There’s no doubt, 2020 was a seller’s market when it came to home buying. Most houses sold at or above list price, sales were quick, and people were looking for change thanks to the monotony of pandemic life.
But even though sellers definitely had the better year, Redfin reports that November was the month to be a buyer. Historically low mortgage rates gave purchasers a bit more power, offering some relief from rapidly escalating home prices.
The median monthly mortgage payment peaked in February at $1,163 but dropped down to $1,094 in November. And even though the nationwide median list price in November was $336,000, mortgage rates plummeted 2.77%—the lowest on record—which helped offset the higher cost of homes.
"It's easy to forget that the price is just one part of the equation of how much house a buyer can afford," said Redfin chief economist Daryl Fairweather. "The relationship between historically low mortgage rates and surging home prices has been fascinating to watch this year. We've seen mortgage rates drive unforeseen levels of homebuyer demand, which has pushed prices up by upwards of 15% in recent weeks. The good news for those buyers who are persevering through a dearth of homes for sale and fierce bidding wars is that once you do land a home, today's sub-3% mortgage rates are largely cancelling out the high prices.”
However, there were still many barriers for buyers. Love inventory and intense competition made it a difficult process for many. In fact, 54.3% of Redfin offers faced competition in November. And over 50% of offers for the six months prior also entered bidding wars for homes.
"A lot of my buyers would be surprised to hear that November was considered a good month to buy," said Shoshana Godwin, Seattle Redfin agent. "Although monthly mortgage payments are lower than they were at the beginning of the year, buyers are still facing five to 15 competing offers on desirable homes. People have to find a home and get their offer accepted before they can take advantage of low rates.”