The Corona virus pandemic has dumped a large bucket of water on everyone’s plans this 2020, including the Santa Clarita real estate market. But with news of a COVID-19 vaccine by Pfizer and now J&J, experts predict a rebound. With a continued trend of more people leaving big cities to buy homes in the suburbs like Santa Clarita, it’s obvious this trend will continue well into 2021. But what would a COVID-19 vaccine mean for mortgage rates?
To assess the impact of COVID 19 on the housing market, we need to look at the market before it erupts come 2021. At the start of the pandemic, most economists and mortgage experts didn’t expect rates to drop below 3%, but it did. Experts and brokers can still make predictions, but what happens next will depend on the timing of the vaccine’s release and the response of local, state, and federal authorities. As of now though the Federal Reserve has indicated that it doesn’t plan to hike rates anytime soon.
How a COVID-19 Vaccine Could Change Your Home Buying Experience
Still, a protected, efficient, and widely available vaccine would clearly be a global issue – and would change a lot of our current predictions. When the US has a vaccine that is widely available, a “trickle-down effect” will also have an impact on the Santa Clarita housing market. Right now we see news regarding Pfizer’s vaccine candidate caused the average rate for the 30-year fixed-rate mortgage to rise six basis points in November.
Of course, the housing market is very much a local issue, and what happens in New York may not be the same as what happens in California, because every location is unique with its own market values. As everything starts to return to normal this will stimulate the nation’s economy. This would bring an improved outlook on the market, here are some key updates to look out for:
- Mortgage rates will remain low. Throughout most of 2020 mortgage rates steadily declined, reaching a 50-yer low of 3.13% for the 30-year fixed mortgage in mid-June. Going forward, we forecast the 30-year fixed-rate mortgage to remain low and not reaching past the 3.4% mark for a while. In time though, a vaccine would naturally cause rates to rise so don’t wait too long!
- Home sales increase. Due to the impact of COVID-19, we saw a short-lived boom in home sales, creating a short supply of homes for sale. But as uncertainty creeps in, Santa Clarita homeowners and homebuyers are settling in waiting to see what next year brings. Of course, a correction is due in the market with an expected rebound of 5.6 million home sales for 2021.
- Refinances remaining steady. As mortgage ready hold at all-time lows, refinancing is likely to stay at high levels for all of 2021, projected to reach $1.3 trillion in 2021. Keep in mind as rates continue to adjust through 2021 the benefit of refinancing will also shrink.
The vaccine could knock sellers off their perch, experts argue, because they might feel more comfortable with open houses and signing contracts if they get the vaccine. A barrier that not all Santa Clarita homebuyers may be able to accommodate. If the FDA approves the COVID-19 vaccine before the end of 2020, GDP growth is likely to be significantly better than its current forecast. Want to get ahead of the market and get pre-approved for 2021? Our quick online application takes less than 5 minutes and puts you in direct contact with a Loan Officer who can help with your financial situation.