3 Reasons Home Prices Have Increased

Here are three reasons home prices have increased amid COVID-19.

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An unanticipated outcome of the pandemic shutdowns has been the increase in home prices. In January, home price growth was decreasing, and bidding wars were almost non-existent. If we compare that to April, more than 41% of homes faced a bidding war. Home prices grew 7.4% year over year to reach a record high.

There are three reasons for this massive price growth during the health crisis:

  1. Buyers are rushing back into the market. Social distancing restrictions have loosened, and people who are still hoping to buy a house have now re-entered the market.

  2. Historically low interest rates. Mortgage interest rates are as low as they’ve ever been, and this can vastly increase the amount of home a buyer can afford.

  3. The amount of inventory. In May, the number of new houses that hit the market decreased by about 30%. This means buyers are competing for the available properties.

“Mortgage interest rates are as low as they’ve ever been.”

There is an enormous demand for homes. Add extremely low interest rates and very low inventory to that, and sellers have a wonderful opportunity to get top dollar for their houses.

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