I was hesitant to write this post. The media is flooding us all with Covid-19 news and quite frankly, it’s too early to really tell. On the other hand, I’m hearing this question from clients and have seen some early indications of what may be in store for the next couple of months. Here are a few thoughts.
Buyers may be somewhat reluctant to look: My guess is that online activity will remain strong, but the simple fact is that many if not most local people are already limiting trips outside of home and work. Potential buyers from out of the area will be less likely to visit, particularly if they need to fly. Case in point, just yesterday I had some Southern California buyers cancel their plans for a home tour next week. They’re tentatively rescheduled for June.
The stock market does affect the real estate market: Particularly investors and second home buyers. Financial turmoil tends to dampen enthusiasm for making big purchases. Like the stock market, real estate rests on a foundation of consumer confidence. Conversely, should we see stocks remain on the current roller coaster for an extended time, we may ultimately see a boost in real estate investment.
Open houses may become scarce: This is a logical prediction based upon the fact that buyers will be less likely to tour homes and sellers will be less enthusiastic about inviting groups of strangers into their home. We haven’t seen much impact at this point, but it’s bound to change over time.
Some tenants may struggle with paying their rent: Regardless of the long-term outcome, some lower income workers are feeling a pinch now. For example, our local economy is highly reliant on tourism and hospitality. There is no doubt that those the industries and their minimum wage employees are or will eventually take a hit. Let’s hope their landlords have a little compassion and patience through these challenging times.
Then the market will come raging back: The weather will warm-up and the spread of the virus will cease. At that time, it’s likely that the pent-up demand for housing coupled with historically low interest rates will absolutely blow our market up.
I am the primary source of real estate information for many of my clients and I feel obligated to tell it like it is. While most experts are predicting a cooling market for the next couple of months, that itself may create opportunity. Motivated sellers are still in the market now and for buyers, this is likely to be the best pricing we will see this year.