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Spring Market Forecast

Spring Market Forecast

The forecast for the spring real estate market clouded when the coronavirus became a national emergency. Last month, I would have thought our biggest challenge was lack of inventory but that has changed as we wait to see the effects of the pandemic on real estate buyers and sellers.

Depending on the severity and duration of the outbreak, lower mortgage rates should help to offset the effects on the real estate market of a slower economy and increased economic uncertainty. Average 30-year mortgages have dropped below 3.5% and the opportunity to lock in historic low rates may be too good for buyers to refuse when making a purchase decision.

The effect of the virus on overall consumer confidence could dampen the spring market if economic and health anxieties stop buyers from moving forward on major financial investments. The employment outlook in Socal has been on solid footing for some time, so unless that changes in a big way, homebuyers should be in a good position to take advantage of favorable interest rates and see less competition for listings. Some people always find an opportunity in times of crisis, and as Warren Buffett advises, buy when others are fearful.

Effects from the recent stock market drop may have larger consequences for the higher end of the market where financial market wealth is often used as a source of funds for luxury homes, second homes, and investment properties. Many buyers looking at their stock portfolios may not feel as wealthy or be willing to sell stock assets at discounted prices to provide a source of down payment. On the bright side, turbulent financial markets may make real estate more attractive as a safe haven to park investment funds.

Seller coronavirus concerns will impact the traditionally busy spring market if home sellers decide to postpone moving plans. Sellers in residence may not allow buyers to tour their homes. Prospective buyers should be prepared to be asked to wash or sanitize their hands before entering a property. Expect to see more agents offer “virtual tours” and other ways to show properties to buyers to reduce the number of in-house showings in this time of social distancing.

Real estate and financial markets are changing rapidly so call or email for an update if you are planning a move in 2020.