Today I’d like to talk a bit about the Short-Term Impact and Long-Term impact of the Coronavirus on the Housing and Rental Markets. Pay attention as I’m going to give you some insight and key takeaways on this episode.

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Keep in mind that this is evolving day-by-day, and although I’m not a fan of the main-stream media, it is my opinion that they are doing more harm than good by adding fuel to the fire of concern to those paying attention to them.

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The coronavirus pandemic has already caused a decline in the stock market, though that was more out of fear than anything else. However, we can look back to recent historical events like the swine flu, the SARS epidemic, MERS and other aggressive flu strains to make reasonable predictions of the impact of the covid-19 pandemic on the housing market. We can also use history to predict the impact of unusual responses to this pandemic, such as Italy suspending mortgage and rent payments.

Historically speaking, the housing market is relatively stable during market disruptions like a recession. Since 1980, there have been five official recessions in the United States. In all but the 2008 financial crisis, inflation-adjusted home prices only declined an average of 2.7 percent from the month before the recession began to the final month of the recession.

There’s a good chance the market will remain hot for some, but cool for others. The coronavirus is leading to fewer homebuyers searching in the marketplace, as well as some listings being delayed. In the latest flash survey, 11% of Realtors indicated a reduction in buyer traffic and 7% are reporting lower seller traffic when asked directly about the coronavirus impact on the market. The fear of the coronavirus outbreak is definitely giving pause to some buyers and sellers. But in this low inventory seller’s market, even as some potential buyers drop out of the market, there are others who remain eager to get a home under contract while rates are so low.

Local real estate markets may act as a buffer against potentially larger declines in the financial markets. The recent turbulence in the stock market has already impacted the household wealth of many people to the tune of billions of dollars. This could reduce the demand for luxury homes. However, with fewer buyers for luxury real estate, there could be opportunities for steep price discounts for buyers who choose to remain in the market for high-end properties.

The weaker financial markets can affect stability in the real estate markets. However, times like these do provide an opportunity for investors with money and the willingness to ignore the short-term fluctuations and talking heads on the main-stream media, to scoop up properties that may not appreciate as quickly as when the financial markets are running strong.

KEY TAKEAWAYS:

Smart investors often take advantage of these opportunities, while some would-be investors may finally pull the trigger on purchasing that first or second investment property.
Sometimes, you have to take advantage of these market disruptions to see that many investors will pump the brakes on investing out of fear and other illogical emotional reasons while others see the opportunity of having access to more real estate inventory, possibly better pricing, and still historically low-interest rates.

Before this coronavirus threatened the global economy, the state of the U.S. real estate market was great. The median home price nationwide hit a record high of just over 300,000 dollars. This is nearly seven percent higher than in 2019. The number of home sales was up nearly ten percent year...