One thing we know about our market conditions, like the weather in the Midwest if you don’t like it wait a minute. The situation with the economic impact of the COVID-19 changes daily as more segments of the market get pulled in. Many have asked how does this effect the Real Estate market? The answer is don’t compare what is happening now with what happened twelve years ago. That downturn was directly linked to the real estate market as loose lending practices lead to the downturn in the economy with the financial industry at the heart of it.
What is happening now is a “hunker down” mentality that has spread to the buyers and sellers. Lenders are still lending, but interest rates that were at historic lows have started to go back up. Liquidity of cash is tightening as the nest eggs shrink. Interest rates have started moving up as the unemployment numbers have raised concerns of investors that a higher default rate will follow the unemployment numbers. As risk has gone up the investors want a better return to take that risk.
What we have noticed in our market is the buyers are not out looking. They are hunkered down. Sellers may be reluctant to meet closing dates as they are not prepared to move out of their houses quite yet. They are hunkered down. Canadians and others have left Arizona to go back up home to hunker down. The result is the market is in a pause mode. Vacation rentals have dropped dramatically and iBuyer Opendoor has pulled back. Many believe it will come back in a few months but for a seller to panic sell or for a buyer to expect a seller to panic sell would not be what we would advise our clients. We believe that the spring selling season is going to get pushed back into the fall.
Here are some quotes from Brian Buffini and Dr. Lawrence Yun the chief economist for the National Association of Realtors that put things into perspective:
“If you don’t sell, you haven’t lost anything.”-Brian Buffini
“If it (the economic shutdown) is of short duration, it will be just a delayed Spring buying season. It could be in August or September when we see that normal Spring buying season occur.” – Dr. Yun