The Reno / Sparks Assn of Realtors released their March statistical report a couple of days ago and based on these trends alone, one might think that we’re headed into a very busy Spring & Summer. I think this outlook is optimistic as there are obviously several underlying trends (not all bad) for the real estate industry.
· Most of the sales in this report occurred before the lock-down: A typical escrow requires 30 – 45 days to close which implies that that majority of these contracts were consummated in late January – February. Note that the active inventory is on the rise now while well below the inventory we had to choose from last year.
·There has been Some fall-out: Personally, I did have one transaction cancel after 3/15 as the buyer was about to get laid-off. Throughout the MLS we have seen an unusually high number of Back-On-Markets, an indication that circumstances are changing for some people. Although it’s anecdotal, I sense that this trend is not as bad as we predicted it would be.
· Some pipelines have emptied: My investors have all but disappeared which seems to have as much to do with the stock market as it does with the virus. Second home and down-sizing Californians are secluded in place which has opened-up the market to locals and some are taking advantage. I’m thinking about single level homes in great condition which were selling in a matter of days just one month ago. Sensing an opportunity, some local people are filling that void. Unlike the last several years, there’s actually something to look at!
· There is an element of “Wait & see”: The folks in the market now are motivated. That is, if a seller has a sign in their yard right now, they are probably not “testing the market”. Those that simply wanted to sell rather than needed to sell, mostly pulled their homes off the market.
I suspect we’ll see a drop in these statistics in April and perhaps a deeper slide in May as the cycle of the virus unfolds. With a little luck we should start to normalize in June. Although I’m sure we’ll see market conditions a bit more sluggish than predicted, I suspect that the prospects for real estate beyond June – July will be quite good. Keep in mind that those folks that wanted to move back in February, still want to move. The financial conditions for some buyers will change to the extent that they no longer qualify for a home purchase which may serve to level the market a bit. It’s been a seller’s market for over five years now, we may see that altered a bit this year.
Unlike the crash of 2008, I feel it’s more likely that Real Estate pulls us out of a recession rather than pushing the economy into a deeper one. If you need assistance, I’m still working so don’t hesitate to send me a note. Meanwhile stay safe and healthy. dan@nvhomeconnections.com