The real estate market will react to the coronavirus, but it is really important to understand that it will not react quickly. The real estate market is more like an aircraft carrier, than a schooner.
See the three short videos that I did on our Facebook page. You don’t need an account to view these. In just a few minutes, you’ll get all you need to know.
In short: don’t panic.
It can take months for the real estate market to shift. The Cromford Index is very high right now. Even the last time there was a shift in market conditions in 2013, according to Tina Tamboer of the Cromford Report, it took a few months for that to reflect in the housing market.
Still, if you have been looking for a home, expect more properties to come on the market, as investors (many backed by Wall Street money), hold off purchasing.
Have a look at this chart. Since we’ve gotten serious about the coronavirus, you can see a small up-tick in active listings. That may be the beginnings of buyers reacting to the news. But, as with many things in the real estate market, we may not know until we look back later.
That may not mean that prices will drop. In fact, probably not. There are two reasons for this. First, there is still a scarcity in the market, due to years of companies and individuals purchasing homes that are then used as rentals or AirBnBs, thus taken out of the regular buy/sell circulation.
So, if there is a “flood” of short term rental properties coming on the market, it will likely only increase choices for buyers, but not really push prices down.
Second, there are still a huge number of people out there who need a home –many of them have not shown up in home buyer stats recently because they have decided to sit out the market for a while.
So, if you are a buyer and you’ve been frustrated by the multiple offers, we suggest you circle back to the homes you missed. Maybe even put in a back-up offer if the buyer is a cash buyer. That home may come back on the market because the cash buyer’s situation may have changed.
If you are a seller, don’t fret –especially if you are selling above $400k. First, we will see more change in the sub $400k market before we see changes in the higher prices, for the reasons above.
Second, as also said above, there will be a scarcity for a while.
Unless the virus knocks out our economy for many months, don’t expect major changes.
If you need help planning your strategy to sell or buy, please call us at 602-456-9388.
