Opinion written March 11th, 2020, see update below
Whether you own your personal residence or some rentals, you are likely asking “How will the Coronavirus affect my real estate assets?” Also, “Will it affect the market in the Willamette Valley?” These are great questions with many variables to consider. My best estimate: Yes, in the short term.
I have been closely monitoring the outbreak since mid-January, as I had family living in China and had a visit planned for this week that had to be postponed. The two biggest effects on real estate overall are the drop in the stock market and plummeting mortgage rates.
The Bad News
Covid-19 is confirmed in Oregon, which means that we have gone from anxiety to the reality that the virus is here, and life is a bit uncertain until either containment or a vaccination proves effective. Unfortunately, neither scenario has a clear timeframe.
The Good News
The uncertainty in the economy may have a ripple effect for years, but the current fundamentals and outlook for the US economy is good. Hopefully there will be a relatively quick recovery.
Possible Side Effects of Social Distancing
- Delayed real estate purchases
- Pent up demand and faster-paced market after hibernation
- Increased energy toward DIY projects at home and re-decorating
- More decisions to remodel as homes become elevated as hangouts
Actions to Take
- Speak to your mortgage broker or financial advisor about doing a refinance on your mortgages
- Tighten your belt by curbing unnecessary spending
- Hold on and think long term by asking yourself “what will a short-term recession mean to my holdings in the long term?”
- Stay safe. Follow the CDC guidelines to protect yourself and prevent the spread
- Remember that this is temporary and it will get better
- Since international and investment purchases may slow, look for opportunities yourself!
Update written March 18th, 2020
Wow, things are moving so quickly that my opinion seems decades old now that schools have been shut down and there are orders to shelter in place in some communities in CA.
I believe that we are in for turmoil, but not as much in the housing market as other sectors or industries. As I mentioned, we already have a housing shortage of several million units in the US. With the slashing of the Fed Funds rate and other stimulus that the government is proposing, I don’t see this being a severe or prolonged shock to the housing market. I believe that those government interventions will “flatten the curve,” by spreading out a potentially large shock to our economy over a longer timeframe. This will create a slow, mild recession (Disclaimer: I have been accused of being an optimist before). This recession will create opportunities for investors and first time buyers that have been priced out of the market. There will still be people that need to buy and sell homes and again, EVERYONE NEEDS SHELTER. Look for opportunities as they come up and ways to support your neighbors and communities. More updates to follow….