A buyer’s market? Purchase applications rise as states plan economic reopenings
Purchase activity increase in 10 largest states
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As states begin to plan out phases to reopen their economies, there appears to be some pent-up demand among homebuyers in the housing market.
Mortgage Bankers Association reported Wednesday that mortgage purchase applications rose to their strongest level in a month for the week ending April 24.
“The ten largest states had increases in purchase activity, which is potentially a sign of the start of an upturn in the pandemic-delayed spring homebuying season, as coronavirus lockdown restrictions slowly ease in various markets," Joel Kan, MBA's associate vice president of economic and industry forecasting, said in a statement. "California and Washington continued to show increases in purchase activity, with New York seeing a significant gain after declines in five of the last six weeks."
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Adding to incentives in the current market is the fact that mortgage rates declined to another record low.
On the flip side, refinance activity declined – so overall application volume declined more than 3 percent.
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Peggy Zabakolas, a licensed real estate broker with Nest Seekers International and a former regular on "Million Dollar Listing," said current market conditions favor homebuyers.
"With massive layoffs, we may see a lot of housing inventory coming to market in the next few months at more accurate pricing,” Zabakolas said in a statement. “If you have the cash on hand and a flexible timeline on closing, all the stars may be aligned for you to make a purchase. If you have the required down payment and solid job security, there’s no reason you shouldn’t take advantage of low mortgage rates.”
Of course, more than 26 million Americans have filed for unemployment over the past five weeks – indicating a vast number of people for whom a home purchase may not be possible.
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Experts, however, are optimistic and have told FOX Business the housing market could rebound rather quickly when t1he U.S. economy begins to reopen.
“As consumer confidence rises and employment opportunities follow, we should see a normalization of the residential market,” Garrett Derderian, founder of real estate data analysis and reporting firm GS Data Services, told FOX Business. “While housing led the recession in 2008-2009, it may be poised to bring us out of it now.”
The Corcoran Group founder Barbara Corcoran said during an interview with FOX Business that we could have “an explosion” in prices if people begin to believe over the coming months that the U.S. is moving past the virus.
U.S. home sales plummeted in March, falling by more than 15 percent.