The current state of the market
The state of our lives is changing every day as we keep a close watch on how the current pandemic unfolds. While we are becoming more clear on what we can and can’t do on a daily basis, many are wondering what things will be like once we arrive at the time when this comes to an end. For a while now and long before the current issue came about, there has been speculation about a possible recession with many fearing it could look like that of 2008.
While it is not expected that it will be business as usual in the immediate future, home prices aren’t anticipated to show drastic declines yet as mortgage rates may help preserve some buying power for buyers. Many people are being directly affected right now with temporary layoffs and pay cuts as we ride through this crisis, but once normalcy returns we have to guess what will happen as the real estate market then follows. What will happen to prices and sales? That might be where historically low rates along with very limited inventory could help maintain strength in the market.
“I don’t know which force will be greater: the negative impact of job cuts, if that was to occur, or the positive influence of low mortgage rates,” says National Association of Realtors® Chief Economist Lawrence Yun.
Additionally, where this will be a temporary situation most sellers are going to likely be less apt to agree on a sales price that is far less than just a few weeks ago. Again, where inventory is already at historic lows, demand may still outweigh it where buyers have fewer options. One thing we may see is the rate at which different markets bounce back differing. Markets that are less of a “staple” market such as ones dependent on tourism and even the luxury market may see a slower sales pace while we get back up to speed. Specialty markets typically have a slower sales pace anyway so we may see a slight lag in these segments.
While there isn’t a crystal ball to inform us of how everything will play out, there is data to compare from the last recession to indicate that any slowdown should not be nearly as drastic.