While there are still some deals happening, there is no doubt that the coronavirus pandemic has thrown a rather sizable wrench in what was a well-oiled real estate machine. The real extent of the market damage won’t be known for months. I am not in the business of making predictions BUT my bold, short term prediction once the stay at home order is lifted is that we will see is a terrific real estate run. Why? Here are some reasons:
1. Interest rates. Most economists believe a “correction” is coming. If you’ve been waiting for rates to hit bottom now might be the time. If rates aren’t at the bottom I don’t think they will go much lower and more importantly most economists are anticipating a jump upward soon.
2. Inventory. There isn’t any. There is not enough of a supply of homes to meet the demand from buyers. This lack of inventory often brings multiple offers on a single home. With low inventory and a larger demand comes higher home values. This may change as there are a number of sellers who are waiting to put their homes on the market. While there will be increased competition among sellers there will still be enough pent up demand.
3. Value. The value of your home has risen from the most recent bottom of the real estate market. If you didn’t have any equity in your current home 5-6 years ago to on your next home, you do now and will when you are ready to sell.
4. Borrowing. The federal government will continue to lend. They will continue to spur the market forward. The Federal Housing Administration (FHA), which guarantees mortgages for first-time buyers, has moved over the last few years to ease borrowing requirements and costs. This will continue and has a trickle down affect on all segments of the industry. If there are more first time buyers the sellers of those smaller homes can buy bigger ones and so on.
5. Foreclosures and Short Sales. There just aren’t that many around here any longer. I don’t see that changing even with what we are going through. Just as significantly most buyers who went through foreclosures, bankruptcies or short sales during the downturn now have repaired their credit enough to qualify to buy a home again.
While nobody can see into the future, I do know that we will get through this, that we are resilient and we will do it together.