Will the Housing Market Turn Around This Year?
Today, many people are asking themselves if they should buy or sell a home in 2020. Some have shifted their plans or put them on hold over the past couple of months, and understandably so.
Everyone seems to be wondering if the market is going to change and when the economy will turn around.
Many sellers are still positioning themselves to make moves this year. Once stay-at-home orders are lifted and they feel more confident they are expecting to list their homes. This means more homes will start to be available for interested buyers.
Currently, inventory levels are dramatically down this year in some cases close to 50% what they were at the year before. Last year around this time the market began to slow down and homes were sitting on the market longer. This led to price reductions that carried into August.
In our current market, there are many homes that are not selling but prices seem to be holding up. I attribute this to the low levels of inventory and since shelter-in-place policies have relaxed many buyers have re-entered the market.
Whether they are encouraged by the stockmarket's recent performance or perceptions that the economy will not be as adversely impacted, buyers are out there looking and in many cases, they are making aggressive offers.
Already this year their was quite a bit of uncertainty with the looming election. After COVID, some buyers are still being cautious, uncertain about what the long term effects to real estate may be.
Although there exists quite a bit of uncertainty we do know a couple of things that will ultimately shape our economy and impact our real estate in our area. Prior to COVID the FED was already concerned with the condition of the economy and had reduced rates and re-instituted quantitative easing, effectively injecting money into the economy.
The impact of COVID prompted even more dramatic steps by the FED to reduce rates. Congress passed a multi-trillion dollar stimulus package to help shore up the economy and prevent a catastrophic recession. There will likely be more stimulus to follow and rates will remain low for quite some time until the economy shows signs of growth.
Ultimately these policies will lead to increased asset inflation meaning higher stock market and real estate values in the long term.
The reality is that prices in the long turn will be going up. Typically the Summer season is the time when the market experiences the most inventory. Moving forward, once inventory starts to contract prices are likely to jump.
Even though no one really knows the long term effects and how long the COVID pandemic will endure. We do know that Congress and the FED are committed to avoiding a deep and prolonged recession. With the current unprecedented money creation and low-interest rates, it's difficult to imagine that the economy will suffer a deep and long recession.
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