How’s the local real estate market?
Covid-19 affecting the market? Is this a good time to sell or buy?
For this update I will be looking at factors that may play a role in how long it will take to see the return of our local real estate market.
First, I will start with an update on the most recent sales and listing figures, which are showing that some people are putting a pause on the real estate market. The numbers below show the number of new listings in our communities for the last ten days of March compared to the first 10 days of April.
It’s interesting to note that the number of new listings in our communities has not been affected, whether it’s because these listings were already in the works, or people want to get a jump on whatever the market is going to be like on the other side of this pandemic. Then again, we live and play in a four-season recreation area where a number of these properties may be second residences. The numbers do show, however, that the number of sales is slowing down dramatically. When we look at the April market stats in a future update it will be interesting to see how the continuing number of new listings and the decreasing number of sales will impact the market and whether there will be much of a swing from the current Seller’s to a Buyer’s market or whether it will it be more of a balanced market.
There are also a number of conditional sales in the pipeline and the majority of these sales have a longer than normal conditional period for the buyers to complete their due diligence such as financing, home inspections, water tests etc. The normal conditional period would be around 10 days or under,whereas now we’re looking at multiple weeks in most cases. I believe that a lot of Buyers are hoping that by the time their conditions become due that this shut down will be lifted and that business will be more back to normal and that this is why they have gone with longer conditional periods.
When I look at factors that may play a role in the length of time it could take for the local real estate market to rebound, the first and most obvious is the length of time it takes to flatten the curve and put the Covid-19 virus behind us, as well as whether there are any recurring waves of the virus, the impact and intensity of those additional waves and if a viable cure or vaccine is discovered. The length of time that we are in this pandemic state will have direct impact on the length of the time it will take for the market to recover. If the crisis is for a short period of time, then the impact will be minimal, however, if this virus runs for a longer period of time then the impact will be greater thus increasing the amount of time it will take for the market to rebound. Some of the factors to consider with a longer crisis:
- The impact of the number of people laid off, the number of people losing their jobs and the number of businesses closing which will decrease the number of people actually looking to purchase property or who can qualify for financing. As well, people may not have the means to carry their current home and may need to downsize or sell their property.
- The losses in financial investments in stocks and bonds, as well as people depleting their savings during the crisis may erode their ability to afford the down payment for the purchase of a property.
- With the recent decrease we have historically low interest rates which mean that people who do qualify will have one of the most economical borrowing rates.
- Whether the Government will launch a stimulus plan, whether it will include a plan to assist people with purchasing a home, or whether there be other programs that assist in getting the economy moving.
- Whether the Financial institutions will lessen their rules or whether they it will actually become more difficult to get financing after the crisis and whether the government will retool the stress testing requirements that are currently in place to qualify for financing.
- Whether people staying at home during this time of shutdown will change their thoughts and perspective on their home requirements and needs, whether they may deem that their current home is not what they want and look for a new home or whether people living in close quarters may discover that their relationship is not as strong as they thought, or perhaps it will become stronger, as well as the fact that some families may have new additions to the family that may also change their home requirements.
- Whether people living in the city may decide after the crisis that they may plan to move out of the city to live in one of our local communities, while others may accelerate their retirement plans to make the move to an area with a lower population density.
- Whether real estate investors will be experiencing a loss of income during the crisis either as a result of having their tenants suffer financial hardship or from their inability to book short term rentals for the summer season, in which case they may decide it is time to sell. On the other side of the coin with the low interest rates and the stock market down people may be looking at real estate as a good investment vehicle.
- The last factor to consider is whether there will be a pent-up demand for properties once this crisis is behind us, since prior to the crisis at the beginning of March we were experiencing what seemed like a record breaking real estate market locally with a shortage of properties for sale.
Stay tuned for our next update and until then have a safe, healthy, and Happy Easter! If you would like to be kept up-to-date with the real estate market as it pertains to the coronavirus, sign up below.
Written by Karen Cox, Broker of Record Sea & Ski Realty
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