COVID-19 vs. The Housing Market
The home buying and selling season kicked off this year with concerns. While selling and buying is usually a predictable and exciting time in Real Estate, a wildcard none of us ever expected is now in play. COVID-19, or Coronavirus, has caused widespread fear, which has led many families to become uncertain of what their next step is in their Real Estate venture. In response to this, I created this article to help answer your questions and encourage you to continue your home search or sale because, in reality, this could be the BEST time to buy and sell this year! Want to find out why? Keep Reading!
Stock Market vs. Housing Market
We are beginning to feel the effects of the outbreak in China with the shortages and delays in consumer goods. In addition, restricted travel, social distancing, and the closure of businesses will all contribute to lower consumer spending, which can hurt the economy. However, the Stock Market and the Housing Market are typically not tied together since people don't buy homes as merely an investment - they're a basic need that changes depending on life stages. So historically, the Housing Market is stable during Stock Market dips and even in recession. It's somewhat counter-intuitive, but recessions don't necessarily mean bad things for the housing market. In fact, they usually don't.
ATTOM Data Solutions, a leading real estate data provider, looked at home prices during the five recessions since 1980 and found that only twice--in 1990 and 2008--did home prices come down during th recession, and in 1990 it was by less than a percent. During the other three, prices actually went up. Once fear subsides and the virus gets contained, combined with the government's Economic Stimulus Package to compensate for the quarantine, the dip in the Stock Market may be short-lived, and another recession won't be imminent.
Good News for The Housing Market
How could the Housing Market go up during a recession, you ask? When the Stock Market dips, investors consider it to be too risky, so instead, they look for safer places to invest their wealth. Bonds and Real Estate are some of the most common places investors turn to during times like these. The higher the demand is for Bonds - like right now - the higher the price becomes, and the lower the interest payment is relative to the price. When these yields are lower, mortgage rates are lower, too. Mortgage rates were down to 2.29% last month compared to last year during this time when they were 3.49%. Investors looking to Real Estate as a safer place to put their money follows the same trend as Bonds, which is why interest rates are down.
What Does This Mean for Buyers and Sellers?
Is it only a matter of time before the rates start to go up again, and it's uncertain how low mortgage lenders are willing to go, regardless of the Federal Reserve cutting its rates again. But the current state of mortgage rates is incredible news for both buyers and sellers. With mortgage rates this low, this means buyers can afford a lot more, and sellers can relax knowing that their homes are in HIGH demand. It's still a seller's market out there, so with extra safety precautions and new marketing techniques put into play, this could be a successful year in Real Estate.
Advice For Buyers
Look at your personal financial situation and job security. If you are comfortable in your financial position and were planning on buying a home in the next few months, this couldn't be a better time for you. As a buyer in these current circumstances, you will likely be conducting your home search virtually. From meeting with your Realtor through video chats to doing virtual tours, you will have to be adaptive, but know it's for everyone's safety and best interest. If you decide to do an in-person tour of a prospective home, there are certain precautions you and the sellers will have to take. for you, the buyer, you will be encouraged to wear shoe covers, sanitize your hands before entering, wear a mask, and ensure you're not sick before you come inside. The home of your dreams could be within your grasp if you act quickly!
How to Sell Your Home During the Pandemic
Sellers rejoice! The abundanc of buyers flooding to the Housing Market to take advantage of low-interest rates means your home will be in HIGH demand - you can sell fast and for more money! The demand for homes right how is higher than the supply, so you can expect that if you put your house on the market, you'll get multiple offers in no time. To sell your home during these times, talk to your Realtor about making your home very viewable in an online setting. Create a Matterport 3D virtual tour of your residence, have plenty of pictures and videos, and provide a detailed description. Unless necessary, conduct meetngs via video chat and only give in-person tours to serious buyers. During these visits, offer shoe covers and hand sanitizer for your guests, don't invite anyone in that is sick, and above all else, don't allow a tour if you are sick yourself.
I encourage those who were on the road to buying/selling this season to continue on that path, and those who weren't to jump in! The Housing Market is booming behind the curtain of fear with which Coronavirus has covered us, and I want you to take advantage of these unique Housing Market conditions. Follow precautions, be mindful, and get ready to sell faster and for more money!!! Wondering if now is a good time to sell or buy in your specific situation? I created a checklist for sellers to determine if now is their home's time to shine, and for buyers to determine if the home of their dreams is in their future. Even if your'e just seeking Real Estate guidance given these new circumstances, reach out! We are still here and ready to help you! Contact me at 916-439-8124 or 1-844-707-9782 for pre-recorded information on many topics.