It is an understatement to say that we are living in unprecedented times. The change occurring even from one day to the next will make your head spin! We had planned a post to go up today, full of recommendations to fill these lovely spring days with fun local activities. But obviously, those aren’t an option for us anymore. As things continue to change rapidly, our hearts go out to our community and our clients! We hope you and your family are healthy; mentally and physically. If you are struggling, know you are not alone. Please reach out to a friend today!
But be encouraged that even in the midst of tragedy and uncertainty, there are bright spots in our local markets. Surprisingly, last month Lynchburg and surrounding counties had more houses sell than come available. In spite of the visible instability of the national stock market, the fundamentals of the housing market are steady and real estate investments will continue to appreciate even in the event of a recession. Economic history as far back as the soaring interest rates of the 80s back up this prediction. Remember that after the Dotcom bubble in the 90s, and the post-9/11 recession, the economy and stock market took hits similar to what you’re hearing about on the news right now, but housing prices continued to appreciate. Don’t sweat the screaming Wall Street headlines: you have NOT just lost 30% of your home’s value– not on paper, and not in real life.
In addition, this isn’t the first time we’ve watched the housing market respond to a pandemic. In 2009, H1N1– the infamous Swine Flu– entered the world stage hard on the heels of the 2008 financial crisis. The immediate effects on the market were adverse, of course, but the market today is much better positioned to weather this storm than the post-housing-bubble market of 2009.
The most recent numbers reported by the industry professionals (flash survey taken in the second half of March) show market habits holding steady, with between 80% and 90% of both sellers and buyers staying the course. A small percentage have removed their houses from the market to take advantage of refinancing at historically low-interest rates, but this simply increases the demand/supply ratio and helps keep prices steadily rising.
What we do anticipate happening, and we’re seeing reflected in these survey numbers, is a slowdown in sales during what would traditionally be a time of ramping up activity and interest. According to the NAR flash survey, about 50% of the market saw a decline in buyer activity in the latter part of March. Likely housing sales that would normally have occurred in April and May will instead occur in July and August. The largest change in behavior involves canceling or severely limiting open houses.
So what do all these numbers mean in practical terms? If you are a seller today, we recommend that you continue to prep your house and list as planned—your home will be among the first to sell when the social bans are lifted. For buyers, now might be a great time to jump on the opportunities the market is providing you. This lull in activity means fewer competing offers on the house of your dreams, extremely low interest rates, and the possibility to score a great deal. However be aware that there will likely be delays in getting your loan closed and all the paperwork signed, sealed, and delivered. In addition to the practical challenges presented by current social distancing orders, the mortgage market is currently overwhelmed with applications, and there is demand as high as five trillion dollars for refinance or new purchase money right now. For perspective, in 2019, two trillion dollars of mortgage money was funded. As you can imagine, the secondary mortgage market is backed up, and even local appraisers are at least three weeks behind. That being said, it is worth the wait and delays since buyers are locking in historically low fixed interest rates.
As always, we are here for you. You can trust us; we are really good at what we do. And because we care, we’re here to answer any questions pertaining to your housing needs.