Impact of Coronavirus on Maryland Housing Market
If you’re in the market to buy or sell a house, all this uncertainty about the Coronavirus (COVID-19) might have you worried about the housing market. Will it suffer a swoon similar to Wall Street? There are a few ways the virus could affect the housing market that you should be aware of—but before we get into the details, you can breathe a sigh of relief, because a housing catastrophe on the scale of the 2008 financial crisis is not predicted to happen.
It's Too Early To Know
Nobody knows how Coronavirus is going to impact the Maryland real estate market over the next month or the next ten months because we don’t know what the real impact of the virus will be on public health and markets. According to President Trump, it could disappear one day “like a miracle” and according to others, we could face a devastating pandemic.
Last week, the local stock market closed down nearly 8%, but the Futures were up almost 4%. Uncertainty slows the real estate market down and the only certainty right now is how uncertain the markets and public are about COVID-19. It’s hard to see how this type of uncertainty doesn’t create a drag on real estate across the country, the question is how long it will last.
Beyond the uncertainty, you have the very real impact of a sharp decline in investment/retirement accounts that many people use for down payments. With many accounts down double digits over the last two weeks, some buyers may reconsider their decision to sell stocks right now.
On the other hand, interest rates are historically low, hitting all-time lows this month and the real estate market across Maryland has been on fire since January so it’ll take a major shift in demand to slow things down as we head into peak buying season.
What We Have Heard
So far, what we're hearing from clients, colleagues and other industry partners (lenders, title, etc) is that buyers are hoping the Coronavirus slows the market down so they can have a better opportunity to buy, but there seems to be very few people actually pulling out of the market or reducing offers because of it.
Currently, buyers still seem more motivated by historically low rates and lack of buying opportunities than they are concerned of the possible impact of the virus. It seems that long-term confidence in local real estate is still a stronger influence on people’s decisions.
This mindset could change quickly, having broad negative effects on the local real estate market, if markets continue to tank, systematic failures in the market appear (e.g. Mortgage-backed Securities in 07-08), or people begin experiencing more direct effects of the virus like work/school closures or people they know testing positive.
This is an important change to watch for if you’re considering putting your home on the market in the coming weeks.
Don’t Overvalue Speculation
It’s important to distinguish between fact and speculation and not overvalue speculation. If you spend 30 minutes online today, you’ll be able to find an assortment of well-supported reasons why the markets are on the brink of another recession as well as well-supported reasons why everything will be just fine, with growth ahead. Your decision to, or to not, enter into the housing market should be rooted in things you can rely. It's can be challenging to determine fact from speculation, so make sure to do thorough research and find credible sources.
Of course, as always, you want to consider the national, regional and local economy as well as neighborhood trends, and other factors that will influence appreciation/depreciation potential.
So, how should you approach things in the spring homebuyers seasons?
The conditions are set for the spring to bring an incredibly competitive housing market. Inventory is low, demand is high, and mortgage rates are low.
However, it’s worth taking recent housing market history into consideration. Two years ago, similar conditions existed in the market. Howvever, according to Danielle Hale, Chief Economist for Realtor.com, we are entering into the “most competitive housing market in recorded history,”
The wild card in the housing market is coronavirus. If its impact is prolonged and induces even a minor recession, it could put a damper on demand—which would actually be welcoming for sellers in particularly competitive markets. The virus will most likely not cause home prices to drop, it would likely just slow down the pace at which they are rising.
Real Estate Transactions can be done ONLINE
The great thing about today’s housing market is the entire real estate transaction process can be done online and through electronic documents. Essig Bass Home Team is a technology driven real estate team. We care about the health of our clients, the community and our team. If you’re still interested in buying or selling your home, but staying reasonably cautious about the virus, we can handle everything for you online. We offer:
- Virtual showings and house tours. This can be done over FaceTime and recorded for you to view later. We do this all the time for clients and family members outside the state.
- Virtual Consultation. FaceTime or Skype can be utilized to do a consultation. We will walk you through the steps to get your house ready, conduct your needs assessment, discuss ideal timing to put it on the market and go over current housing market trends.
- Electronic document signing. We utilize an electronic document platform that uses a triple-check system to securely store information. Database and file backups are performed regularly, encrypted and then stored in the cloud for clients to access anytime and anywhere.
- Available by phone. Whether you text, email, call or FaceTime, we will always answer, or get back to you as soon as possible.
- Offers and Negotiations. We can write offers and negotiate on your behalf all online through electronic documents. As our client, we work for you and promise to get the best possible deal.
- Marketing Presence. With everyone staying home, it goes without saying there has been a huge spike in the amount of time people are spending online, especially social media. We create a customized social media marketing campaign for your home. We also create a single property website, premier exposure and responses time to leads on Zillow, Trulia and Realtor.
Above all Else, STAY SAFE
Again, we strongly value the safety of clients, community and team. Please remember to take precautions to keep yourself and your family healthy. Wash your hands, wash surfaces in your home, wash your smartphone and keyboards, avoid shaking hands, and don’t enter into crowds unless you have to.
If you are experiencing symptoms of COVID-19 (fever, coughing, shortness of breath, and in severe cases, pneumonia), please seek testing at John Hopkins University, the state lab in East Baltimore, or other private labs.