The first half of 2020 has seen more than its share of hurdles and challenges, both locally and nationally. We started off the year with very high expectations, as we had one of the best economies on record, as well as a robust housing market with reasonably low interest rates.
Then COVID-19 hit the United States in March and we, in turn, hit the pause button, entering uncharted territory. The real estate community was able to adjust quickly to this new environment, utilizing technology to keep showing and selling homes with social distancing in mind. While there has been some disruption, there has also been some benefits to both buyers and sellers in this new market. The question is, what does the next half of 2020 have in store for the real estate market?
Here are a few observations and predictions for the rest of 2020 real estate in Collierville:
Number of sales will decline
The number of sales year-to-date has dropped 13% from 2019. This will continue for the rest of this year but not for the reasons you might think. Usually when sales drop, it is because demand is low. That is not the case right now. Demand is still high but COVID-19 slowed the number of homes coming on the market, thus reducing the number of total sales. I see this trend continuing because of the record number of refinances taking place. People that recently refinanced aren’t going to turn around and put their home on the market.
Demand will stay high
While total sales have dropped, it hasn’t slowed down the demand for new homes. Low interest rates are driving an already buyer-rich real estate market in Collierville. Also with the recent national unrest in larger cities, the suburbs are in high demand, so I see that trend continuing the rest of this year as well.
Interest rates will stay low
In March, we were looking at a 30-year mortgage rate at higher than 4%, but fast forward to May and we have seen rates less than 3%, which are historically low. With concern for the overall economy and the need to keep the real estate market strong, I do not see rates rising too much during the rest of the year. For buyers, this is an amazing turn of events, as it keeps homes a little more affordable even with the rising prices.
Prices will continue to rise
Most people would assume since sales dropped 13%, we would have also seen a drop in, or at least a leveling out of, prices for this year, but that has not been the case. According to the Memphis Area Association of Realtors, through the end of May, the average price home sold in Collierville has risen from $375,116 in 2019 to $414,980 in 2020. This is an increase of nearly 10%. With inventory lower than 2019, demand increasing, and interest rates staying low, this trend of increasing prices will continue moving forward.
What does this mean for buyers and sellers?
It really is a win-win for buyers and sellers for the rest of this year. Buyers will reap the benefits of interest rates near 3%, which will help offset rising prices, and sellers will benefit from more equity in their homes, allowing them to increase their buying power.
The bottom line is the overall real estate market in Collierville is and should stay strong for the rest of 2020. If you are thinking of buying or selling, now is still a great time.
Allen Green, Realtor
John Green & Company Realtors®