Hello Caton Team Friends – sharing this great article about 2020 and Real Estate – what to expect this year…
The housing momentum continues into the first week of 2021.
California’s 2020 Market Stats on Track to Close with More Growth Than Expected: The California Association of REALTORS® is still finalizing its numbers for December of 2020, but preliminary estimates suggest that the year ended with roughly 3% more home sales that occurred the previous year. Although not an impressive rate of growth by typical standards, given that activity virtually ceased during April and May when home sales were falling by more than 20%, it shows how strong the housing recovery was during the second half of 2020.
Rates Still a Bright Spot: Interest rates ticked up ever so slightly last week from 2.66% for a typical 30-year fixed rate mortgage to 2.67%. That is the lowest level ever recorded outside of the previous week. In addition, the Fed has signaled an increased willingness to keep rates low, and although recent election results in Georgia caused 10-year treasury rates to rise temporarily, the outlook for inflation remains dubious and low mortgage rates are still expected to persist through 2021.
Construction Spending Resumes Uptrend in November Report: In a sign of optimism for the future and a testament to the strength of buyer demand, new construction spending rose by 0.9% in November. This was driven entirely by an uptick in residential projects, are homebuyers continue to strain existing supply. Nonresidential construction has not benefitted from the structural shift ushered in by this crisis, which has made our homes more important to us than ever. In some cases, they have increased our individual needs for housing because we work from home and now need more space. As a result, nonresidential spending was down in November as delinquencies remain high and space requirements are being reevaluated.
Buyer Demand Still High Despite Modest Downshift: Mortgage applications declined again last week but remain above last year’s levels by nearly 5%. That marks a deceleration from previous weeks, but the previous week saw a market acceleration from the mid-20%s to more than 44% so the last two weeks are roughly on par with the solid growth of the previous month when taken together.
Pending Sales Down Outside California: Although pending sales in California remained strong in California, the National Association of REALTORS® reported that pending sales fell nationwide in November despite low rates. Demand remains relatively robust and rates remained low, but increasing economic restrictions likely suppressed new escrows. Despite the relatively small decline of 2.6% from October, pending sales were still up by more than 16% from the same time in 2019.
Forbearance Now Back on Uptrend: One observation does not make a trend, but the percentage of mortgages in forbearance has now rise for three consecutive weeks. The percentage of mortgages remained constant at 5.3%, which is down from its peak during the summer, but the number of mortgages in forbearance were up. In addition, FHA and VA forbearance rates rose last week, which drove the overall numbers higher.
California’s Public Health Challenges Persist: California continues to see cases of coronavirus surge to levels far in excess of levels seen during the summer. On Saturday alone, nearly 600 Californians died. This will continue to place economic restrictions on businesses and residents, which will impact jobs and incomes, and therefore rent and mortgage payments. We remain optimistic that the economy will continue to improve gradually as we move towards more general availability of the vaccines, but there will be significant challenges until that time. Even after economic activity can normalize, there will still be significant financial and economic losses that will take time to fully recover.
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I read this article in the California Realtor Association Magazine
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