Will the impacts of the pandemic on the housing market last?
The housing market. It is red hot. "The pandemic has affected the housing market but not like you would think," President Realtors Association of Northwestern Wisconsin Deb Hanson said. Hanson explains people looking to lock in a 3% mortgage interest rate. "Interest rates back in the 80s were like 18%," she said. "When I bought my first home in 1991, it was around 10%. So right now, buyers are finding that with the low-interest rate, they're able to afford more of a house than they would've years ago." The idea of paying less per month on a home to call his own is what prompted Chris Jorgenson to finally commit to buying one. However, the aggressive market we're in took away some of the illusion he had when he started his journey. "Prior to this, when I'd watch TV shows and HGTV, you picture yourself: 'Oh I have some time to look at this house, you have a couple of days, and you place an offer and then maybe it's a little bit lower than the price and then they come back.' That entire process was non-existent," he said. We are in a seller's market, meaning they are in the drivers seat because supply cannot keep up with demand. "One piece of advice I think is so true is really go in with your strongest offer. You may not have a chance to make a second offer because the sellers can dictate, and if they get an excellent one, they'll take it," Jorgenson said. This was not the case 13 years ago during the great recession. "The 2008 house bubble was driven by the substandard mortgage and poor understanding of the financial instrument," UW-Eau Claire Accounting Professor Ling Lu said. "At that time, people didn't have the financial ability to pay for their mortgage but were still approved for their mortgages." Now, mortgage standards are much higher, according to Lu. This, coupled with the positive impacts of the pandemic on the market, tell a different story in 2021. "Plus there are some key fundamentals drivers like the low-interest rate, the demand for more space and the economic stimulus," she said. But what goes up, must come down. Real estate brokerage Redfin reports pending sales have been on a downward trend since peaking in early May. "I think this time the housing bubble is there but not that same drivers cause the bubble. And it will probably have a softer landing later," Lu said.