The Corona Virus continues to dominate the headlines as fears of an all-out global pandemic have begun to impact worldwide economics and the stock market. With any abrupt change like this, it can have an eventual affect on the real estate market. Although the effect of the virus’ long lasting impact on the market is yet to be seen, here’s how it can change how (and when) real estate is bought and sold.
Whenever people are fearful, they seek certainty. Instead of leaving money in a volatile stock market, consumers move to safe and reliable treasury bonds. This gives them certainty. And when the bond market is performing well, interest rates drop. Lower interest rates let buyers afford more home for their dollar, or, allow some buyers to get into their first home that they may not have been able to afford before. Additionally, homeowners with higher interest rates are able to refinance with the lower rates, either reducing their term or monthly payment. This could provide certainty to homeowners to remain in a secure home (and payment).
What’s interesting is that in an uncertain market, both buyers and sellers have the ability to seek certainty. Buyers, capitalizing on a potential cooling down of a frenzied market, can get into a home and get out of the hectic house hunt. Sellers may choose either to sell at a perceived “top of the market” or stay in their home and wait it all out. There really isn’t an advantaged side of the coin here, only the ability to capitalize on fear and uncertainty for a unique and specific situation.
One “for sure” hit that we’ll see is in the luxury market. Whenever there is fear or doubt, those with substantial means tend to hold back purchases and wait for the dust to settle. Second homes and large expensive homes are the first to go when there is a market correction or slowdown. This means sellers on the high end will need to be dynamic with their pricing to land a buyer in the luxury realm.
Whatever the impact Corona Virus has on the real estate market, having a strong understanding of your local market is key to knowing when and if you can make a smart move. Give me a call to chat about your options and together we can find an opportunity that makes good sense. Remember, I am always here as a guide to help you reach your goals and overcome any obstacles. Contact me if you're thinking about making your next move!