Our team has been selling real estate for almost 20 years now. Over that time, we’ve seen 3 major shocks to the global economy. 9/11. The Financial Crisis. And now, The Coronavirus. During the first two shocks, real estate activity seized up. Like now, the world was trying to determine the severity and impact of the shock, and consequently, families delayed making major purchases like buying or selling a home. However, life happens. All the things that drive home sales (getting married, having babies, downsizing, etc.) don’t stop, so eventually, sales activity picks back up. Regarding home values, after 9/11, the underlying economy was strong and values picked up right where they left off. After the financial crisis, though, that was not the case. Prices reset. In the stronger close-in markets, we saw prices fall 10% or so. In the overbuilt markets and outer suburbs, prices fell off as much as 50%. So what about this shock? Though we are still early in the game, we have not yet seen the same seizure that gripped the markets in 2001 and 2008. Why? We think the main drivers are:
Market fundamentals are very strong. Especially in the close-in single-family home market. There is simply not enough inventory, and even through this past week, we were seeing multiple bids on properties with prices escalating 5-10% above where prices were just last fall.
Interest rates are at all-time lows. Even if you are not planning to move, we strongly encourage you to reach out to your lender (or call us for a recommendation). You will save money.
While the stock market has fallen dramatically and quickly, it is important to note that we are only back to where we were in the middle of last year.
Even if the stock market continues a rapid decline, we think that home values will ultimately behave more as they did after 9/11 then after the global financial crisis.
The fundamentals are simply too strong
There are more buyers than sellers); and,
Interest rates too low.