We are at a time in history where there is one major event that could flip the market in either direction. I see a lot of people giving advice one way or the other on how the market is going to go. I am not going to try to be that expert but, I will share my opinion on two possibilities in the market for 2020 moving forward. Here I am going to go over before, during, and after.
Before this virus hit the market was at an all time high with great interest rates and an enormous backlog of buyers. We were experiencing a seller’s market that was allowing sellers to receive multiple bids even over asking price. With all these bidding wars brought in all sorts of creative terms like dropping the home inspection or allowing sellers to set the dates. While this market was very hot it was rumored to be a bubble. I did not agree with the bubble idea at this point but, I can say that the market prices were very high and I was not sure how much higher would still be affordable for the market. One fact that was holding prices on this upward trend was the lack of inventory.
During The Start
Things really started off as if nothing happened with the market still surging forward and buyers ready to jump on anything that comes on the market. It all started a few weeks in when the first rumors of lock-downs began. This started a market frenzy and at the same time interest rates dropped starting off a whole new line of refinances. With all this weight on the market things really started to get crazy. We had buyers wanting to close early to ensure they got in the home before the lock down and we had mortgage pros and attorneys swamped. This brought up a lot of petty arguments as we missed closing early on dates and ended up closing closer to the original dates. Truth be said panic is what was causing the original issues.
Now a few weeks in, the real issues started happening with clients getting furloughed from their jobs and losing their ability to obtain a loan. We now saw more homes than ever falling back onto the market or trying to find another buyer from the multi offers they got. At our firm we lost a few and gained a few being the second buyer in line was good at this point. Soon after this we began to see buyers just flake out and decide now is not the time even walking away from the deal and deposit. While getting furloughed can get you a mortgage denial to get your deposit returned just walking away from a deal you could perform on leads to you losing your deposit.
Today State of The Market
With all that is going on it is hard to have a clear sight on whether we will have a buyer’s or seller’s market when Covid-19 is done. Just yesterday our office lost another deal to a worker getting furloughed. I am just working with my agents to help them explain to the parties involved if they are all still interested it may be in their best interests to sign some long extensions based on the buyer returning to work. This is not going to be any easy time for a seller to just jump back on and look for a new buyer to start back at square one with so it may be the time to be more forgiving than ever and work with people.
The truth is if we can get past the lock-down and get back to work people are still hungry for housing and all the virus has done so far is pent up the demand. I am not hearing from buyers that they are giving up. I am just hearing that they are waiting or just a little more hesitant than usual. This all said I think that as long as we make it past this lock down by May 15th I think we will see a massive launch to the economy leading to the strongest seller’s market we have ever seen. This would be due to pent up demand, falling interest rates (prediction), lack of supply, and confidence in the greatness of the USA defeating the virus. I hope this is the road we end up going down.
Not So Positive Future
If this virus keeps its grip on the world and leaves us all out of work until after May 15th each day will have more of an impact than the last. With all that has happened while dealing with this virus there are some things that are never going back the way they were. From small retail outlets to restaurants we are going to see enormous amounts of closures for good that will never come back. Another thing that will slow the market will be the amount of unemployment. In order to get a loan a client must have a good so these jobless claims will lead to a lack of buyers. I know I have heard people pointing to demand and citing supply and demand but there are some other factors that come into play here. One key one being the ability to lend and the availability of funding. Let’s hope this scenario does not play out but keep in mind as a real estate professional there is money made in every market.
I am not an economist, a financial advisor, or a stock trader. I am just a real estate broker who has been watching the market. No matter which way the market turns it is important as a real estate professional to go where the business goes. This is not the time to be stubborn to an opinion, it is the time to keep an objective eye on the market. If you enjoyed this blog post make sure to subscribe to our newsletter for the latest issues. Also check out our podcast and Facebook Group “Real Facts on Real Estate”