Things are changing every day as we keep a close watch on how the current pandemic unfolds. While we make changes with what we can and can’t do on a daily basis, we all begin to question what things will be like once we arrive at the time when this all blows over. Even before the current issue at hand, there has been some discussion about a possible recession with many fearing it could resemble that of 2008.
While it does not look like it will be business as usual in the immediate future, home prices aren’t expected to severely drop as mortgage rates may help preserve some purchasing power for buyers. Many are being directly affected with temporary layoffs and pay cuts as we weather through this crisis, but once normalcy starts to return we have to guess what will happen as the real estate market follows. What will happen? This is where low mortgage rates along with very limited inventory could help maintain market strength.
“I don’t know which force will be greater: the negative impact of job cuts, if that was to occur, or the positive influence of low mortgage rates,” says National Association of Realtors® Chief Economist Lawrence Yun.
Furthermore, as this should be a temporary situation, many sellers are going to be less apt to accept a sales price that is substantially less than just a handful of weeks ago. Again, where inventory is already at an all time low, demand may still outweigh it where buyers have fewer options. We just may see the rate at which different markets bounce back differ in pace. Those that are less of a “staple” market such as ones reliant on tourism or possibly even the luxury market may see a slower pace as we get back up to speed. Specialty markets often have a slower sales pace anyway so we may see a slight lag in that arena.
While nobody has a crystal ball to know how everything will play out, there is data to compare from the last recession to suggest that any slowdown should not be nearly as severe as last time.