A message from Rismedia* about the Coronavirus and it’s affect on the 2020 Real Estate market. Copied word for word from this morning’s newsletter:
As coronavirus spreads, people are becoming more cautious. Many conferences and large public gatherings have been canceled and people are postponing or canceling travel plans. Meanwhile, other industries, such as soap, bleach and hand sanitizer, are booming as consumers stock up on emergency supplies.
While the coronavirus is having widespread effects across the globe, the real estate market in the United States is coping with a mixed bag of positive and negative effects from the outbreak. Overall, real estate remains a trusted long-term investment option in a time where stock prices are falling and the return on bonds is at an all-time low. Here are some ways the coronavirus outbreak could affect the real estate market moving forward:
The Federal Open Market Committee issued an emergency interest rate reduction on March 3 in an effort to bolster the economy from the effects of the coronavirus. With benchmark interest rates lowered to just 1-1.25 percent, buyers who were on the fence about purchasing could see that now is a great time to lock in their mortgage rate. Lowered interest rates may also help buyers afford a more expensive home or take advantage of the increased affordability while interest rates are down.
Another positive note in real estate is that the mortgage industry is currently experiencing a refinancing boom as rates hit an all-time low. Mortgage Bankers Association Senior Vice President and Chief Economist Mike Fratantoni explains that “given the further drop in Treasury rates this week, we expect refinance activity will increase even more until fears subside and rates stabilize.”
Inventory could become tighter as listings are delayed and buyers and sellers become wary of making contact with strangers. Chief Economist and Senior Vice President of Research for NAR Lawrence Yun suggests that, in the short term, “home sales will be chopped by around 10 percent, compared to what would have been the case, due to the spread of coronavirus.” A recent NAR survey found that 11 percent of REALTORS® are seeing a reduction in buyer traffic and 7 percent are reporting lower seller traffic when asked about the impact of the coronavirus on their market.
Showings and Open Houses*RISMedia was founded in 1980 by CEO and Publisher John E. Featherston, as the residential real estate industry’s definitive source for news and information for real estate’s most profitable and productive professionals–and all those looking to gain a competitive edge.
Real estate agents may see fewer buyers interested in attending open houses while the coronavirus outbreak is in effect. Instead, agents may consider hosting more online open houses and take some time to try out the latest virtual tour technology to showcase their listings without the risk of exposing themselves and homebuyers to contagions.