What a Post COVID-19 World Will Look Like for Home Buyers and Sellers
Many home buyers and sellers have promptly hit the brakes on their real estate endeavours — which at the start of 2020 seemed very promising. With the spread of the coronavirus and the incoming recession, many are wondering the same question: what can we expect from the real estate market once COVID-19 is no longer an issue?
As trusted realtors in Temecula, CA and the greater inland empire region, we’ve done all the research for you by analysing current economic trends and past recessions. We’ve found — thankfully — that the housing market will most likely remain resilient moving forward.
What past recessions have taught us
The best way to predict the future is always to look to the past. In the last 40 years, the housing market was mostly unaffected during recessions — with some exceptions. The reason is an obvious one; no matter the economic situation, people always need a place to live.
When two back-to-back recessions hit the early 1980s, buyers were unable to afford homes and dropped out of the market. However, home prices remained resilient and the economy quickly recovered. In the 1990s recession, home prices did indeed drop, but only by 0.9% — and experts agree that a drop less than 1% is relatively minor as prices often fluctuate over time. In addition, the 2001 dot-com recession actually led to a boom in the housing market and housing prices rose by 4.8%.
The obvious exception to these examples is the Great Recession in 2008. However, that recession and the incoming recession caused by the coronavirus are almost incomparable. Lending practices are much safer now, there are many more safeguards in store for homeowners, and there’s a much stronger buyer demand now than there was in 2008.
Supply and demand is already returning
One of the most positive signs the real estate market will fully recover from the coronavirus? Most real estate agents are already seeing a return of both buyers and sellers in the past few weeks. Top realtors claim they are seeing about 36% of sellers and 39% of buyers returning to the market.
In fact, about 85% of realtors haven’t seen any sellers take their home off the market in the last two weeks. Back in April, that number was as low as 36%. Nearly all realtors are seeing drastic spikes in buyer demand in the last few weeks as well.
Home prices haven’t been impacted
Most buyers and sellers dropped out of the real estate market back in March and April because of an inaccurate notion; they all assumed the incoming recession would cause prices to drop. In actuality — a late May poll showed 58% of real estate agents claiming prices hadn’t fluctuated during the cornavirus pandemic and 38% claiming prices were on the rise. Only a small 4% of agents thought prices could be negatively affected in the future by the pandemic.
This means prospective buyers and sellers don’t actually need to wait out the COVID-19 pandemic in order to find success in their real estate endeavours. However, those still insistent to wait most likely won’t see negative impacts to the housing market during or after the upcoming recession.