2020 has, without a doubt, been one of the most unpredictable years in American history, not only in terms of the pandemic, protests and unrest, and politics, but also in the economy and real estate market.
After roughly 7 years of exponential growth in housing prices, many economists were predicting a crash in 2020, but as of October 21st, 2020, prices are still going up.
So what happened?
I spoke with David Hoffman, one of Charlotte’s top-selling real estate agents and former Washington economist, about why there’s been such a discrepancy, especially given this year’s shutdowns, job losses, and prevalent fear.
He told me that we essentially skipped the Spring selling market when the pandemic and lockdowns hit, which became one of the largest factors in the Charlotte market only having 1.1 months of housing supply (down 55.1% year over year) and an average sales price of $349,041 (up 16% year over year).
“We went straight from Winter to Summer, because the spring Market was stopped when agents weren’t allowed to do physical showings, and potential sellers weren’t sure what was going to happen in the world; week to week. This created both pent-up demand, and a limited supply of housing,” David said.
When Summer hit and interest rates fell to historic lows, Spring and Summer buyers combined to make demand go through the roof, especially in rural areas.
“Demand for the large home in suburbia with an acre and a pool has never been higher, versus demand for a small house in the big city on a quarter acre of land. More and more, buyers are wanting enough space to work, vacation, and homeschool, without being too close to neighbors who might spread the virus,” said David. “With the pandemic increasing work-from-home situations, buyers no longer see the benefit of being an urban environment when they can get more bang-for-the-buck a little further out.”
So what will happen next year?
At this point, a large crash in the housing market seems unlikely; at least locally. Either the economy will continue its “V-shaped” recovery and continue to increase housing prices, or market conditions will level off and supply will catch up with demand over the coming months, stabilizing prices in 2021. “Regardless, hundreds of new people moving to the Charlotte area from the north, each day, will keep prices from falling too sharply whenever a downturn does arise,” Hoffman said.
What do you think the next few months will bring?
What do you think the housing market in 2021 will look like?
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