Property sellers and real estate professionals face a tough decision about disclosures when selling a...
People and businesses that are involved in the real estate market in Nevada and Northern California are encountering significant changes in how the industry functions because of COVID-19. The pandemic has decimated certain real estate sectors like short term/vacation rentals and has changed the way that brokers and agents perform their jobs. Mortgage interest rates have plummeted, and former vacation rentals are now being listed for sale. The pandemic has rattled financial markets around the world and is now impacting real estate. What will the future hold?
Impact on Mortgage Interest Rates
As the pandemic took hold in the U.S., mortgage interest rates fell sharply. In early March, they fell to a low of 3.29%. Currently, average mortgage interest rates are hovering around 3.342%. The falling interest rates have created an opportunity for people with existing mortgages to refinance their mortgage loans for a better rate so that they can pay off their homes faster. It has also drawn more buyers into the market because of the availability of cheaper financing. This could result in sellers raising their asking prices to pre-pandemic levels.
More Virtual Tours for Residential Real Estate
Brokers and agents have had to make adjustments to how they perform their jobs. While they previously might have met prospective buyers and shown homes to them in person, the pandemic has forced brokers and agents to rely more on virtual tours. As short term/vacation rental homes have sat empty, more of them are being listed for sale. The increase in inventory is creating a buyer’s market at a time when many Americans have lost their jobs and are feeling the pinch of the economic downturn. Despite these problems, the housing market has since rebounded in Nevada.
Silver Lining for Sales
Since interest rates are low, the pandemic has created a good market for investors. The delays and price drops initially caused by the stay-at-home order and general anxiety have stopped. In Reno, for example, the median home prices increased to $435,000 in July, which was a 7.4% increase from the median home prices in June and a record for the market. Year-to-year, the increase from July 2019 to July 2020 was 7.1%. Closing delays are also no longer occurring. Deals are closing quickly, and the number of homes sold increased by 29.8% in July as compared to June. In Las Vegas, the number of homes sold in July versus June increased by 34.9%, and there was a year-over-year increase of 5.1%. While it is too early to tell the long-term affects of the unemployment rate and possible consequences on the real estate market, the current state of things in the local industry is looking up.