Many people are wondering what will the COVID-19 virus do to the real estate market. Recently I listened to a podcast from the Brian Buffini show who was interviewing Dr. Lawrence Yun, the economist for the National Association of Realtors and his comments about the effect of this virus echoed what I believe to be true as well based on my experience in this market place for the past 21 years
Right now it feels like an economic quarantine, where everything is paused and this includes real estate transactions. Before all this started February homes sales were going strong, rising comfortably and still ahead of last years numbers. Over the past 12 months we have seen a real shortage in real estate inventory, which with the low supply there was a high demand, a strong Seller’s market.
The concern is that this economical quarantined will cause another recession. The stimulus plan should help keep those that have been out of work temporarily or lost their job regain some financial comfort. If we are like China and South Korea and are able to push the “play” button again within 60 days and we move past this crisis, our real estate market should be as strong as ever. The demand for homes is still there, unlike a decade ago where new home builders were averaging 2 million homes a year now they only averaging 1 million homes (the supply will still be low). Interest rates are incredibly low, so money will be cheap and the banks are much better prepared this time around. There is not the subprime market as we had seen in the past.
Our homes have become our “safe havens” Through self or mandated quarantines. We all have had to spend a lot more time in our homes than ever before. In this time, people are making improvements to them, cleaning them more, or possibly learning that they need something bigger or different once this is all over. Homeowners have not lost 30% of their value in the last 30 days. There is still a comfort in homeownership and a need for it. Our spring selling season is likely to be delayed into the summer but for this area that is a normal trend. Real Estate is on solid ground this time around and although delayed believe that it will be a robust buying season just around the corner.