Though these are times of uncertainty, we can look to the past for clues to how the COVID-19 pandemic may continue to impact the local housing market.
Zillow recently published a study regarding the behaviors of the housing market during previous pandemics such as the 1918 influenza and the 2003 SARS outbreak. The article concluded:
- Economic activity fell sharply during the epidemic (a 5-10% temporary hit to GDP or industrial production over the course of the epidemic) but snapped back quickly once the epidemic was over. This pattern differs from a standard recession, which is a situation in which economic activity falls for 6-18 months and then recovers more slowly.
- While the number of home sales dropped significantly during previous outbreaks, home prices stayed roughly the same (or only dropped slightly). After the epidemic was over, transactions snapped back to normal volumes.
- Early indications from China support this premise with housing prices remaining relatively stable from December to January and transaction volume decreasing during the COVID-19 outbreak.
What this means for you:
Real estate does not stop, even during a pandemic. Some may be surprised to hear it, but now may be a good time for you to buy a home or investment property!
Why Buy Now?
- Less Competition: Prior to the corona virus pandemic, most real estate professionals would have described the local housing market as being “on fire,” with buyers competing in multiple offer situations. With countless businesses closed, many are now having difficulty qualifying for a mortgage. If you are fortunate to have steady employment, financial reserves, and can qualify for a mortgage, you will likely face less competition!
- Interest Rates Near Historic Lows: Mortgage rates are fluctuating but are likely to remain lower than usual for a while. Take advantage of this time to lock in low fixed rate debt for years to come.
- Lending Requirements: During past financial crises, lending tightened and, in some cases, even shut down altogether. Could that happen again? I don’t have a crystal ball, but I can say that lending regulations have already become stricter for many government-backed programs. If you qualify now, it could be beneficial to act and a secure a home before lending requirements tighten.
My team continues to serve clients during the COVID-19 pandemic, and we are finding creative ways to connect even when we cannot meet in person. If you have questions about the state of the market or how to pursue your real estate goals even during this pandemic, don’t hesitate to reach out via phone or email today. I’m here to help!