The daily questions I am receiving right now are “Lauren, how is the market?” or “Lauren, are you worried about a housing recession?”. Before I go any further, I,
Coronavirus and the Impacts on the Real Estate Market
Dated: March 17 2020
Are you worried about the impact of the Coronavirus in regards to the real estate market? If so, I am here as your local resource to provide information and guidance during this difficult time.
In this blogpost, you will find more information on the current situation as it pertains to our real estate market and how we do business, an outlook from Chief Economist and Senior VP of Research for National Association of Realtors, and my personal view on the situation at the local level.
Global Events Impacting Real Estate –
Quoted from “The State of Housing: Experts Discuss Global Influence, Trends, Coronavirus and Other Challenges, and Potential Solutions” By Liz Dominguez
The state of the economy and global occurrences can have a substantial influence on real estate, both nationally and locally. Experts are currently keeping a close watch on a global event that’s having a sweeping impact on the economy and, therefore, real estate.
“Without a doubt, two weeks ago I would have said the biggest hurdle is a general housing shortage. But that’s changed,” says Lawrence Yun, chief economist and senior vice president of Research for the National Association of REALTORS®. “The coronavirus is an unprecedented event, and even though we don’t know how everything will play out, it’s currently a big uncertainty that’s hitting the stock market.”
Yun says it could be good or bad. For some people, the money they have been saving for a down payment may have evaporated, but for others, low rates may provide an exceptionally enticing opportunity. According to a recent NAR survey, nearly one in four home sellers changed how their home is viewed on the market due to the outbreak, including stopping open houses, requiring that prospective buyers wash or sanitize their hands, asking buyers to remove their shoes or wear footies, and more.
The Economic Flash Survey, which was conducted March 9 and 10, found that 37 percent of respondents said homebuyers were more excited by lower mortgage rates than the stock market correction. Surprisingly, 78 percent said there’s been no change in buyer interest due to the coronavirus, and 87 percent said it had not affected the number of homes on the market. In specific areas like California and Washington State, however, 21 percent and 19 percent, respectively, cited larger decreases in buyer interest.
A recent public statement from Yun following the survey release stated:
“The coronavirus is leading to fewer homebuyers searching in the marketplace, as well as some listings being delayed. In the latest flash survey, 11 percent of REALTORS® indicated a reduction in buyer traffic and 7 percent are reporting lower seller traffic when asked directly about the coronavirus impact on the market. Given that a home transaction is a major commitment, the uncertainties on how the economy will play out and the spread of the virus itself are barriers to home-buying and -selling. The stock market crash is no doubt raising economic anxieties, while the coronavirus brings fear of contact with strangers. At the same time, the dramatic fall in interest rates may induce some potential buyers to take advantage of the better affordability conditions. It is too early to assess the likely impact as to whether lower interest rates can overcome the economic and health anxieties. But the survey is implying, in the short term at least, that home sales will be chopped by around 10 percent, compared to what would have been the case, due to the spread of the coronavirus.”
My Personal View
I have been receiving calls and emails asking if I thought this was going to affect our local market. After the last few days of school closures, business closures and Governor Brown’s restrictions, I do see the local market slowing down in Spring when, typically, it is our busiest season. Historically, during the world’s past outbreaks, when life and media settles down, the recovery is fairly quick when comparing to the recovery time of the Great Recession that started back in 2007. Right now, I am seeing multiple offers and properties going pending quickly. Prices are being escalated 5-10% over listed price in competitive situations. Rates are low so there are buyers looking. Inventory was already low and I think sellers who don’t have to sell will hold off until the current crisis settles down and/or we become used to our new norm. Because of this, I think inventory is going to decrease even more therefore the demand will remain high and properties will sell quickly. With that said, rates are volatile and went from 3.25% to almost 4.25% in a day; when you have a point differentiation it immediately takes some buyers out of the buying pool. If rates were to go higher towards 4.5% or even higher, I think the buyer demand will decrease and we might see a stabilization when it comes to multiple offers, etc.
Now……big picture……in my opinion, this is definitely going to lead us into a recession of some sort, however, I see the recession being in the Corporate world (that is a house of cards and was unstable; this just pushed it over), and the small businesses, self-employed sector is going to take a significant hit. I think the fallout from individuals losing their business/jobs will eventually affect the real estate market and we will see a slowdown in the market which therefore will plateau and/or lower prices depending on your market. I see it as a short-term dip and we won’t see it until further down the road and I think the dip will go back up relatively quick if you were to compare the real estate market recovery during the Great Recession. If you are thinking of buying and/or selling, my advice is to call me and we would need to follow the market day by day until the economy and the global crisis starts settling down and we are seeing more consistent behavior on the market.
Here are some links to current stats and resources for your information:
CDC Stats updated daily:
Oregon Health Authority Stats:
Red Cross: Coronavirus Safety Tips for you
Harvard Health Resource Center on Coronavirus:
For some, real estate is simply a job. For me, it’s my passion. Growing up in both the construction and real estate businesses, I’ve spent a lifetime learning the intricacies of the industry. Prof....
Latest Blog Posts
Are you worried about the impact of the Coronavirus in regards to the real estate market? If so, I am here as your local resource to provide information and guidance during this difficult time.In