Many home buyers and sellers are wondering about housing values during this time of the coronavirus. It is a good time to buy or sell? As a real estate professional, you want to advise your clients as best as possible. So, what do you tell them?
Will they find that deeply discounted property that is a deal due to a homeowners job loss or other unfortunate situation? Will your clients be able to get maximum value for their home when they sell because of low inventory in a market riddled with challenges?
The answer to coronavirus housing value questions, and whether or not to sell or buy right now, lies in examining federal and local policy as well as real estate trends pre-pandemic. This means that your local market may dictate your client’s next move and that move might be severely different from a real estate agent’s client in the next state over.
The good news, though, is that even during Covid-19, the housing market has been relatively stable. Home prices in some areas are significantly up from this same time last year in fact. Who would expect this in the midst of a global crisis.
Even though we are officially in an economic recession, a time in which focusing on big purchases and the future is risky, real estate has weathered the storm it seems. Compared to a near dead halt in home sales at the start of the nationwide coronavirus lockdowns, due to job losses and trouble showing houses, we currently see light at the end of the tunnel.
Real estate is bouncing back to pre-Covid days, although most of the country is not quite at pre-pandemic levels when it comes to housing values. The Commerce Department has reported slightly elevated sales of new homes in April. Even though the National Association of Realtors (NAR) reported plunging home sales that month. But, NAR showed that prices increased overall. Many other reports suggest the demand for homes is on the rise today.
It seems that after an initial bit of coronavirus shock and struggle, home buyers are tiptoeing back into the market. Sellers are not as plenty, but there are still transactions to be made out there. Because there is more demand than supply, sellers are not compromising much on their prices so real estate agents need to be able to properly coach clients on appropriate home values. This is where knowing your local market inside and out sets one real estate professional apart from the rest.
Federal Action but Housing Markets Still a Local Issue
Thankfully, the Federal Reserve took fast action at the start of the coronavirus pandemic, which helped stabilize housing markets. Yet, markets across the country remain a highly local issue. This means that what is happening in California bears little resemblance to what is occurring in Florida.
Each state in the country has been hit differently by Covid-19, and some states that were okay at the start of the pandemic are facing more uncertainty today. The long-term question is what is going to happen as unemployment rates fluctuate with business openings and closings, and as many businesses shut down for good.
While no one can speak with 100 percent confidence on the state of the housing market moving forward, we can evaluate what is currently happening. We have made it through the tougher times, and real estate is revealing a spring-back that is putting many buyers and sellers in great positions.
Locations where there were stricter lockdowns, and those with more severe outbreaks, have had more impactful hits in their real estate markets. Michigan, Pennsylvania and New York had more dramatic decreases in listings and have taken longer to rebound. Texas and other states that did not lock down as extensively have recovered more quickly.
The trend we are seeing in the success of the current real estate market as a whole has much to do with the severity of a state’s lockdown order, which affected home showings as well as buyers’ ability to remain employed and qualify for a loan.
It All Comes Down to Supply and Demand
Like the greater economy, we can gauge the state of the housing market by looking at supply and demand. When Covid-19 first emerged, the number of available homes and the number of qualified buyers decreased in a parallel fashion. This is one of the biggest reasons why we have not seen a significant drop or increase in prices nationwide.
The steady price increase that we do see throughout much of the country is likely reflective, therefore, of the spring housing boom that many in the industry predicted pre-virus. With several months lost due to lockdowns and job uncertainty, a large number of buyers and sellers are back in the game today in a big way.
Buyers, in particular, are ready to jump into the market. And, without a large inventory to choose from, they are slightly bidding up home prices to the seller’s advantage. In summary, the sky is definitely not falling on home values. If anything, buyers are finding themselves disappointed that sellers will not offer that great deal buyers thought possible during a pandemic.
As a real estate professional, it is your job to help your clients evaluate the current market and anticipate what will happen if they wait to get into the water. We can never say whether prices will remain the same, drop or rise, but so far there is no huge plunge and that is something to be grateful for.