Two of the hardest questions to answer for any person: when to invest their money, and when to buy a house. Both the stock market and housing market have unpredictable natures, giving people qualms about jumping in given the risks. Yet when it comes to the housing market, it seems that people have taken the initiative to buy even with the looming pandemic and economic uncertainty. Marketwatch has reported that sales of previously owned homes jumped 20.7% in June, rebounding from a horrific May that hadn’t seen such low sales since 2010. The question that remains is whether this will be a growing trend or whether now truly is the time to buy a house.

One reason for the uptick in the housing market could be the extremely low mortgage rates that are available. According to Bankrate, the average 30-year mortgage rate is sitting at 3.15% as of July 21 while the 15-year is at a low 2.72%. How low are these rates? Well by comparison, the 30-year mortgage-rate as of last July was 3.77% and the year before that was 4.53%, according to FreddieMac. It could be these low mortgage rates that are encouraging people to buy homes now, even if they are potentially facing some type of financial insecurity. If you were in the market for a house, now could possibly be the time to consider it. Mortgage rates do not entirely rely on the interest rates the Fed raises or cuts, but are still influenced by them. Considering the Fed has cut its discount rate to near 0%, an incredible move, it would not be a surprise if mortgage rates remain at this point or even continue to dip, considering the Fed is likely not going to be raising rates again for a year or maybe more, depending on the length of recovery for the US economy.  Some experts have suggested that the surge could simply be a result of people who had delayed searching for a home during the pandemic peak now finally having the opportunity to buy a house.

The uptick in home buying might also be attributed to Covid-19, but not quite in the way we think. It is natural to assume that if cases continue to rise, the buying might slow as the fears of a recession could emerge. As of today, the unemployment rate is still somewhere between 10-11%, a number usually indicative of some type of recession, yet this has not swayed people from seeking new homes. In fact, it could be pushing people to buy new homes in hopes of relocation. Stories have emerged from the coronavirus pandemic of an exodus of people leaving the cities to locate into more rural places in hopes of escaping the virus and finding a job. New York City has been at the front of this speculation, as the city took the hardest hit from the virus, is still recovering and has yet to fully reopen. According to an article by Kenneth Rapoza in Forbes, Armando Codina is one of these individuals. He, like many others, has been part of growing movement of New Yorkers to Florida. As Rapoza notes, the tri-state area poses many disadvantages for people attempting to save money, and with the recent health emergency caused by Covid-19 in the city, people have had enough and have begun moving out of the city. A large portion of these people are moving to Florida, a place where restaurants are open and businesses are striving, even in the face of rising coronavirus cases. This move from New York City has long been coming, as Rapoza further details how the number of people leaving the metropolitan area has doubled since 2018, going from an average of 100 people a day to 270.

So the final question that remains is whether these low rates should encourage even more homebuying in the future. That is something that remains to be seen as we enter the second half of the year.

-Michael Urpi