Housing Market 2nd Quarter 2020
Housing Market Impacts from COVID-19
Median Sale Prices
In our last housing market update, the Median Sales Price Single-Family Homes Pre-COVID (Feb. 2020) was $319,000. June 2020 was $325,000. This is an appreciation of 1.8%. With all the negative news in the world today, we will take the positive news that home prices has remained steady.
With June’s Median Sales Price of $325,000, it represents an appreciation of 6.9% from June 2019 and year-to-date appreciation is at 4.1%. National housing prices for single family homes are relatively flat year over year. With the states that are experiencing declining population, exodus, taking depreciation while states like Nevada who are growing in population experiencing appreciation.
The best news for the housing market is Record Low Interest Rates. Just this week, we saw interest rates drop below 3%. They settled up a little but are hovering around the 3% range.
The challenge for housing is Low Inventory. In our last quarter update, inventory was sitting at 2.1 months. Inventory is the number of months of homes we have available based upon current sold home demand. June’s single family inventory was at 2.1 months. In June we sold 2,464 homes – which was a 15% decline from June 2019 – offsetting the number of sold homes was the number of new listings declining by 22% from 2019. The decline of inventory shortened our days-on-market with 59% of homes selling under 30 days and 80% under 30 days.
These graphs demonstrate the low housing inventory on the national housing market:
Sales activity for the 2nd quarter was weak in April due to the onset of COVID’s Stay Home Nevada, but rebounded mid May and June finished strong. The graph below indicates sold home activity, pending sales and new listings for 2nd quarter of 2020 compared to 2019 in the same period. Take a closer look at what happened in June, pending sales exceeded new listings. This will drive the available inventory down. Low supply and greater demand will cause an impact on housing prices.
As mentioned above, June’s available homes where effective months of availability were at 2.1 months of inventory.
Post COVID-19 – What will happen to the economy & housing market?
“The housing market is likely benefiting from low mortgage rates, stronger demand for larger spaces as more and more people work from home and a desire to move away from crowded cities to avoid exposure to coronavirus.”
Rubeela Farooqi | Economist at High Frequency Economics
Here is what the leading financial institutions in housing are predicting:
What does the Graham Team anticipate for the 3rd quarter of 2020?
Appreciation Estimate: 0% to 1% appreciation. Low inventory levels and strong demand should under normal economic conditions push prices upward. You add record low interest rates which allow consumers to have more purchasing power, and you would think our prediction would show a jump for 3rd quarter. However, we are anticipating that unemployment and consumer concerns will keep pricing relatively flat for the remainder of 2020.
Economic and Outside Factors that Influence Our Projections
Unemployment: Nevada was one of the hardest hit states for unemployment filings due to the leisure and hospitality industry being the industry with the most significant number of layoff. When hotels and restaurants reopened, we saw the unemployment decrease for short term layoff (temporary unemployment), however, we also saw the core unemployment rise in Nevada and nationally. Nevada’s unemployment rate in June was at 15% — a significant drop from the record high of 25% back in April.
A summary of the national core unemployment figures:
Migration: Even though Nevada is higher in unemployment than the national average, we will have the added benefit of migration. California is losing population at with last report about 700,000 people left the state. They are heading to Nevada, Idaho, Arizona, Oregon and Texas. The majority of the migration is middle income and they reported due to cost of living. With employers extending the work from home options, this migration could significantly increase as it will allow people to work from home in more affordable states like Southern Nevada.
Home Equity: This is one of our favorite graphs as it shows how much smarter Americans are with in home equity. They did not over leverage and did not over purchase. With 53.8% of American households having at 50% of equity in their homes, they are entering the COVID condition from a place of strength.
Interest Rate Estimate: 3% to 3.25%. Surprisingly, rates dropped below 3% last week. Record low rates are expected for the remainder of 2020.
Purchasing Power: The difference in 1% in interest rate is real money in your pocket. If you purchased a $300,000 home at 3.25% interest rate versus 4.25%, at the end of 10 years you would have $17,000 more equity. That is $17,000 more in your pocket versus the bank’s pocket.
Buyers: Is this the right time to purchase a home?
- 1st: Only for those who’s income is not affected by the closure of non- essential business.
- 2nd: If you can accept the potential that prices may fluctuate over the next six months, you are in for the long term and short term fluctuation will not cause you to stress. If you stress over changes in price points no matter how small, this may not be the time for you. If you are looking at the 5 to 10-year return and not the 6 mo.
- 3rd: You want to take advantage of the low interest rates where your purchasing power is increased. The difference between a 3.25% rate and 4.25% is $35,0000 in purchasing power. For many buyers, this is the difference for them to be able to afford the home in the neighborhood they wanted versus the one they could afford, or for them to have certain features like a pool.
Sellers: Timing will be important.
- We are seeing more online traffic of viewing our homes than ever before. Listing your home while we have record low inventory levels has advantages. Marketing is extremely important as buyers are making their first decisions online. Your online presence is your 1st impression to 90% of today’s market. How can your home be safely listed:
- Video Walk-throughs
- Virtual Walk-throughs
- No in-person showings (occupied homes) until the offer is received subject to viewing. Then the ONE buyer views your home with the strictest safety protocols. No-touch policy. We show the home with gloves, masks, and sanitizer. Our team opens the doors and handles for the contract Buyer.
- Home Inspectors: Interview to ensure they have a safety protocol in place before entry. Buyers hire home inspectors, but we make sure they have a safety protocol to follow.
- Appraisers: FHA and VA are allowing drive-by appraisals and using the listing photos to complete the appraisal.
- Get ahead of the masses who are holding off. Being part of a smaller number of available homes, while marketing to Buyers who have more time to view homes online, could give you a strong competitive advantage.
- Finally, what repairs or remodel items will bring you the greatest return when it comes time to sell? And, what items should you focus on when getting your home ready to sell? To the Buyer, not all repairs & home improvements bring the Seller the same value. We have put together a guidebook that helps you prepare your home to sell, outlining those home improvements that will bring you the greatest return. Visit for a free guide: Home Improve Guide for Re-sale:
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