In B.C. times, that is Before COVID-19, June marked a celebratory month for the mortgage industry — National Homeownership Month. It started as a weeklong celebration in the 1920s and grew into a monthlong celebration initiative created by HUD. Today, the industry celebrates by helping people realize dreams of responsible homeownership. This year is a little different as coronavirus has put many Arkansans’ dreams on hold.
RELIEF FOR HOMEOWNERS
Existing homeowners have entered into forbearance plans in record numbers. For many, forbearance allows short-term breathing room, but ahead looms a large repayment. Others have refinanced. Falling interest rates, 3.65% in March 2020 to 3.48% in April 2020, precipitated refinancing demand. With either option, existing homeowners have taken action to relieve some of the financial pressure and anxiety caused by the pandemic.
NEW HOME SALES DURING A PANDEMIC
For those lucky enough to have little to no negative financial implications from the virus and able to purchase a home, social distancing presented another set of challenges. Before social distancing measures, the industry largely conducted business in person. When COVID-19 arrived, processes shifted to digital. Using tools like Facebook Live for virtual open houses and digital notary services for online closings, the industry has been able to make sales during the pandemic.
April new home sales shocked the industry, beat most predictions and rose 0.6% — a possible sign of recovery. However, in Arkansas, our active listing count year-over-year was down 24% in April, meaning fewer homes hit the market in 2020 than in 2019. Arkansas’ pending sales count increased 40%, indicating that uncertain buyers delayed closing and are tying up more of the inventory. Inventory was a concern and challenge before coronavirus and continues to be one during the pandemic, exacerbated by changing buyer needs and lifestyles.
As they stay at home, many families have realized they need larger homes. Nationwide, April’s condominium sales were down 32% over last year, whereas single-family home sales were down 16%. In Arkansas, 97% of home sales were single-family residences, and only 3% were condominiums. Arkansas never had a booming condominium market or a big inventory, but this statistic highlights shifting lifestyle needs.
If you have not experienced this firsthand, you have probably heard a friend or family member long for more personal space as they homeschool their children, work from home, run a household or try to create “me time.” Unlike families in Manhattan or Los Angeles, Arkansans have plenty of space to spread out.
As the economy opens up, financial pictures improve, and we have a better understanding about how our society moves forward. Consumer confidence is returning. The National Association of Homebuilders reported a 7-point uptick in confidence in May after hitting an eight-year low in April. At the beginning of the year, the industry was buzzing about Millennials’ buying power. This group is now at a stage in their lives when it makes sense to settle down and purchase a home.
The industry remains cautiously optimistic as the country reopens and consumer confidence rises. Coronavirus’ impact on our economy, lifestyles and work processes will result in lasting changes. When the market returns, we can expect a much different landscape of conducting business with a new kind of homebuyer.
Tina Sewell is branch manager at Rock Mortgage in Fayetteville. Rock Mortgage is a division of Bank of Little Rock Mortgage. The opinions expressed are those of the author.