It seems that not only are there questions about a solution to COVID-19 but, equally as many questions about the impact on the economy as well… and rightly so. There’s a quote by Creighton Abrams, a former General US Army that goes- When eating An Elephant, Take One Bite At A Time so with this pandemic pachyderm small bites are the way to go. And with that in mind, I’ll very briefly touch on the economy and then move on to local real estate.
Can we expect to see a recovery or recession once this is over?
Some organizations are stating the GDP (Gross Domestic Product) will fall dramatically, the most ever in decades. What do we know, history has a way of repeating and with a little bit of research, you can find data that shows previous pandemics have a “V” shape pattern in that there’s a sharp recession followed by a quick recovery. In fact, the stock market today looks very similar to the stock market a century ago as the world was facing the effects of the Spanish Flu. (display graphics). So, it might be fair to say that we will feel the “pinch” over the next several months or so and that the recovery period might very well be brief. Remember, data/info is being refined and updated daily so it’s premature to be posting potential outcomes.
Will this event cause a correction in the real estate industry?
That’s an interesting question. I was listening to Mark Cuban the other day and he said something that stuck in my mind and that is once we get through this we’ll be looking at America 2.0. I think he hit on something there, everything will be different and certainly E Commerce will be leading the way. As far as real estate is concerned, we may well be close to saturation point on the web. There’s plenty we can do online but there are too many tangibles when buying and selling real estate. So here in the High Desert we are seeing the higher end or luxury home market has little to no activity at all. Following on from that, mid-level homes have flattened out but there is still some movement in the market. Conversely, homes at the lower end of the market are quite strong and seeing more activity above all the rest and that could be the usual investors as well as buyers looking to take advantage of low interest rates. In the construction of new homes, I am seeing that it is still operational but, only insofar as builders are completing existing projects. It looks like many speculative general contractors are holding back on starting any new projects for the foreseeable future. What I find interesting is that while Tammy and I have been out showing homes, we’ve seen plenty of other agents with clients doing the same. And I want to point out that we follow all the State, Local, CAR and NAR guidelines so we are taking proper precautions.
I hear a lot of people asking how can we conduct real estate business under the current COVID 19 restrictions?
As I’ve just said, we are seeing business being conducted, maybe not quite as usual as we’re all dressed in our PPE. We just have to stay vigilant and stay safe. Viewing homes can be done using virtual tours though I think we can all agree that buying a home is a tangible process but a virtual tour can help a buyer decide whether they want to see the home or not. Also, some agents are conducting tours through apps like Facetime, getting permission from the sellers to walk through their home (applying all the necessary precautions of course) for the benefit of a buyer. Additionally, private tours have been conducted on a one-to-one basis (again with permission from the seller) and- using all the requisite protections- I want to point out that both NAR and CAR have been working alongside state and local agencies to ensure our safety and they have been at the forefront in creating documents highlighting risk management such as the form PEAD or Property Entry and Advisory Declaration (shown in slide). If you and/or your agent plan to do an actual tour then you should first check with the homeowners, homebuyers and the appropriate agencies for current guidelines while we are still experiencing the COVID 19 and its effects while also using the appropriate forms. Remember, I am not advocating physical tours over virtual tours I am reporting information as I get it and you should always follow the appropriate procedures as they are updated by the relevant agencies.
So, what can we hope to see moving forward?
It is clear that there are three elements at work-
1) The level of unemployment,
2) The speed with which the Stimulus Package is delivered,
3) Cheap mortgage rates. What we need is for all 3 to come together to make a full market recovery.
Should I buy a home now?
Well that depends on your personal circumstances. I think the question you need to ask yourself is- Is my job secure, do I have steady income? If the answer is yes, then now is a good time to buy here in The High Desert. We could be seeing something like when people were buying back around 2011-2012 (slides/graphs).
There’s a lot of misinformation out there. If you want the best advice on what’s happening in the current housing market, contact your local real estate agent. I would say they should contact you and have them go to the website. If they are out of the area we can find an agent to handle their needs.
Tori’s Notes on Sale-Sold Graph
Average Price For Sale & Sold Report
What Does Average Price For Sale & Sold graph mean?
- Average Price For Sale is the average list price of the properties for sale in a particular month. Average Price Sold is the average of sold price of the properties sold in a particular month. Displaying both Average Price For Sale and Average Price Sold line charts in a graph portrays the relationship between on and off market pricing.
What Does Average Price For Sale & Sold Report Do?
- It helps determine whether the market is a buyer or seller market. If the average listing price and average sold price are the closest, the area has the healthiest market.
- It helps identify where the softest market is and where the buyer can find the biggest price concessions.
- It helps determine if there is any change in property value for a specific area.
How to Use Average Price For Sale & Sold Report?
- Refer to For Sale vs. Sold Report for the number of properties sold. If a very expensive or very cheap home has been sold, these statistics can be skewed up or down, and the trend line can fluctuate with less consistency.
- If the average sold price is below the average listing price, and falling, the market is moving toward a buyers’ market. If the average sold price trend is up or above the average listing price, the market is moving toward a sellers’ market.