of access to homes for showings, inspections, and appraisals. Unemployment numbers spiked precipitously, reaching nearly 15% in April. Economists predicted that home prices would decline 3-10% over the coming year.

Sure enough, the United States saw a slump in the spring homebuying season from April through June. Yet, as much of the country continued fighting COVID-19 throughout the summer, the housing market began an aggressive recovery. In the six months since the start of the pandemic, home prices have risen at an annualized rate of 6.9%, according to September 2020 data from the Radian Home Price Index.

The Radian Home Price Index, provided by Radian’s subsidiary Red Bell Real Estate, LLC, is the most comprehensive and timely measure of U.S. housing market prices and conditions. The index is calculated based on the estimated values of more than 70 million unique addresses each month, covering all single-family property types and geographies. Digging deeper into the data, we can see a number of interesting trends.

A tale of three quarters

Strong demand and low supply continue to put upward pressure on home prices. Days-on-market hit record lows in the last few months for both active listings and homes sold. Additionally, mortgage rates have been hovering at historic lows—under 3%—for weeks. Finally, home demand is benefiting from a shift out of big cities and into suburban areas, where there are more single-family homes.

High quality lending

While many people initially saw the economic impact of COVID-19 as a parallel to the great recession, today’s lending environment is barely recognizable compared to that of 2008. The quality of mortgage products, underwriting, and servicing standards has improved dramatically over the past decade through regulatory reform and improved business practices, which is helping ensure sustainable home ownership.

Government intervention

Congress swiftly passed the CARES Act in March 2020, which along with housing agencies has provided mortgage forbearance and unemployment benefits to people affected by the pandemic. This meant that when nearly 15% of Americans lost their jobs in April, homeowners were protected from default, foreclosure and eviction.

There are also good reasons to believe that other factors will further support home price appreciation throughout the fall. For one, the Federal Reserve recently signaled that interest rates will remain low through 2023, and the housing agencies have extended forbearance and foreclosure moratoriums until into 2021. Finally, the upcoming presidential election means there will likely not be any adverse changes in housing policy until at least the new year.

While no one can say for certain what the long-term impacts of the pandemic will be, we can certainly say it has taken the housing market on a wild ride this year.

Original Source: Inman News


I wanted to piggyback on the above article so that you can see how our market compares to the rest of the country. This comparison may not exactly be apples to apples as the comparative differences of the mostly Primary Residential Properties Nationally being compared to Resort Residences Locally, nonetheless the information is valuable. As part of this comparison please note that I added the Average Sales price of sold properties compared year over year for each of the first 3 quarters of 2020 with a second graph showing the percentage increase in sold prices for each quarter, again year over year. I believe the graphs speak for themselves.

The most beautiful time of the year agreed by just about anyone you talk to who frequents our gulfcoast is
October and this year is no different, well, with one exception. The vacation rental seasonseems to be in full
swing, the roads are busy, the beaches are being enjoyed by many and the storeparking lots are mostly full.

Recently I’ve been speaking with a number of prominent Vacation Property Manages and they allconcur, rentals from peek season have as usual fallen off, just a little and it seems that folks will bevacationing here well into December. With the prospects associated with COVID threatening a ruinedvacation rental season has continued to deliver surprising weekly rental occupancies, when this will 
return to our usual cycle nobody really knows, guests seem to keep on coming down and our
communities & businesses continue to be the beneficiaries.

Interesting real estate market since the first quarter with a January that started out strong until restrictions 
were put in place in March we experienced new lows in sales numbers as units sold. Then there was May, we
saw improving sales that remained steady until the end of August. Historically July & August are not big selling months, this year they were consistent with our strong selling months of May & June. The September surprise
was that amazing spike in sales until October and BAM!, the fall came down as fast as it had gone up.

Inventory is key, without it we can have no sales, as an economy housing was expected to be the driver.
Something needs to change, property owners who planned to sell are staying on the sidelines
waiting & attempting to time the market, this not only not possible, it’s a bad idea.

Just like 2009 when we had plenty of inventory and not enough buyers everyone was attempting to time the
market, those who bought in 2009 have significant equity today, those who waited until 2013 missed out.

A new ceiling driven by rigid lending practices, unlike 2004 – 2006, todays buyers are qualified, and we continue
to see pent up buyer demand. Unfortunately, and for the most part the remaining unsold inventory is old & tired
inventory, the few new properties that come to the market, that are pricedcorrectly sell in record time.
In spite of all we hear about growing property values overpricedproperties are not selling. Key to selling today, as
always is to price a property based on recently soldcomparable properties and nothing else.

Please appreciate that I personally harvest this data directly from our local MLS and create the graphs myself.
This info is specifically for inventory in Destin, Miramar Beach, Santa Rosa Beach, 30A,
Inlet Beach & Point Washington market areas. I ran this data today, October 12, 2020 @10:22am, is deemed
reliable, but not guaranteed.

Blog author image

Richard Eimers

I have been a Florida Licensed Realtor for over 24 years, have SOLD more than $550,000,000 worth of every kind of real estate from Pensacola to Destin to 30A and Panama City Beach. With over 20 years....

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