Coronavirus Impact On The Housing Market
Will COVID-19 cause the housing market to crash like it did during the financial crisis in 2008? According to a study conducted by Zillow on housing during previous pandemics, the study concluded that while home sales dropped dramatically during an outbreak, home prices stayed about the same or suffered a slight decrease. In other words, it’s harder for housing prices to change when there are hardly any transactions, putting the housing market on pause.
Most recent data is already showing signs of this playing out for the United States. Web traffic leading to real estate portals decreased by nearly 40 percent immediately following the aftermath of the pandemic. Depending on the conditions in each city will determine the effects. For example, in-person home showings are banned in Los Angeles, however, much of the real estate industry is utilizing digital solutions in order to keep the market moving.
Image via The Real Deal
While our economic situation is being dominated by COVID-19, mortgage rates have dropped. However, there is a chance that lack of public support for home ownership during these difficult times could result in foreclosures, personal bankruptcies and houses dumped on the market.
Prospective homebuyers are faced with life-changing decisions with lack of knowledge for the future. The housing market can’t begin its recovery until the threat of the virus has diminished. Data for selected cities shows that once a shelter-in-place has been ordered, a city’s new home listing drops to the bottom. Then after time passes, new home listings gradually rise.
Feature Image via Orange County Register