2020 was the year of booming real estate and construction. In February, more than 400,000 homes were sold in California. This was a 6.6% increase from January. The increase in the number of houses sold also corresponded with an increase in price. There was a 6.3% increase in price between January and February. However, in March, the virus hit and things took a downward turn. Many buyers pulled out of buying, and many sellers refused to sell. By the end of March, the housing and construction market had faced a severe decline. More than 54% of realtors reported that they had prospective buyers that had pulled out. More than 45% of sellers had also backed out (C.A.R. poll). Everyone was anxious about the future as the virus took its initial negative toll. Following this, the prices also significantly dropped. This was the observed trend until June.
However, 2020 is still the year of a booming real estate and construction market. Even as the virus spread, real estate transactions could go on. Constructions could still continue, although it affected some parts of the real estate industry.
In June, the housing and construction market in California began to experience a change for the better. The housing areas of Sacramento, San Diego, Los Angeles, San Francisco and San Jose experienced the most significant turnaround. There was up to a 42.5% increase in the home and property sales from May. This was also accompanied by a rise in previously declining prices of up to 6.5%. This is not all the good news. Mortgage and interest rates became very low, with mortgages going down to 2.91%. In 2019, the mortgage rate was at an average of 3.6%. The all-time low mortgage rate encouraged more people to invest in housing and financing a custom build home. By August, more than 465,000 homes had been sold in California. Despite the effects of the Coronavirus, this was a 10% increase from 2019 in San Francisco and the Central coast.
The situation resulting from the virus has, in a sense, been mitigated in the housing and real estate market. However, this is not to say the virus didn’t have any lasting effect on the industry.
Before the Coronavirus pandemic, many people were leaving urban centers in favour of residential areas, preferring to live in the suburbs. However, this trend has gained more popularity since the pandemic. Many more people are buying and investing in the idea of a home away from noisy urban areas. This has caused a shift in the location of new constructions. This trend has positively impacted the custom home market, as there is a growing demand for custom homes.
Moreso, because of the pandemic, the designs of custom houses may change. New custom build homes may be designed to have more space for work and relaxation. The lockdown that restrained many people in their houses has increased the work-from-home population. Therefore, new custom made houses will provide space for home offices and workspaces. In addition to this, there may be play areas, more gardens and relaxation centers. This trend is one that has come to stay as people are reinventing their spaces.
While the demand to reconstruct homes to adapt to the time is growing, investors, lenders, and home builders are worried. Many people were laid off due to the pandemic, lenders are careful to lend to people who still have a job, and people who currently have construction projects, financing a custom home builders are halting due to lack of funds. This, however, is a temporary situation. There is a growing population of remote workers, the interest rates are low, and as the people adapt to the new normal, the future of the custom home market is assured.
The custom build home market has been relatively stable, and even though there may be occasional hiccups, the real estate and home construction markets seem able to stabilize itself. During the pandemic, real estate agents arrange virtual tours with prospective buyers. Builders and designers organized virtual meetings with clients to conclude design and other essential things. Construction companies also provided safety gear for workers, so it doesn’t stop work altogether.
However, just as the coronavirus pandemic was sudden and affected a whole lot of things, another unforeseen disaster may affect the custom home market. Economic policies and regulations, a financial crisis or depression or another health crisis may affect the market. Likewise, occurrences such as the California wildfire outbreaks may affect the custom home market in the state.
The uncertainties surrounding the custom home market’s future shouldn’t stop you from getting your own home. Element Homes can help you build the custom home of your dreams. We offer custom home building services that are qualitative and affordable. Contact us now to get a free estimate.
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