MCLENNAN COUNTY, Texas (KXXV) — The housing market experienced dramatic changes during the COVID-19 pandemic. It was characterized by an initial surge in demand and low mortgage rates followed by rising interest rates and stabilizing price appreciation, leading to cautious optimism among home buyers regarding future trends.
- The COVID-19 pandemic initially stalled the housing market, leading to low mortgage rates (e.g., 2.75% for Chris Bonneau) but resulted in supply shortages drove home prices up significantly.
- Economic factors, including stimulus payments and the shift to remote work, increased buyer spending, but rising interest rates in 2022 (currently 6-7%) have slowed buying activity without causing significant price declines.
- The pandemic caused construction slowdowns and fewer available homes, increasing demand. Due to heightened demand and limited supply, home prices surged.
BROADCAST TRANSCRIPT:
‘Was this like anything you’ve seen before?’ asked 25 News Reporter Dominique Leh.
“It was unprecedented,” Haus Realty Owner and Broker Cory Duncan said.
It was a time like no other.
“When the pandemic hit and everything went into lockdown, obviously the housing market followed and kind of stalled, everything went on hold,” Duncan said.
This was good for Chris Bonnea, who purchased his home in 2020.
“We didn’t realize it, I mean, think our initial rate was 2.75% was what we were able to lock our loan in at,” China Spring Homeowner Chris Bonneau said.
But Bonneau was one of the lucky ones.
“Shortly after the prices were going up a lot,” Chris Bonneau said.
The pandemic led to several supply shortages, which caused the building of homes to slow down. Fewer homes available meant more demand.
“Prices spiked. Demand spiked,” Duncan said.
While prices were higher during the pandemic, interest rates hit below 3%, a historically low number that was great for buyers.
“It’s not lost on me, when I look at Zillow, or any of those platforms and just like wow, okay, you know I’m very fortunate,” Chris Bonneau said.
A few other economic factors contributed to the increase, stimulus payments, and the focus on working from home.
“The reduction of cost of transportation, commuting to work, having that office space, and paying for that office space, and so as costs were eliminated, then there was more money to spend on home payments, and so more money was focused on homes,” said Duncan.
The Federal Reserve began raising the interest rate to combat inflation in 2022. Now, it’s at 6-7%. So, how did COVID-19 affect our housing market today?
“So mortgage interest rates have increased, and buying has slowed slightly," Duncan said. "I will say that it’s not like prices have dropped significantly, but the growth has been limited. We’re talking about a 1 or 2% appreciation per year versus the 20% plus we saw back post COVID times."
Meanwhile, Bonneau is just glad he bought a home when he did.
“I don’t see prices coming down a whole lot, I don’t want to get ahead of myself, it juts seems like it’s just going to be what it is,” said Bonneau.
Question and Answer:
What did the housing market look like when the pandemic hit?
After the market was still, what happened with prices?
What was the market like for buyers and sellers?
From then to now, how has this affected our housing market?
