As many states begin to slowly emerge from a Coronavirus lockdown, real estate investors and professionals are eyeing the market. Will the economic whirlwind damage real estate sales? Are we headed for another housing crash? We’re laying out current real estate trends based on data from industry leaders and showing you what to expect as America moves forward.
The Economic Impact of Coronavirus in America
The COVID-19 virus has had a sudden and drastic impact on the world economy. Globally, more than a third of the earth’s population experienced a shutdown. Many continue to face significant restrictions and closures.
In the United States, the virus has impacted every state, battering the economy and putting millions of Americans out of work. As of this writing, more than 26 million people have filed jobless claims in America – nearly double the number at the height of the 2008 recession.
Businesses remain closed or are operating with limited capacity. Employees have been laid off or furloughed. Nearly 20% of Americans are now out of work.
Even as Congress continues to pass financial bailouts, Americans will struggle for months to come. But what does that mean for the real estate market? Will people continue to buy and sell homes?
Coronavirus and Real Estate
There are two main issues currently affecting real estate sales: health and safety concerns, and unemployment.
First, home sales have slipped as buyers, sellers, and real estate professionals isolate and try to protect themselves from this virus. Some states forbade real estate activities during lockdown. Inspectors couldn’t inspect properties under contract. Appraisers couldn’t access homes. Realtors relied on virtual showings, writing contracts on properties sight-unseen.
Even as states begin to relax restrictions, buyers, sellers, and real estate professionals are on edge. Everyone is trying to limit their contact with others. While there are steps real estate professionals and their clients can take to stay safe during the pandemic, it’s still undoubtedly going to impact the real estate market for a long time to come.
Secondly, there are significant economic impacts on our nation. Many Americans now face unemployment, leaving them unable to pay essential bills like a home mortgage. And those who considered buying a home just a few months ago are now simply trying to make ends meet. The dream of homeownership is dashed for many.
Real Estate Forecasts for 2020
Health concerns mixed with an economic downturn makes for a sluggish real estate forecast.
New builds are at a standstill in most states. Suppliers have stopped production, and contractors are working with a reduced workforce. Everything is taking much longer than it was just three months ago.
While it’s still too early to know what impact the economic downturn will have on real estate for the rest of 2020, there is cause for hope.
Real Estate Forecasts Considerations
Real estate projections rely on known trends. We are currently facing a great unknown: Coronavirus. While the virus continues to spread, our daily lives – including real estate activities – will be impacted. However, life, to some extent, must go on.
People will still move to new locations. Couples will get married and need to purchase homes. Couples will need to buy larger houses as their families grow. So while we may see a downturn in the number of home sales, it’s unlikely we will see a crash similar to 2008-2009.
The Coronavirus Timeline
Life won’t return to normal until the threat of Coronavirus is gone. Of course, no one knows how long that will take. To that end, it’s wise for Realtors to expect a long-term drop in monthly home sales, possibly for the remainder of the year.
However, if the virus dissipates, or researchers develop effective treatments, we may see the market begin to rebound faster than anticipated. Unfortunately, we are on the COVID-19 timeline, and no one knows what that looks like.
As such, the uncertainty will continue to impact the housing market as buyers are more cautious.
Housing is a Necessity
Even in a time of crisis, Americans will continue to buy real estate. Housing isn’t just an investment; it’s a necessity. Couples will continue to purchase homes together. Families will continue to grow and will need bigger houses to accommodate their expanding brood. Individuals move. Life goes on.
So while the real estate market will undoubtedly see a slowdown – possibly for the rest of the year – it’s not going to stop. Inventory is down, and mortgage rates are at historic lows. Unlike the crash of 2008, home prices should remain steady, and buyers will still take the leap into homeownership.
Interest Rates: The Bright Spot for Real Estate
As the economy took a sharp downturn in February and March, the Federal Reserve slashed interest rates. Subsequently, many lenders also dropped mortgage rates. Even amidst an economic crisis, many Americans saw this as a huge incentive.
For those who have job stability, now is a great time to buy a home. That’s encouraging news for real estate forecasts moving forward.
Real Estate Trends: The Great Unknown of COVID-19
We are still early in the Coronavirus fight. While some states are opening up slowly, it’s going to be months before life returns to normal. The impacts on the American economy and real estate are real, they are uncertain, and they will be long-lasting. However, real estate trends show some promise, too.
However, many real estate experts agree that, while the number of home sales are likely to drop, housing prices should remain relatively steady.
Fannie Mae projects home sales will decrease by nearly 15% in 2020. And while that’s a massive blow to Realtors and other real estate professionals, there’s good news, too. Home prices are expected to remain steady, or even increase in some markets as inventory stays low.
Most experts are hopeful that, while 2020 may be a rough year for the real estate market, we will rebound quickly and be on pace for a more profitable 2021.