The real estate market is booming, low interest rates buy-sell market
Real estate, particularly residential real estate, is an industry that flourished during the pandemic and continues to be successful.
After the pandemic put everything on hold for the first months of last year, the real estate market was on fire in most parts of the country.
Over the past year, low mortgage rates and an increase in the number of people working from home due to the pandemic have fueled a rapid increase in demand for housing. Despite uncertain economic conditions, the residential housing market is booming.
Last year was the best year for existing home sales since 2006. So far in 2021, the national housing market continues to be hot, pushing up house prices, with many homes selling as well. quickly that they arrived on the market.
The local market is following this trend according to Greg Hoftiezer, owner and broker of Hoftiezer Real Estate in Watertown.
“The Watertown market is indeed hot. I have never seen anything like it in 40 years in the business. We have had buyers and sellers markets in the past, but nothing like what is happening now, ”he said.
A report on the site www.Realtor.com revealed that the average home price in Watertown in May was nearly $ 235,000, up 28% from a year ago.
Recent national studies show that 47% of those surveyed agree that now is the right time to buy a home. In the same study, 67% think it’s a good time to sell a house.
Affordable housing is where the greatest need is reported locally and nationally.
“I would say there is a shortage of affordable housing in Watertown and that relates to the rental market as well as the units available for purchase. The real estate market, like most other markets, is driven by supply and demand, ”Hoftiezer said.
Millennials make up the largest share of home buyers in the United States With lower interest rates, they are now deciding that buying is more profitable than renting in a growing number of parts of the country. Many of these millennials have saved up money they would otherwise have spent during the pandemic, providing them with funds for a down payment.
“Millennials basically only have known low interest rates,” Hoftiezer said. “When rates eventually get back to ‘normal’, say 5% or 6%, which is almost triple what they are today, I think the markets will stabilize for good. “
Another reason for this seller’s market is that the Federal Reserve is keeping borrowing costs low for short-term loans to member banks. This has a significant effect on all kinds of interest rates, including mortgage rates. The federal government has announced its intention to keep rates low until 2022.
The increase in the number of people working from home has contributed to the housing boom. For many who will continue to work from home full time or at least part time, it makes sense to live in a cheaper city with lower taxes and lower house prices. The need for a space to work from home can lead to the need for a larger home.
Real estate is considered a good hedge against inflation. Government spending during the pandemic, and as it ends, has driven up the prices of many goods and services that lead to inflation.
Some fear that the current boom in the real estate market will not last forever. The last time the market heated up it ended with the subprime mortgage crisis that led to the Great Recession of 2008. Hopefully lenders have learned their lessons on issuing high loans. risk and that they will avoid repeating these mistakes.
Perry Haan graduated from Watertown High School in 1975. He is Professor of Marketing and Entrepreneurship at Tiffin University in Tiffin, Ohio.