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One Year Into the Pandemic

The Difference A Year Makes …

A year ago,  the world changed and we were shocked with the spread of the Covid-19 pandemic. Business shutdowns began across the country and much of the world. Pennsylvania was not immune to the pandemic, and real estate here was shut down hard from mid-March through most of May. This has been a year that has changed the way we live and work. 

Homes became more than just a place to hang out after work and sleep at night. They became our offices and our safe places. Home no longer had to be within driving distance to the office. We commuted from the bedroom to the den or makeshift dining room offices. As a result, many people chose to make a move to a new home – for more space, coveted outdoor space, or a change in scenery.  The real estate market has boomed in the suburbs and countryside. Our area saw more interest in out-of-area buyers moving here for our peaceful country living and safety and beauty in our wide open spaces.

Mortgage rates plummeted last spring when the Fed cut rates to zero.  30-year fixed rates plunged to a record low of 2.50% from nearly 3.625% in February of 2020 helping to fuel the real estate market. And while we were locked down for months, the second half of 2020 was phenomenal in our area for real estate sales. We opened back up in June and had record-breaking sales in September and October. Even over the holidays we didn’t see our traditional slow-down.

The success of the vaccines, easing of restrictions, and the just-signed $1.9 trillion fiscal stimulus package has pushed mortgage rates up nearly 0.50% in the past two months.  A rebounding economy and record government spending spell inflation and that means higher rates. The average 30-year fixed is now at 3%, which is still a very low rate (historically) and has not had any impact on the purchase market. By the end of the year experts predict interest rates will rise slowly but surely. 

On a $150,000 loan with 5% down, the difference in the payment from 2.50% to 3.00% is $38 a month – a number that most can absorb without stopping them from buying the home they want to purchase.  Refinancing rates are slightly higher as most banks save their best rates for purchases and charge a premium for refinancing. 

As the economy continues to rebound and consumers spend the trillion dollars they saved this past year, mortgage rates will continue to increase as inflation creeps back. If you are looking to buy right now, I’m sure you’re frustrated with the lack of inventory. I get it. But as spring comes and the temps warm up – more houses will come on the market. Already our agents are on more listing appointments this week than they were on for most of January or February. Hang in there.

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