Last Updated on Jan 27, 2022 by James W
The recent pandemic has taken the world by storm and affected people’s lives in a multitude of ways. Every industry has suffered a major setback – some industries more than others. The housing market, however, has not collapsed as many expected. While there was a slight dip, it quickly recovered and has been relatively stable. This is due to the reason that most of the homeowners and homebuyers postponed their decision of selling and buying houses, respectively. Gavop did an in-depth analysis of the impact of the ongoing pandemic on the real estate market and mortgage industry and created infographic for easier understanding. Furthermore, during this unprecedented times, Gavop helps home and auto-onwers choose the best insurance company that meets their coverage requirements.
Buying a home has long been one of the essential parts of the American dream. While, of late, many experts believe that people have mixed thoughts about buying a home, research suggests otherwise. A survey taken by Chase revealed 87% of the participants considered becoming a homeowner was very important to them. Among them, 66% considered buying a house was a good financial investment while 75% saw it as a necessary part of raising a family. Similarly, another survey reported that 68% of renters wanted to become homeowners, while 68% of homeowners were planning to renovate their homes the following year. The challenges of becoming homeowners are more inflated for minorities due to the wealth gap. For instance, 8% of black and Latino homeowners were unable to pay their mortgage and lost their homes to foreclose between 2007 and 2009. During the same period, the rate of foreclosure of whites was half as that of the former. Adding to the turmoil, racial prejudice prevails to be a critical barrier in achieving financial independence. Most notably, houses owned by black Americans are sold for 35% less compared to similar properties owned by white people.
Many homebuyers have been trying to take advantage of the current COVID situation to relish their dream of buying a home hoping that the home prices would drop. However, to their dismay, house values have risen by 4.3% from the previous year. Homeowners are playing the waiting game and have halted their decisions of selling their homes. This is evident from the study that revealed new listings of homes for sale dropped by 70% in major cities like New York. Similarly, web traffic to real estate sites has dropped drastically by 40%. The struggle for survival and to have a sustainable lifestyle has made people avoid making critical decisions such as buying and selling of homes. People are more concerned about their livelihood and have adopted a more conservative approach.
Similarly, the mortgage industry also suffered a major setback when the weekly mortgage applications dropped by 17.9% during the month of January. The impact was most severe during the month of April, with the majority of the U.S states witnessing a decline in mortgage interest approval rate when compared to the previous year. However, it was only a momentary change and the mortgage approval rate quickly recovered in May, with most of the states witnessing an increase in mortgage interest approval rate compared to the previous year.