The Coronavirus Pandemic: Shifting Us to a Buyer’s Market?
For the past several years, the news about the real estate market has remained somewhat consistent: a seller’s market. Ever since the 2008 recession, home sales have continued apace, rebounding after the crash and regaining incredible momentum. That is, until the outbreak of the novel coronavirus-2019 (COVID-19). While this is a grim moment for humanity in general, the news for those looking to purchase a home seems to be getting a touch brighter.
Due to the economic shutdown, the rise of unemployment, and the potent – and justifiable – fears that people possess around the contraction of the highly infectious and deadly virus, home sales have plummeted. As we all learned in our economics class in college, the law of supply and demand states that the sudden drop in demand will result in a drop in the price of the supply.
At least, that’s the theory.
While many experts say that it is still too early to tell what exactly will happen to the real estate market as a result of the COVID-19 outbreak, early reports frown around the country show an already marked decrease in interest rates. During the middle of March, an average fixed-rate loan set for 30-years was receiving an interest rate of 3.29%. For a comparison’s sake, this time last year an equivalent loan was receiving a 4.45% interest rate. According to the mortgage giant Freddie Mac, the current rates are the lowest experienced since they began keeping track back in 1971.
The question now becomes: will they fall even lower? Again, while only time will tell, it is entirely possible that we will see these rates dip down into the 2% range, especially as we near the upcoming presidential election when the White House will likely attempt to bolster the economy by dropping short-term interest rates.
A lot of unknowns, to be sure, and this is because we are in a completely new era. Something such as the outbreak of COVID-19 has never happened before, at least not when the economy was so closely tied to the health and mobility of a population. To this point, the experts are certainly divided. Some believe that the end of the pandemic will be the end of this economic crisis, returning us to the pre-virus situation. Others disagree, seeing the end of the war against COVID-19 as the true beginning of the economic recession. One thing almost everyone agrees on? The primary goal right now is to fight COVID-19, keep people safe, and figure out what to do afterwards.