In the midst of uncertainty, such as the circumstance we are all in right now with the COVID-19 situation, perhaps the best thing we can do to facilitate our feelings of anxiety is to arm ourselves with facts and data, not give into the fear. Revisiting past experiences by reviewing historical patterns and understanding the peaks and valleys of what’s come before us is one of the many ways we can confidently evaluate any situation. With worries of a worldwide downturn on everybody’s minds today, it’s imperative to investigate what has happened throughout the years and how COVID-19 outbreak is not a housing crisis.
The Market Today Is Vastly Different From 2008
We all remember 2008, but please understand that today’s market conditions are far from the same as it was then, which was a key factor that triggered the recession. From easy-to-access mortgages to skyrocketing home price appreciation, a surplus of inventory, excessive equity-tapping, and more—we’re not where we were 12 years ago. None of those factors are in play today. Master dataset exhibits this is an impermanent occasion in time, not a breakdown of the financial industry. It is a drop that will bounce back rapidly, an obvious distinction to the crash of 2008.
Inventory And Interest Rates Are Low And Everyone Needs A Home
Although the Coronavirus is everything but normal, low inventory and low mortgage rates have set the stage for a highly competitive homebuying season. Investors will also be looking to position themselves in high demand areas that had become too expensive during this latest upward and strong cycle.
Current Sellers Are In A Better Position Than Before
COVID-19 may put a temporary damper on demand, which would be great for buyers in competitive markets who need to buy. So don’t expect prices to decline drastically, but instead a slow down in the rate at which prices rise. As sellers take properties out of the market, it will balance supply and demand. In addition, most homeowners are under leveraged and have equity in their properties this time around with strong possibilities to refinance.
A Recession Does Not Equal A Housing Crisis
Take a look at the past five recessions in U.S. history. Home values actually appreciated in three of them. It is true that they sank by almost 20% during the last recession, but as we’ve identified above, 2008 presented different circumstances. In the four previous recessions, home values depreciated only once (by less than 2%). In the other three, residential real estate values increased by 3.5%, 6.1%, and 6.6%.
We Can Be Confident About What We Know
We can be certain that, while we don’t know about the specific effect the virus will have on the housing market, we do realize that housing isn’t the driver. The reasons we move—marriage, children, job changes, retirement, etc.—are steadfast parts of life. Buyers continue to be out looking for a home like yours. Sellers continue to list their homes and make plans to move for a variety of reasons depending on their current needs. Serious buyers and sellers are still out there and need to move. Our team made the necessary pivots early on and we continue serving our client’s needs by implementing social distancing and safe health protocols in place for meeting with clients and selling their homes.
Concerns about a recession are real, but not a crisis in the housing market. If you have questions about what it means for your family’s home buying or selling plans, call us at The Oriana Shea Group to discuss your needs today. The best time to buy or sell a home is when you have less competition, not more. So don’t wait. (562) 270-1775.