The startling coronavirus pandemic has left many of us thinking back to the stock market and housing market crash of 2008 — something we’ll never forget. Now, we’ve got a new question on our minds: Will COVID-19 leave us with yet another housing market crash? Especially factoring in the unemployment rate, which some experts expect to see continue to climb to levels comparable to the Great Depression, there’s no way the housing market could survive this pandemic, right?
Let’s look at what’s happened thus far.
Before we dive in, we must note that this is based on the information we have so far. As this is such an unpredictable and unprecedented time, nobody can make any guarantees and things can and do change literally by the day.
A Housing Market Crash of 2020? What the Research Says
The stock market took a serious hit, so it stands to reason that the housing market is next, right?
According to an April 2020 survey by the National Association of Realtors, roughly 90% said that home buyer interest has been reduced due to the pandemic. This would explain the massive drop in traffic to websites like Zillow.
It sounds scary, but perhaps reassuringly, 60% are merely delaying the purchase by a couple of months. Thus, while interest has gone down, for many people, they’ve only needed to adjust the timeline under these new circumstances. They haven’t backed out of their decision completely, nor are they no longer in a position to take action.
Additional research is promising. While the current situation might feel discouraging, a paper published by the University of Granada and Federal Reserve Bank of Chicago says that the housing market recovery is going to more than make up for it. This is for a couple of reasons. For starters, after a financial crisis, interest rates typically remain low for quite a long time.
Secondly, government support usually continues to help revive the economy, and we don’t expect it to slow down for at least several months.
With stimulating the economy being of such importance, it gives us hope that while real estate might sustain some damage, we don’t need to worry about a full-blown housing market crash.
Plus, we should also look how people’s actions have changed — or in this case, how they haven’t changed…
People Haven’t Stopped Buying and Selling
Maybe surprisingly, it still stands that there are people indeed looking to buy a home. And because so many are holding off on selling, it’s only working to increase demand. In that respect, it’s a seller’s market right now, and selling your home could be not only doable but quite profitable. This is especially the case in areas where property values haven’t dropped.
Especially when we’re comparing coronavirus to the crash of 2008, know that the odds of that happening again — to that extreme and in that manner — are slim to none. This is because the economic factors at play in the 2008 crash (a credit crisis) simply aren’t an issue anymore. The climate has completely changed and the circumstances surrounding this scenario aren’t what they were before.
And despite how gloomy the situation may seem, surprisingly, renters are mostly keeping up with their payments. The National Multifamily Housing Council (NMHC) says that as of April 26, 2020, 91% of renters had paid their rent. For April as a whole, it held at 95%. Unemployment is on the rise and monthly cash flow is suffering for so many families. However, these percentages indicate that we’re nowhere near a housing market crash like the one we last saw.
The Housing Market Must Still Adapt to the “New Normal”
We don’t say any of this to dismiss the seriousness of the situation or the impact that coronavirus has had on the real estate market. The industry has indeed been impacted and we’ve all had to shift our approach. Like everyone else, though, all we can do is keep our finger on the pulse and aim to adapt accordingly.
The point we want to make, though, is that looking at our current situation versus the crash of 2008 isn’t a fair or accurate comparison. Plus, the housing market differs from city to city and state to state. And within that, income (and the change in income) is different from family to family.
This means that property values might go down significantly in one area and not budge in another. One city might be experiencing heightened demand while another hears crickets. If you’re considering or in the process of buying or selling a home, your best course of action will depend on your own household finances and what’s happening in your area. An experienced real estate agent can walk you through the process and get you up to speed on what’s happening in your city and surrounding areas.
Some of the biggest changes in buying and selling will come from needing to adapt to social distancing. For instance, open houses and in-person tours have taken a backseat to virtual showings and Zoom meetings. Online listings — and marketing those listings strategically — is more important than ever before. We were already relying on the digital realm to buy and sell homes, and that’s only more pronounced now, due to COVID-19.
Buying and Selling in Las Vegas, Nevada
If you’re in Las Vegas, you can still buy or sell your home during coronavirus. Yes, your approach will need to change. However, with the right real estate agent by your side, you can achieve your goals. At The Brendan King Group, we’re ready to guide you through these challenging times. We work quickly and aim to keep more money in your pocket.
We’re the leading experts at creating eye-catching online listings — including 3D tours — and marketing your home to a wide audience online. Our real estate agents are happy to work with your schedule and manage the logistics, even if you’re moving here from out of state.
Importantly, we prioritize your health and safety and are prepared to fully comply with social distancing guidelines and recommendations.
Contact us today and ask how we can meet all of your real estate needs.