CORONAVIRUS VS THE HOUSING MARKET…..
Up until March, the housing market was gaining steam. Then the invisible Pause button was pushed and everything came to a grinding halt. The talk of recession, the current “temporary” out of control unemployment claims and the wild stock market has many thinking of the Great Recession 10 years ago. That was a whole different situation from today’s unfolding sequence of events.
Let’s put this all into perspective…. The Great Recession was a financial bust… SubPrime loans or High Risk loans were given to people who could not afford the payment, had bad credit histories and less restrictive in terms of the types of borrowers they approved for loans. This mess lasted for years.
Today’s financial mess is the result of a tiny virus wreaking havoc in the world. It’s just messing up everything. Sellers are not putting their homes on the market for fear of the virus coming into their homes. Buyers cannot buy because they are now unemployed. Even if the buyer still is employed and can get a loan, they can’t get inside to view the home.
More food for thought….in past pandemics like the SARS outbreak, the number of homes on the market in Hong Kong fell sharply, mostly because people wanted to avoid exposure to the epidemic. Still, the value of the homes that did remain on the market remained steady. This was probably due to limited inventory just like here today. The same is true of the COVID-19 outbreak in China. There were fewer homes on the market, and transactions nearly stopped, but prices were not reduced much on the homes that sold. Here’s more food, so what if the market softens just a bit and you sell your home for a few thousand less. The home you are buying is also reduced. The interest rates are fantastically low, so in the long run you just saved a wad of money.
The Pause button will be released and back to work we will all go. Yes it will take time for everything to come back on line. Let’s just say the buying season is moved up to early summer this year instead of early spring. Real Estate is poised and ready for a strong, eventual, recovery. For your consideration, take a peek at this post….NAVIGATING REAL ESTATE TRANSACTIONS DURING THE PANDEMIC
I have made a short video showing what was going on from February to end of March in the real estate market. Consider this our benchmark for months to come.