Our lives are changing day to day as we keep a close vigil to how the current pandemic unfolds. While it is becoming more clear on what we can and can’t do on a daily basis, we all begin to speculate how things will be like once we arrive at the time when we get past all of this. For a while now and long before the COVID-19 threat, there have been discussions about a possible recession with many fearing it could resemble that of 2008.
Even though it does not seem that it will be business as usual in the immediate future, home prices are not expected to drop drastically as mortgage rates may help sustain some purchasing power for buyers. Many are being directly affected with temporary layoffs and pay cuts as we weather through this crisis, but once normalcy returns we have to guess what will happen as the real estate market catches up. Will prices and sales stay at a slower rate? That is where the historically low rates combined with historically low inventory could help fuel market strength.
“I don’t know which force will be greater: the negative impact of job cuts, if that was to occur, or the positive influence of low mortgage rates,” says National Association of Realtors® Chief Economist Lawrence Yun.
Furthermore, where this should be a temporary situation, sellers are probably going to be less likely to accept a sales price that is far less than just a few weeks ago. Again, where inventory is already extremely low, demand may still be strong where buyers have less options. We may potentially just see the rate at which different markets bounce back differ in their pace. Those that are less of a “core” market such as ones reliant on tourism or even the luxury market may see a slower recovery rate as we get back up to speed. Specialty markets oftentimes have a slower sales pace regardless so we may see a slight lag among them.
While nobody can predict the future and know how everything will unfold, we do have the data to compare from the last recession to suggest that any slowdown should not be nearly as severe.