As the global impact of the coronavirus expands, real estate agents are finding creative ways to continue connecting buyers and sellers.
Guidelines for social distancing and mandatory closures have changed daily since the start of the coronavirus outbreak, with real estate agents adapting continuously to attempt to keep transactions moving. Social media, virtual reality and virtual tours provide a way for buyers to continue their property search from their homes. Buyers and sellers have all the tools they need today to explore the market. Being confined in their homes, people have more time to search, thus we have had an influx of inquiries.
“Real estate agents and brokerages are chameleons and entrepreneurial by nature, so we’re quick to adjust,” said Eddie Shapiro, CEO of Nest Seekers International.
How does this affect U.S. Housing??
To get a handle on what this economic tumult means to the U.S. housing market, we need to look first to the bond markets.
A stock market correction, which is defined as a drop of at least 10%, is inevitably accompanied by movements in the bond markets as investors sell off stocks and park their money in bonds — and this is what we saw last week.
News of the spread of COVID-19 was instrumental in the decline of the 10-year yield to the lowest levels ever recorded.
A lower 10-year yield generally translates into lower mortgage interest rates, which can be a stimulus to home purchases and refinances. But when lower mortgage interest rates are combined with a potential economic turndown, the outlook for the U.S., the housing market gets more complicated.
In order to assess how the housing market will be affected by the COVID-19, we first need to look at the market prior to the outbreak.
We have not seen growth like this since 2016. Additionally, new home sales just came off the best single report we have had in this expansion and housing permits are at cycle highs.
Prior to the outbreak, other economic data in America also looked good. Regional PMI data, jobless claims and retail sales were all positive, pointing to another year of economic expansion.
In 2020, we would expect sales for both new and existing homes to be around 6 million units
If containment policies are implemented here in America to the extent we have seen in some other countries, then the housing market will take a short-term hit.
Americans won’t be buying houses at the same rate we had if they become afraid to go outside to mingle with the public. However, scale and duration are key here. This would be a short-term event, as I believe we should be able to contain this virus in 2020.
Keep in mind, however, that the record-breaking expansion of the economy of the last 10.5 years has put us on good footing to weather a possible downturn. Our demographics and low mortgage rates are two powerful positives for the housing market and should outweigh the negative effects of a short-term economic downturn.
The housing market is strong enough to handle a short term hit to global demand.
Where do we go from here?
For now, I recommend focusing on the positives, rather than falling prey to the fantasies of gold bugs and survivalists. The next six months can produce some terrible economic headlines, but don’t ever forget we are a strong, proud, hard-working people and we won’t take this lying down.
Notice I didn’t mention anything about the Federal Reserve cutting rates but, this was done on purpose.
It’s time to show the world the true power of King Dollar.
Remember, too, that the world today is a much different place than it was in the days that the Spanish flu claimed so many lives. We have better drugs to fight secondary infections, sophisticated medical protocols to assist those that do fall ill and a concerted effort worldwide to contain the spread of the virus and create vaccines against it. We can handle this.
Rather than panic, my recommendation is to wash your hands a lot, don’t go to work sick and take precautions to stay healthy. Don’t forget to enjoy life.
Source: Logan Mohtashami, columnist/HW Content Solutions
Thought for the Day: “Love the beauty within each person.”
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