Despite The Global Pandemic, The U.S. Real Estate Market Will Not Crash In 2020

22 May 2020 Friday 03:37
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Despite The Global Pandemic, The U.S. Real Estate Market Will Not Crash In 2020

With the current situation worldwide, everybody has been nervous, from the stock market investors to the home buyers, and that’s easy to understand—if you watch the news, it would make you think it’s the end of the world, but it’s not.

The coronavirus has taken its toll on the global economy leaving huge international corporations and small businesses worried of its impact—that too we understand.

The greatest challenge in the economy right now is the limited movement. The affected countries worldwide have implemented safety measures such as restricted travel, home quarantine, community lockdown, social distancing and closing of businesses and establishments. All of these have contributed to the sudden downward direction of the global economy.

But just like in the past, we can definitely overcome this. There will surely be an impact and it may not be a pretty one. How much the impact is? We don’t know. It’s just too early to tell.

The big question is: will the real estate market survive in 2020?

That’s a really tough question to answer right now, especially that we do not know how long this current ordeal will drag on—and the duration of the crisis is the key. But the way things look like right now, there is unlikely a housing crash to happen of the same kind as that in 2008.

What is more likely to happen is that the real estate market will certainly slow down. It will put the potential homebuyers on pause with their plans. Eventually, it will end up with growth of home prices slowing down or may totally halt in some areas.

The most vulnerable in the housing markets are those homes with higher price ranges above the median income which only a relatively small number of buyers can afford. While those in the entry level and mid-range prices, we will still see a higher percentage of buyers who have the capability.

A slowdown in the economy will result in fewer home sales with more houses on sale stuck in the market. As people lose jobs, this will put a lot of pressure on homeowners, we would then see inventory ramp up as they would rather want to offload.

But we aren’t there yet. All of these are just speculations at this time. We have not reached that point, at least on a national level, and we may not reach that at all. Again, the key there is how long the government will be able to suppress the virus.

Home prices are still growing continuously in most cities.

While approaching the supposed buying peak season by spring, data shows that home prices are still rising, and it is forecasted to continue doing so in the next few months. In fact, home values have gone up by 3.8% since the previous year and are predicted to rise up to an estimate of 4.1% by next year—these predictions are based on the current situation and trends. And as we all know, these situations are changing fluidly. But what we can clearly say right now is that we do not see the real estate market in the U.S. crash this year.

The last crash has altered things…

The fact is, it takes more than just a short-term economic disruption, more job losses, and more income reduction, to cause a real estate market crash on a national scale—neither is happening now.

The housing market in the U.S. is not as fragile anymore than it was the last time there was a market crash—during which reckless lending practices had caused people who can’t afford mortgage loans to qualify with ease, thus resulting in a lot more problems that triggered the crash.

But the markets have been resilient since then. Honestly, the government regulation and oversight has made the mortgage industry stronger, and in result, a stronger housing market. Also, mortgage borrowers now are qualified better with the series of income verification before they get approved.

Home prices and sales will reduce due to lockdown.

Events have been cancelled, gatherings of any kind are prohibited, and an international travel ban is in place. But so far, there is no nationwide lockdown implemented yet.

Regardless, regional precautionary measures are already hitting the market. In some parts of the country, people are prohibited to go out with the stay-at-home order, thus causing the decline of sales, decline of demand and in turn, slow down home prices growth.

Where there is a larger volume of population, the number of cases are higher while other states have very few or no documented cases at all. That is why, the lockdown is centered around areas which are more populated and the number of cases is high.

If the lockdown was implemented on a national level, it would be problematic. But still, it won’t crash the market unless it drags on longer.

What you need to remember is that the virus pandemic will never directly affect the real estate market to crash. What affects the market directly is the flow of supply and demand and the confidence of the consumers. That means, it all depends on how people feel and react to the current situation.

But if you need to sell your house even at this time, there are still home buying company out there that can help. Mrs. Property solutions, a 5-star rated home buying company can definitely help. Call them if you need to sell your house fast Los Angeles!