Is the spring home-buying “season” finally ramping up in California? Sort of. While real estate activity is down overall, a new report showed a significant week-to-week increase in California home loan applications.
This could be a sign that the real estate market is beginning to pick up speed again, as we move further into spring 2020.
California Purchase Loan Applications Rose 17% in One Week
On April 29, the Mortgage Bankers Association (MBA) published its latest loan applications survey report. Their survey is updated weekly to reveal trends regarding home-purchase and refinancing loan applications nationwide. They also occasionally report statewide trends, as they did last week.
In its latest survey report, MBA officials reported an increase in purchase loan applications for the week of April 24, 2020. These applications relate to home buyers taking out a mortgage loan to buy a house (as opposed to homeowners who are refinancing an existing loan).
According to the MBA’s April 29 report:
“The unadjusted Purchase Index increased 13 percent compared with the previous week and was 20 percent lower than the same week one year ago.”
This means two things:
- Compared to a year ago, fewer home buyers are applying for a mortgage loan. That’s not surprising, given the economic slowdown we are currently experiencing.
- But compared to the previous week, a significantly higher number of home buyers in California and nationwide applied for loans.
Home loan applications in California rose even more than the national increase. During the week ending on April 24, purchase loan applications rose 17.2% over the previous week. That was the largest week-to-week increase in home loan applications of any state in the nation.
New York and Washington also had a sizable increase in purchase mortgage loan applications.
According to Joel Kan, V.P. of economic forecasting at the MBA: “California and Washington continued to show increases in purchase activity, with New York seeing a significant gain after declines in five of the last six weeks.”
A Positive Sign for the Real Estate Market?
This is a positive sign for the real estate market in California, as well as the broader economy. It shows that there is still demand within the housing market. Buyers are still out here looking at homes, taking out loans, etc.
MBA’s Joel Kan added that this latest report could be “a sign of the start of an upturn in the pandemic-delayed spring homebuying season.”
To be clear, the California real estate market is still experiencing a slowdown due to the COVID-19 pandemic and economic uncertainty. But this latest report is further evidence that real estate transactions are still taking place.
Mortgage Refinancing Way Up, Compared to Last Year
As we wrote in a previous blog post, mortgage refinancing activity in California and nationwide has increased considerably in recent weeks. This is largely the result of declining mortgage rates.
Interest rates for home loans have dropped since the start of 2020. Many homeowners are now rushing to take advantage of that trend.
In its latest application survey, the MBA reported a whopping 218% increase in mortgage refinancing applications during the week of April 24. That’s compared to the same week last year.
How the California Home-Buying Process Has Changed
It’s good to see an increase in California home loan applications. It means buyers and sellers are still making deals happen, despite the challenges associated with the COVID-19 health crisis.
With that being said, home buyers in California should understand that real estate transactions have changed quite a bit in recent weeks. Those changes can be summed up with a single word — distancing.
Here are some of the ways the California home-buying process has changed, in response to the coronavirus (COVID-19) pandemic:
- In California, real estate is considered an “essential” business. That means buyers can still buy homes, despite the stay-at-home restrictions.
- Open houses and other group gatherings / tours are generally prohibited.
- Buyers can still visit and tour properties individually, or two at a time.
- The California Association of REALTORS® (C.A.R.) encourages its members to conduct home showings virtually, if at all possible. So there has been an increase in virtual tours offered online.
- During a home showing, C.A.R. says that only a single real estate agent and no more than two other individuals should be inside the property at the same time.
- Sellers typically leave the house when buyers come to view it, to eliminate any face-to-face exposure.
- Home buyers and agents should wear protective masks when they are in the same house, in keeping with state guidelines.
- Sellers are encouraged to turn lights on, and to open all interior doors and windows prior to a showing. This allows prospective home buyers to tour the property without touching anything.
- As for paperwork and documentation, nearly all of that is handled electronically. The same goes for the mortgage process. This is a fairly straightforward process, thanks to digital documents, email, website uploads, etc.
This list was partially adapted from C.A.R.’s “Guidelines for Real Estate Best Practices During COVID-19.” We thank the Association for making this information publicly available, for the benefit of all parties involved.
Get Straight Answers to Your Mortgage Questions
Do you have questions about the California mortgage process in the time of COVID-19? We’re here to help.
Bridgepoint Funding has been serving the mortgage needs of home buyers for going on 20 years. And while our process has changed in recent weeks, we still provide the same level of service as before.
We can answer any questions you have about using a mortgage loan to buy a home in California. So feel free to contact us at your convenience. We look forward to hearing from you!