Nada update: View on a Strong Housing Market during a Pandemic 💪
It has been a very exciting and busy few weeks here at Nada. Our team is growing and we continue to experience a record-breaking sales pipeline. We’ll be announcing new key hires and awesome product release updates in the next few days. Stay tuned!
In the meantime, we wanted to share Nada’s view on the market.
The Housing Market remains strong during a pandemic
While overall economic recovery continued through July, the economic outlook appears to be causing Americans to be more money-conscious; as earlier gains in consumer spending began to stall.
Narrowing the focus into the Housing Market, we see a few key signals that show a strong market with high demand. The pandemic has both increased and altered demand for housing, and it has also helped push mortgage rates to record lows.
Interestingly, Google Trends recently reported a few search trends:
“Refinance home loan calculator” jumped nearly 4,000% last week
“How low will mortgage rates go?” quadrupled
“Process of buying a house” jumped 950%
Clearly, homeowners are searching for resources to increase their asset value by gaining from these record-low mortgage interest rates and many are unlocking their equity by selling in a strong seller’s market.
These are the primary factors enabling a strong housing market in our view.
(1) Record-low mortgage interest rates
Today’s record-low rates mean that up to 13.6 million homeowners would save money by refinancing. According to this same report, that would mean up to an aggregate of $3.9 Billion in savings per month.
(2) Lack of Supply (homes for sale)
“Considering how many young people are becoming of age to buy, right now we are underbuilt by about 4 million homes,”. ~ Sr. Economist at Realtor.com.
Further, July had an >50% bidding rate on home purchase offers submitted, and nearly 50% of homeowners surveyed stated ‘now is a good time to sell’.
(3) Millennial home buyer demand
A recent survey showed that 89% of Millennials planned to purchase a home in the near future. While Realtor.com reports that over 50% share of mortgage originations will be from Millennials this year.
Yet, over 70% of Millennials are burdened by affordability with savings required to cover down payment and closing costs.
In a separate survey published by CNBC, it should also be noted that 63% of Millennial first-time homeowners stated they had buyer’s remorse. In particular, with the hidden costs of purchasing and uncertainty with ongoing costs of owning a home.
So, what is Nada doing
At Nada, we see the positive signals in the market and the demand for a more transparent, reliable, and affordable home asset partner as a significant opportunity. We are addressing the affordability burden today with our buyer closing cost credits through our Nada Realty service and lender credits through our Nada Loans service.
As we continue to expand our home eco(system) technology, we will be addressing the (1) trust issue homeowners are facing in seeking refinancing support and (2) the buyer's remorse experienced by homeowners due to the financial stress with hidden purchase costs, and uncertainty with ownership costs. By delivering ongoing and real-time actionable insights to homeowners through our platform, Nada will put homeowners in control of their asset, enabling them to maximize value well beyond a single buy or sell transaction.
Times are strange, make no mistake, but we are committed to helping everyone access the value of homeownership and fortunate to be well-positioned to deliver such value.
All the best,
JG + team Nada