Due to the pandemic causing some residents in Long Beach to work remotely, some have begun to question their living situations and look towards bigger property, while others have opted to refinance their homes due to historically low interest rates.
Jonathan Crouch, assistant principal with Learn4Life at Rolling Hills Learning Center, said,“COVID really changed things with needing more space. I know for my spouse and I, working from home was a bit difficult. He would have meetings and I would have meetings and sadly enough I would go into the bathroom just to be able to close off, because we are both in meetings.”
Crouch and his husband lived in a condo in Downtown Long Beach, and with conflicting work schedules and a home a little too small for their needs, they decided to pack up and move, eventually finding themselves in a single-family home that sits at the edge of El Dorado Park.
“The biggest motivator were the interest rates, when we are talking about historic lows below 3% … that’s free money,” said Crouch.
In March of 2020, in response to the economic shutdown caused by COVID-19, the Federal Reserve lowered interest rates to nearly 0% to help offset the economic imbalance that was created by the virus.
However, buying a house has not been easy for residents looking for a home. Crouch and his husband put in multiple offers to different homes and eventually made a deal after weeks of searching.
Before owning their single-family home, Crouch and his husband owned a condo that “was hard to sell.”
Janet Darrow, a realtor with Keller Williams who specializes in Long Beach, said “It is because of COVID, people boxed up together and people are making the move to places with a little bit more room.”
Darrow also said, when living in a condo under those specifics, “that your home is not just your home, where you are there seven or eight hours a day now. You are there for a longer period of time, maybe it’s school, maybe it’s your office, it’s having to rise to the level of different functions now.”
According to Zillow, the medium home value for a house in Long Beach was $584k in October of 2019.
With the combination of historic low mortgage rates and the pandemic, home values have increased to $637k in October of 2020.
Since the start of 2020, mortgage rates have been breaking records of historic lows and have beaten its own record 11 times this year.
According to Freddie Mac, this year’s rates have not been seen in nearly 50 years of the groups surveyed.
When analyzing mortgage rates during the Trump administration, rates were at its peak in November of 2018, seeing a 30-year fixed rate at 4.94%.
Since then, rates were already on a steady decline, but in March when the Federal Reserve dropped its interest rates to nearly 0%, mortgage rates as of October were at 2.80% for a 30-year fixed rate.
This is propelling an already current home shortage problem in Long Beach, bringing homes to increasingly rise in equity.
The Federal Reserve plans to hold around the 0% interest rates at least through 2022 to help offset the economic imbalance from COVID-19, and with that, an 8% increase to home equity in the coming year, according to Zillow.