What’s Going to Happen to the Real Estate Market Now? COVID 19 Edition
-by Whitney Lewis
“Is the market going to crash this year?”
This is the question us Realtors have been especially attuned to the past few weeks as our clients speculate and seek guidance.
Here’s our perspective:
No, the market is not going to “crash” in 2020. Yes, the market will “correct” or at a minimum it will “slow”. It’s basic economics. Buyer demand will wane easing the steadily increasing home prices – with less competition comes a less dramatic rise in home prices.
“How much will the market correct?” “How long will it take the market to recover?” Well, those answers depend upon how long the pandemic lasts. Some economists say that for every day our country is shut down, add a week to the recovery time. Early estimates are of an average 10% drop.
“What does that mean for me?”
Sellers, all things being equal, you don’t need to panic. The real estate market is much less volatile than the stock market there are no overnight corrections happening. This is not reminiscent of the 2008 crash for several reasons: lending has tightened and as a whole people are not overextended, interest rates are low, and inventory is much lower than the remaining pent up demand. These factors poise the market for a slow correction/quick comeback.
Buyers, all things being equal, you don’t need to panic either. Interest rates are still low meaning your buying power is still high. Never make yourself house-poor and buy well within your means so that you don’t have to worry about the future so much.
My best advice for both buyers and sellers is to not try to play the market and worry about buying at the bottom and selling at the top. If you can, hold on to your real estate investments for the long term – your future self will thank you.
We’d love to hear from you about your specific situation! We’re here for you.