People ask me all the time what is happening in real estate, so I try to be prepared for that answer. I know that God has provided a bunch of sales for me coming into the Shelter in Place Order, but there are many Realtors who have not been so lucky. Today, I am going to tell you what the Realtor’s Chief economist is saying about the economy’s recovery after Sheltering in Place and what several other economists are saying.
Mid March had opportunity to be on a NAR Leadership call with the NAR chief Economist Lawrence Yun. Yun said, “The economic declines will be sharp but the rebound will be strong when people get back to work.
Realtors may not get back some of the lost sales from home buyers who wanted to buy before school starts but delayed their purchases.
Home prices should remain stable, because we had housing shortage before crisis and still have it now.”
Bank of America recently released a report on housing that echoed what Lawrence Yun said; “The market was well positioned heading into this recession. Inventory of existing homes was lean and builders were cautious about adding supply.” B of A had 2 other reasons that they do not think this particular recession will be like 2008 was for the housing with large house price drops. “Lending standards have been tight with high credit scores and reasonable down payments, reducing the risk of foreclosures.” and “Government policies – most notably the forbearance programs – should keep people in their homes and avoid forced sales”
B of A also predicted a 37% drop in existing home sales from the February peek and a 50% drop in new construction sales. “According to Zillow, new listed homes were down 19% from March 1 to early April this year, while in normal time they typically rise about 50%. The sharp drop in new listings on the market for sale will help to prevent an otherwise larger imbalance in the market given the collapse in demand. This will mitigate some of the downward pressure on home prices.”
One bright spot is that Inman news recently reported that Zillow is reporting that “Traffic to listings on the portal has “rebounded sharply” to levels “that are actually slightly higher than a year ago.” Overall, for the entire U.S. web traffic was up 13 percent year-over-year for the seven-day period ending on April 13.
“It could be coming from optimistic buyers hoping to get an early jump on their plans as soon as restrictions are lifted, or simply from aspirational viewers stuck at home and seeking an escape through real estate,” the report explains. However, Zillow also said in a statement Wednesday that the findings in the report show “renewed interest in the housing market as Americans adapt to this temporary normal.”
Goldman Sachs, for example, is predicting an “unprecedented” recovery in the second half of the year, once businesses start to reopen.
The chief of the San Francisco Federal Reserve Bank, meanwhile, says she’s expecting a much more gradual return to positive economic growth.
“The consensus amongst economist is that we will have a rebound in the third and fourth quarters of 2020 and it should be a ‘V’ shaped recovery” -Wharton school of business
The fundamentals of the real estate market are good, and we should see a good real estate market recovery. Please contact me with any questions that you have.