REAL ESTATE IN COVID-19 TIMES
The reason is quite simple – housing is a commodity. Regardless of the economic conditions, everyone needs a place to live...
No one could have predicted a global pandemic that caused entire nations to shut down, resulting in widespread economic fallout. It’s during unprecedented economic times such as these that we are reminded, usually without warning, that what goes up must come down. It was a tough pill to swallow for those heavily invested in the stock market when global economies shut down for the first time in modern history... And on March 12, markets plummeted in what’s now being dubbed the new Black Thursday. The U.S. particularly suffered, experiencing the greatest single-day percentage fall since the 1987 stock market crash. When stocks drop and a recession seems imminent, people assume that the housing market will crash as well, but in fact, the opposite is typically true. When stocks drop and a recession seems imminent, people assume that the housing market will crash as well, but in fact, the opposite is typically true. It might seem counter-intuitive, but recessions aren’t historically a bad omen for the housing market. A leading real estate data provider looked at home prices since 1980 and discovered that during three out of the last five recessions, home prices actually increased. In 1990, during one of the two recessions where home prices declined, it was only by less than 1%.
REAL ESTATE IS THRIVING IN SPITE OF THE TIMES Despite the current economic turmoil, the real estate market has been surprisingly robust, and bidding wars have been more common than not as inventory remains low and homebuyer demand has shot up. Redfin estimates that 53.7% of all its offers written in June experienced bidding wars. Here in Seattle, bidding wars are the norm... not the exception. I regularly see homes with 10 or more offers. And just this month, I listed a home that had more than 100 showings in less than a week! Regardless of the current economic uncertainty, buyers are more willing than ever to take risks to win homes... According to Redfin, in June 20% of all winning bidders in multiple offers waived the home-inspection contingency. And Zillow’s July data indicates homes continue to sell at their fastest pace in two years, only staying on the market for an average of 20 days before going under contract. At the same time, mortgage rates continue to drop. The average 30-year fixed-rate mortgage fell to 3.03%, the lowest rate since Freddie Mac began tracking the statistic in 1971. Low housing inventory and high consumer demand fueled by record-low interest rates have kept the housing market moving forward at a strong pace over the past few months.
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