It looks like this has been a Labor Day break for whoever compiles stats for ShowingTime… data in the most recent chart above is from last week, right before the holiday weekend. This year’s showings were still nearly 40% ahead of last year, I will look forward to next week’s updates.
New and pending listings took their normal holiday weekend dip after last week’s anticipated increase. I don’t expect any significant changes this coming week, as people focus on getting back to school and transitioning from summer to fall activity levels at work and at home.
National unemployment rate fell to 8.4%
What was surprising was that the unemployment rate for the last week of August 2020 fell to 8.4%, a full percent lower than what many analysts had forecasted earlier the same week and much lower than most anyone would have thought a few months ago. It is still a bad recession, but not one to compare to the Great Depression, when the unemployment rate was over 20% for 4 years.
In April 2020 the US national unemployment rate jumped to 14.7%, but has fallen each month since. In Minnesota, it peaked at 9.9% in May, down to 7.7% in July. Prior to the pandemic, Minnesota’s unemployment rate was 3.1%. It should be noted that unemployment pain isn’t felt equally throughout the state… it remains much higher for minority groups than for whites. Many employers are hiring right now, so the expected outlook is that unemployment will continue to fall. The wild card, of course, continues to be how quickly we can contain the coronavirus.
National homebuyer traffic increased by 60.7%
Another one of the biggest surprises of 2020 has been the resilience of the residential real estate market. National homebuyer traffic has increased even more than here in the Minneapolis-St. Paul area. I know I have buyers who have been waiting for the market to slow down and prices to drop… but that hasn’t happened. The housing market is showing a ‘V’ type recovery, according to national ShowingTime data below.
Homebuyers with a $2,500 monthly mortgage budget can afford $33,000 more with low interest rates
At a 3% mortgage interest rate, a homebuyer with a $2,500 monthly mortgage budget can afford a home at $516,000… compared to the $483,250 home they could afford last year when the average interest rate was 3.77%.
While new single family homes have been getting bigger, apartment sizes have been dropping in size. As more people want more space at home to accommodate work, school, exercise at home in addition to cooking and relaxing the demand for houses continues to remain strong.
The caution is that while interest rates may mean you can afford more space, increased competition means you will likely not be experiencing monthly cost savings in spite of the lower interest rates. That said, where you may win is more space for the same monthly payment.
Sharlene Hensrud, RE/MAX Results – shensrud@homesmsp.com
