MARKET & TRENDS
LOCAL MARKETS
Corona Bust? ESCALATING TRENDS COULD RE-BALANCE MARKETS
by Ingo Winzer
he Coronavirus pandemic brashly intruded on the national and world economy earlier this year, upsetting and accelerating trends we've already had an eye on. One of the worrisome features of real estate in the last few years was a home price bubble in dozens of markets, when prices outstrip the average local income; as much as 51 percent in Boise. Such booms often end badly - as we saw after 2008 - but can also come to a soft landing if the local economy keeps generating a good supply of new jobs. In such cases home prices can just go sideways for years until local income catches up. A couple of these booms, in San Francisco and Seattle, have already stalled out, but without a bust so far because local economic growth continues. Our pre-corona home price forecasts for these and other over-priced markets over the next three years ranged from negative five percent for Las Vegas to a healthy 21 percent for Boise. I'm pretty sure those forecasts are now far too optimistic. T
If you were thinking of getting out of these markets anyway, now is a good time to do so with a minimum of damage. If you were thinking of investing there, don't; wait a while to see what happens. The corona virus isn't the cause of what's happening, but it's a catalyst that will accelerate the natural re-balancing of over-priced markets. Our Investors Metro Monitor shows you the risks and opportunities in 200 markets across the country, at www.LocalMarketMonitor.com. •
Ingo Winzer is president of Local Market Monitor, which analyzes conditions in 300 U.S. markets, using such economic data as home values and growth in employment and population. Winzer, who has analyzed real estate markets for more than 20 years, was a founder and executive vice president of First Research, an industry research
company that was acquired by Dun & Bradstreet in March 2007. He is a graduate of MIT and holds an MBA in finance from Boston University. Winzer resides in Cambridge, Mass. www.localmarketmonitor.com.
92 | think realty magazine :: may 2020
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