Coronavirus real estate market impact 2020. A new report takes a look at the stability of home prices and home sales in the U.S. after pandemics.
Mortgage rates are nearing an all-time low and refinance activity is high, but home sales have slowed due to the coronavirus pandemic, according to a report by Freddie Mac.
Social distancing and self-sheltering are making it difficult for real estate transactions to happen, complicating everything from arranging home showings to signing closing documents.
Buying a home is already one of the most stressful events of modern life. Coupled with the uncertainty of COVID-19, it makes sense that home buyers might be more hesitant about making such a significant decision. Unfortunately, home buyers are in the middle of what is typically the busiest time of the year for home sales.
Coronavirus Real Estate Market Impact 2020
The coronavirus isn’t the first pandemic or economic shock to disrupt the U.S. housing market. Noted real estate expert, Rick Sharga, CEO of CJ Patrick Company, recently analyzed historical information from DataTree by First American on how home sales and prices fared prior to, during and after the Severe Acute Respiratory Syndrome (SARS) and Swine Flu (H1N1) outbreaks as well as the period after the terrorist attacks on 9/11 to give insights about whether these historical trends are predictive of how the housing market may react to the COVID-19 outbreak.
His findings show that the housing market remained surprisingly stable and emerged from SARS and H1N1 in better shape than it was when the pandemics began. Home sales and prices also held up through the economic shock of 9/11, although the rate of growth understandably slowed during September and October of 2001.
“The housing market has proven itself to be very resilient through prior pandemics and economic shocks like the terrorist attacks on 9/11. While the number of sales has sometimes dipped temporarily, prices held and usually continued to rise afterward,” explained Sharga.
Will the Real Estate Impact Be Similar for the Coronavirus?
The report acknowledges its own limitations. None of the prior outbreaks and economic shocks that were analyzed presented the same set of challenges as COVID-19. The coronavirus spreads rapidly and prompted governments to take drastic measures to slow its spread making it difficult to predict what will happen when it’s over. Sharga identifies social distancing and business closings as factors that may have a continuing impact on real estate home sales and prices after the coronavirus pandemic eases.
“The COVID-19 pandemic and our governments’ dramatic actions to minimize its spread are unprecedented, but the resiliency of the housing market, coupled with how strong it was going into the pandemic, provides some hope for a fairly strong recovery,” noted Rick Sharga.