The red-hot housing market that we've been seeing for the past year has cooled off significantly. According to Redfin data, the total value of homes has dropped about 5%, or $2.3 trillion, in the latter half of 2020. This is the biggest drop in percentage terms since the housing crisis in 2008.
Homebuyers are currently facing elevated home prices and higher mortgage rates, resulting in less competition in the market and bringing down some of that pressure. As a result, we're seeing a decrease in the median sales price, which dropped to $383,000 last month, down from its peak in May.
However, it's important to note that home prices are not collapsing. The total value of homes still sits higher at $13 trillion, which is more than it was in February 2020. How much homeowners have lost really depends on where they bought their home. The biggest declines were seen in pricey cities such as San Francisco, San Jose, Oakland, California, and New York. But those who moved to pandemic boom towns like Florida are seeing some return on their investment. Florida, Tennessee, and South Carolina saw an annual gain of 17% last year, thanks in part to those who have moved from the northern region as well as the West Coast.
Would You Buy or Sell In Our Current Market?
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If you're in the market for a new home, now may be a good time to start your search. While prices have come down somewhat, they're still elevated compared to historical norms. Working with a reputable realtor can help you navigate the complexities of the real estate market and find the right home for you. For example, if you're in Central Florida, you may want to search for a "Central Florida realtor near me" to find a local expert who can provide insights into the local market and help you with your home buying journey.
On the other hand, if you're a homeowner looking to sell, it may be wise to wait until the market recovers a bit more. While the current conditions may make it more challenging to sell your home, working with a skilled real estate agent can help you get the best possible price for your property.
In addition to the buying and selling of homes, the home improvement sector has also been impacted by the pandemic. While the sector boomed during the pandemic, demand has weakened, and customers are becoming increasingly price-sensitive. According to data from John Burns Real Estate Consulting Firm, Google searches for discretionary home improvement projects are moving toward 2019-2020 levels. Those wanting to do kitchen and bathroom remodeling projects are down 15-28% so far this year compared to those looking for replacement projects such as roofing and siding.
Home Depot also anticipates demand to moderate, and customers are spending less. Some have even swapped out the quality of the product to stay within their budget. However, some housing experts in the home improvement section say that home sales are no longer a good proxy for measuring home improvement spending.
In conclusion, the housing market has cooled off from the highs of the past year, but it's still a complex market with many nuances. Working with a reputable realtor can help you navigate the market and find the right home for you. And if you're a homeowner looking to sell, it may be wise to wait until the market recovers a bit more.