The real estate market through the crisis

When is the right time to buy a house?

Due to the crisis, nobody went out and bought a house in March and April. Most people were losing their jobs and worrying about keeping their families safe. People who were selling their houses decided to pull them from the market as well. The economy was in a bad place and nobody knew what to do.

However, there are signs of hope on the horizon. Despite national home sales being down nearly 32% on the year, they have started to increase. Over the last few weeks, home sales are up over 6%. According to Google, searches for newly listed homes and real estate agents are rose 13% from the same time a year ago. It is kind of crazy to think but the majority of the country searches to for-sale listings are higher now than a year ago. This means that smart investors are looking to capitalize, you should too.

There are many reasons that people are starting to act. There is starting to be good news about the flattening of the curve and the crisis coming to an end. That means people will respond to that good news and start buying homes like normal. Even if people can’t see a home in person because of the restrictions, there are other options now. People can now take virtual tours of homes and go through the entire home buying process remotely. This wasn’t always possible, but the real estate industry has shifting to make home buying and selling easier. That is good for you and everyone else. But it also makes it more competitive.

Where are prices going?

It is important to move quickly because housing prices are not going to get any cheaper. In fact, for the most part, home prices have held constant through most of this. The thing is even before the crisis, the housing market was already in a low supply of new listings. That is a big reason for prices to remain relatively unchanged. Demand and supply balanced each other out. In a recent survey, the majority of home sellers said they have not reduced their prices. The time to buy isn’t going to get any better than it is right now. All we need to do now is wait for the market activity to pick up again.

New listings will continue to increase. The important thing to remember is that mortgage rates are at even historically lower rates than ever before. This is going to drive strong demand for buyers for a long time, even into 2021. If the inventory remains low, there will be an opportunity for a lot of gains by those who chose to buy in the future.

Mortgage rates are low, however, the ability to get a loan right now is difficult. This is because of the government’s mortgage bailout. Right now, a homeowner with a mortgage from the government doesn’t have to make payments for up to a year if they are experiencing financing hardship. A recent report showed that already there were three million Americans in this program. Due to this banks and mortgage originators are only giving out high-quality loans that don’t require government assistance.

The opposite viewpoint

Some are not so optimistic about a quick rebound of the housing market. Some predict that home sales will fall by 35% this spring compared with last year. That would be the lowest since 1991. Less than half of citizens say that it is a wise choice to buy a home right now. That marks low pessimism. The stock market, another indicator of investor sentiment is wavering with a lot of volatility right now as well.

The last time home buying interest was this low was in 2006. That was right before the housing crisis which also precipitated the Great Recession. Americans all across the country and taking a look at their financial situation and are playing it safe right now. The areas that have been hardest hit by the crisis are areas that have a lot of hospitality and vacationing. Las Vegas, Miami, and Orlando, Florida, were all heavily affected by the housing crisis in the 2000s. They are again being hit hard now.

There isn’t an easy answer to any of this. Nobody knows when the housing market will come back into full swing. Some think the recovery will be more of a “U” shape. That is similar to what we experienced during the Great Recession. Others predict a fast “V”. The important thing to remember is only going out and buy a house if you feel it is in the best financial position for you and your family. You can never time the market perfectly.

Other real estate markets

Outside of housing, hospitality, restaurants, and bars, have suffered a lot. When states started shutting down their economies and putting stay-at-home orders in place, commercial real estate couldn’t manage it. Retail as well as entertainment venues couldn’t stay in business and were forced to close. Think of it, all of the malls and nearly every store and restaurant in the country had to close for a certain amount of time.

Likewise, rental markets for the like VRBO and Airbnb rentals, have seemed similar downturns. They did see a small bump in activity when people tried to get out of cities, but it was not long-lived. This summer is going to be a rough one for vacations. Rental bookings for 2020 summer are only at 25% of what they were last year. That means that the owners of those rentals will suffer. They rely on that money coming in to cover their costs.

The impact can also be felt everywhere in the real estate market. Everyone from wholesalers and hardware stores to industrial buildings has had to close. That includes factories and manufacturing plants who supply the raw materials to do the infrastructure building for new developments. All in all, we have a long way to go before we emerge from this crisis. There are many signs to keep looking at to know when to make your move.