The forecast for the spring real estate market has clouded, of course, with the coronavirus emergency.
Two weeks ago, I would have thought our biggest challenge was lack of inventory but that suddenly seems like a long time ago. We must wait to see the effects of the pandemic on real estate buyers and sellers.
Depending on the severity and duration of the outbreak, lower mortgage rates should help to offset the effects of a slower economy and increased economic uncertainty. The Federal Reserve issued an emergency cut in rates last week, and more cuts are expected again soon.
Average 30-year mortgages have dropped below 3.5% and the opportunity to lock in historic low rates may nudge buyers to look beyond the headlines when making a purchase decision.
The effect of the virus on overall consumer confidence could dampen the spring market if economic and health anxieties stop buyers from moving forward on major financial investments.
The employment outlook in SoCal has been on solid footing for some time, so unless that changes in a big way, homebuyers should be in a good position to take advantage of favorable interest rates and see less competition for listings.
Some people always find an opportunity in times of crisis, and as Warren Buffett advises, buy when others are fearful.
Effects from the recent stock market drop may have larger consequences for the higher end of the market where financial market wealth is often used as a source of funds for luxury homes, second homes, and investment properties.
Many buyers looking at their stock portfolios may not feel as wealthy or be willing to sell stock assets at discounted prices to provide a source of down payment. On the bright side, turbulent financial markets may make real estate more attractive as a safe haven to park investment funds.
Seller coronavirus concerns will impact the traditionally busy spring market if home sellers decide to postpone moving plans. We are seeing sellers ask if they should wait to list their property, citing concerns about open houses or having buyers tour their homes.
Expect to see more agents offer “virtual tours” and other ways to show properties to buyers to reduce the number of in-house showings.
Adriana Donofrio deasypennerpodley Glendora (626) 926-9700 adonofrio@dppre.com
