Welcome to Passive Real Estate Investing. I’m your host Marco Santarelli.

Ask some investors what they think about the housing market going forward and they will simply shrug their shoulders or give you some wild prediction based on media misinformation or personal concerns. The reality is, housing markets around the country had made a substantial recovery since the great recession ended in June 2009, and many real estate markets began turning around in 2012 and 2013.



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After the Coronavirus pandemic came into being, housing market predictions for 2020 and beyond ran the gamut from optimistic to pessimistic. The housing market overall was running at a record pace in the early stages of this outbreak in February 2020, with sellers continuing to make gains and buyers benefiting from lower mortgage rates.

The pace of home sales relative to inventory reached a new record high in February, although hints of deceleration were beginning to surface.  Realtor.com’s recent report in April 2020 shows that while still posting a double-digit drop over last year, February marked the smallest yearly decline in the monthly supply of inventory since October of last year.

Nine of the largest 50 markets are slowing down on a yearly basis, with 20 of the top 50 doing so on a monthly basis.

While the effect of lower mortgage rates reignited housing market activity toward the end of 2019 and the start of 2020, February showed some early signs of the Coronavirus outbreak, particularly in markets that were hit early and hard

The latest housing market indicators point to a shift towards more balanced conditions in the short term.

As of February, the top 5 markets favoring sellers are Phoenix, Salt Lake City, San Diego, Riverside and Baltimore. These markets are heating up the fastest on a yearly basis, with a month’s supply of homes down by at least 52 percent year over year (as compared to last February).

As of February, the top 5 markets favoring buyers are Pittsburgh, Rochester, Minneapolis, San Francisco and Tampa. These markets are cooling off the fastest on a yearly basis, with a month’s supply of homes up at least 26 percent year over year (as compared to last February).

The Response

The response to the Coronavirus crisis is unprecedented. The federal government ordered a de facto shutdown of the entire private economy, closing an estimated eighty percent of businesses. It has caused unemployment to soar with more than 30 million Americans recently filing first-time unemployment claims, smashing all previous records.

Updated disease models and new information on the Coronavirus death rate show that this was probably an over-reaction to a new disease.  However, we can draw from prior economic crises to predict the impact this government shutdown on large portions of the economy will have on the housing market.

2020 Housing Market Forecast Before The Outbreak

Realtor.com said in their national housing forecast that home price growth will flatten, with an expected increase of 0.8 percent. Inventory will remain constrained, especially at the entry-level price segment. Mortgage rates are likely to bump up to 3.88 percent by the end of the year. Tight inventory coupled with rising mortgage rates will lead to dropping sales. Buyers will continue to move to affordability, benefiting smaller and mid-sized markets.