By now you should be getting to know your house really well, its assets and its defects, and it sounds like you’ll have a lot more time to make those assessments. Point is your home is you and your family’s safety net. Right now, the safety net is physical protection within the shelter of your home, but at some point in the future the safety net will change to financial and there’s a lot of worry out there about property values post coronavirus.
Up until March, the U.S. housing market was headed for a hot selling season, but like many Americans, the housing market may have caught the virus as well. Mark Zandi, chief economist at Moody’s Analytics Inc., is predicting a 60% chance of the U.S. economy going into a recession this year. This will hit the housing market hard despite record-low mortgage rates of 3.29% for a fixed-rate mortgage as of the middle of March. Zandi goes on to say, “housing is being buffeted by two gale forces moving in opposite directions,” referring to low rates and a virus-fueled economic turmoil. “The question is, what’s the end result of all that? In all likelihood, the recession will trump lower rates.”
The National Association of Realtors had anticipated about 5.5 million sales of previously owned homes in 2020, up from 5.3 million a year in 2019. Now, however, they’re expecting a 10% drop in home sales in the next month to start with. Homeowners will be hesitant to put their homes on the market until the crisis is over, fearful they won’t get a good price. But if a recession does develop, others could be forced to sell, changing the inventory dynamic from a severe shortage to more available properties. Meanwhile, buyers have seen some of their down payment funds evaporating as the stock market declines, creating the potential of keeping them out of the market until they see a financial recovery.
According to many housing experts, the economic distress will slow home sales, and prices nationally will likely flatten or fall slightly after years of gains. There could be opportunities for buyers with more inventory, declining prices and low interest rates, nevertheless the economic prediction is the coronavirus could drive home sales down 10% in the short term.
What does all of this mean for us on Florida’s west coast? I’m still bullish on our local real estate market; we can certainly expect some adjustments after we return to a normal market but buyers still want to come to Florida from the northeast and other major metro areas, maybe even more after this is all over.
Here’s an interesting statistic I recently uncovered: In 1998, Florida’s population was approximately 14.9 million, in 2018 it was 21.3 million. In 20 years, Florida grew by over 6 million people, more than the size of many U.S. cities. Based on that, our weather, taxes and general lifestyle advantages, I see no reason to think that our state won’t be at the forefront of the coronavirus recovery.
For now, the main objective is to stay physically healthy; your financial health can be assessed down the road. So, keep the disinfectant handy, spirits up and learn to love your home and family, flaws and all. Good luck.
