The corona pandemic has made several sectors in the economy to experience variations in the mode of operation and trade. The real estate market is one of the sectors that have been experiencing different changes over the past few months since the pandemic started. Inventory listings have reduced since March, and it did not get any better in April. Fewer houses were available for buyers from different parts of the country. The housing market experienced a year-over-year growth decline of about 0.6%, though there were few sellers in the market.
The listings continued to reduce in several areas until the end of April and the start of May. However, the real estate market experienced a sudden surge in the price of houses in May compared to April. Year-over-year growth increased to 1.6%, and there was a price surge of about $300,000. Several states experienced this increase in price, even though the rate of infection spread was not reducing.
For instance, Metro areas such as California, Pittsburgh, and Los Angeles-Long-Beach-Anaheim all experienced the highest annual median price growth in May. California alone experienced a growth rate of about 14.9%.
Surprisingly enough, the surge in price was not proportional to the number of active listings in May. Several metro areas were experiencing a dearth in the number of active listings. The East Coast and other provinces, including Rhode Island, Warwick, and Maryland, were greatly affected. The annual price rose by about 1% in New York City, but the listings still fell by about 21%, especially in the Metropolitan areas.
The reason behind the increase in price and the somewhat stability that has been happening in the market is traceable to the fact the real estate market has been able to establish a strong backing even before the pandemic kicked off. The real estate market has an organized structure that maintains the prices of houses within a specific range. Before the pandemic started, buyers can have an idea of the price of whatever house they wanted to purchase. Also, sellers follow a particular standard, and you would barely find any outlier in the market except on rare occasions. Hence, the reduction in price in April appeared to be just an initial response to the pandemic, which affected several sectors. However, what is now being seen in May seems to be an accurate reflection of what the market should look like.
The fact that inventory listings are reduced also prompted sellers to increase the price of the few houses available for sale. Since those who will be willing to buy, houses around this period will have a good reason for making the purchase.
Normalcy is setting in, and the listings are rising again, although one cannot still compare it to the way it was before the pandemic set in. One thing likely to happen is that the price of houses might reduce from the all-time high experienced in May, but not as low as what was seen in April. Thus, bringing a likely balance to the market.