Seems like bad timing on the part of my crystal ball to malfunction. To be clear, it hasn’t worked properly from the day I got it, several Christmases ago on a rare year that I was “good” enough to receive anything but coal. Honestly, if it had been working, there’s a fair chance it would have fallen and broken into a million tiny pieces during the recent earthquake. And then I would have stepped on the glass. Fortunately, however, it’s in the shop.
If I did have access to it, I would be able to either assure my clients that the real estate market will not be affected by this virus (or earthquake) or I could assure them that waiting would be the best course of action right now. Alas, all I have access to is the forecasts by experts mixed with a limited amount of common sense.
This past week we, as Realtors, have tried to advise our concerned clients in the best way we can, armed with current projections, estimates and calculations, in an attempt to find a path through this uncharted territory. In doing so, there are some fundamentals that we do know have little chance of being any different regardless of what is going on around us.
We know that there is a housing shortage. This will not change anytime soon. A basic economic principal is that when the supply is low and the demand is high, housing prices will continue to incline. As of today, there are approximately as many sold homes as well as homes having gone under contract as there were a week ago; in fact, there were more today than yesterday.
The experts are saying that we may expect a little slowing, as people hunker down and stay home. However, age ranges, current health status and individual safety and anxiety levels will determine who does and does not continue to house hunt or sell.
We do know that the interest rate drops we have seen over the course of the last few weeks will motivate buyers to act. We also know that investors with cash will jump on this opportunity to pick up inventory. The chief economist for the National Association of Realtors, Lawrence Yun, has projected that, although the coronavirus might affect sales in certain markets, the low interest rates will motivate buyers and sellers.
“Mortgage rates likely will fall to an all-time low, and buyers will want to lock in, even with growing economic concerns,” Yun said. This gentleman is nearly always right with his projections.
On another note, the luxury market has been projected to slow down during this time. This would be homes starting at the $1 million range. Although not a large share of the market, it is still relevant.
As a side note, Realtors are being extremely cautious with showings, open houses and listings. We are bringing disinfectant wipes, hand sanitizer and shoe covers to showings. Open houses are being limited to one showing at a time with a courtesy wipe down following each showing. Any distribution of treats is done with care and all treats are prepackaged. Water bottles may or may not be offered. The neighbors who want to simply see what the house across the street looks like inside likely won’t be coming around for a while. While this may limit numbers, it does not limit serious buyers.
Ultimately, we could still benefit from a crystal ball. We don’t know how long this pandemic will last. We do know that there will be some proverbial fallout from this unprecedented occurrence. However, as of today, it doesn’t appear to be affecting real estate.