And now our take on the housing market;
“In this time of crisis, the one place that people had to go to for their safe haven was their home. Their homes became their shelter, their comfort, their lifeboat.” – Brian Buffini
Chief economist for The National Association of Realtors, Lawrence Yun, gave his thoughts on the current market predictions for how the real estate market will react after the current quarantine:
“The decline in confidence related to the direction of the economy, coupled with the unprecedented measures taken to combat the spread of COVID-19 which include major social distancing efforts nationwide, are naturally bringing an abundance of caution among buyers and sellers. With fewer listings in what’s already a housing shortage environment, home prices are likely to hold steady. The temporary softening of the real estate market will likely be followed by a strong rebound once the economic ‘quarantine’ is lifted, and it’s critical that supply is sufficient to meet pent-up demand.”
Is the Real Estate Market going to crash?
The current instability of the situation makes this a very difficult question to answer. While many buyers have been considering delaying shopping for a home, so far most have done just that: postpone. The current sentiment isn’t that buyers are exiting the market altogether, but are simply pausing to ascertain what will happen as a result of COVID-19. It’s quite possible that demand will remain high, and simply be delayed until the situation stabilizes, and normal life resumes. If that holds true, there could possibly be a large surge in activity once the situation normalizes, with buyers still needing to find homes, and wanting to take advantage of historically-low mortgage rates. “If it (the economic shutdown) is of short duration, it will be just a delayed Spring buying season. It could be in August or September when we see that normal Spring buying season occur.” – Dr. Yun We could also see an impact on new construction, with global trade at a near standstill, and contractors unable to obtain the materials needed. This could also cause the price trajectory of existing homes to continue upward, as buyers simply have less supply.
What about the Flagstaff Market?
While this info is on the National level, Flagstaff tends to follow very close and the comments from Dr. Yun are spot on for Flagstaff . As of 2/23/2020 there are 77 Single Family homes listed for sale priced under $500k (almost 20 of which are new construction), we are still seeing a low amount of inventory as we have been for some time now. Sellers who are listing are taking advantage of the low inventory and buyer demand. While buyers have slowed down due to uncertainty, they are keeping an eye on the market and interest rates. A well-prepared seller who has staged their home nicely, and is priced competitively, will likely find that buyer who is eager and ready to purchase.
It is really too early to tell what will happen to our market until the uncertainty of everything minimizes.
What is happening to Interest Rates?
As we have been talking for some time, “record low interest rates”. Though today rates are almost up a full percent from last week. This is in part due to the stock market and as we see the market decline we see interest rates increase. This happens in a quick fashion and it takes longer for the mortgage rates to decrease. We expect to see the rates come back down in order to help keep the market stimulated. Last week the National Association of Realtors polled over 50k Realtors and found ” Forty-five percent of members cited there was no notable change in client behavior regarding the stock market and mortgage rate change”. So mortgage rate is something we will need to keep our eye on to see what it does to the Real Estate market.
Finally lets end with a quote from Dr. Yun
“Even if it takes a little longer to contain it, there is such a solid fundamental for the real estate market, things will play out very well over the long haul.”
Remember Real Estate is a long term investment and if you have any questions or concerns please let me know.