Coronavirus Impact On Housing Market As Dow Plunges 1,300
BREAKING NEWS: Coronavirus Impact On Housing Market As Dow Plunges 1,300
The Coronavirus Impact On Housing Market is a major concern for Americans.
- The stock markets are almost down 30% since its all-time high on February 12th, 2020
- The Dow and other equity indexes are trading in bear market territory
- The 2020 housing market forecast was solid and strong prior to the coronavirus outbreak which started in Wuhan China in December 2019
- The stock market has never been this volatile in US history
- The economic impact from the coronavirus is expected to worsen as the virus lingers
- There is no cure yet and/or vaccines for the coronavirus
- Many would-be homebuyers are putting everything on hold
- Many governors are declaring a state of emergency closing restaurants, bars, and other public places
- CEO’s of companies and small business owners are closing their doors and having their workers work from home
- The Coronavirus Impact On Housing Market and the economy is beyond devastating and nobody yet knows the price tag
- Many pre-approved homebuyers are worried about their jobs and whether or not they would still be employed
- The Trump Administration announced today the government will have a trillion-dollar plan bailout which just passed the US Senate
- Part of the Trump Stimulus will be giving taxpayers $1,000 or more dollars to help them during this time of financial crisis
- The Fed dropped interest rates to zero on Sunday on an emergency interest cut move to avoid an economic meltdown
- The once rolling strong housing market may be affected by the coronavirus pandemic
- Are we going to have a 2020 housing market crash?
- Will there be another repeat of the 2008 financial crash?
In this article, we will discuss and cover the Coronavirus Impact On Housing Market As Dow Plunges 1,334.56.
Short Term Coronavirus Impact On Housing Market
One of the things that Wall Street does not like is uncertainty. The market does not like fear. Trillions of dollars are affected daily in the market due to fear by investors. We do not yet know the short and long term Coronavirus Impact On Housing Market. Not until a vaccine has been created, tested, and launched. The coronavirus pandemic has plummeted the stock markets more than 30% in a short period of time. Today, the Dow dropped another 1,300 points. Today’s drop was from session lows due to the Trump Coronavirus Stimulus package just passed in the U.S. Senate. The volatility and huge drops in the stock markets are mainly due to fear than anything else. This is not the first time an aggressive virus hit us. Most can remember the swine flu, SARS, MERS, and other disasters that came our way. However, we all overcame them and the economy recovered. Past events are the best prediction for the future. The impact of the covid-19 pandemic on the housing market in the short term may be impacted. However, the housing market will recover as it has in the past. The coronavirus pandemic is serious. Italy has pretty much shut down the whole country. Many businesses overseas and in the U.S. are closing and/or restricting business activity. The government is thinking of issuing checks for Americans. They are also thinking of suspending mortgage and rental housing payments for those impacted by the coronavirus outbreak. In general, the housing market is stable during times of recession and short-term market disruptions.
Michael Gracz of GCA Mortgage Group follows the financial and housing markets. Mike said the following:
Since 1980, there have been five official recessions in the United States. In all but the 2008 financial crisis, inflation-adjusted home prices only declined an average of 2.7 percent from the month before the recession began to the final month of the recession. There’s a good chance the market will remain hot for some, but cool for others. The coronavirus is leading to fewer homebuyers searching in the marketplace, as well as some listings being delayed. In the latest flash survey, 11% of Realtors indicated a reduction in buyer traffic and 7% are reporting lower seller traffic when asked directly about the coronavirus impact on the market. The fear of the coronavirus outbreak is definitely giving pause to some buyers and sellers. But in this low inventory seller’s market, even as some potential buyers drop out of the market, there are others who remain eager to get a home under contract while rates are so low. Local real estate markets may act as a buffer against potentially larger declines in the financial markets. The recent turbulence in the stock market has already impacted the household wealth of many people to the tune of billions of dollars. This could reduce the demand for luxury homes. However, with fewer buyers for luxury real estate, there could be opportunities for steep price discounts for buyers who choose to remain in the market for high-end properties. The weaker financial markets can affect stability in the real estate markets. However, times like these do provide an opportunity for investors with money and the willingness to ignore the short-term fluctuations and talking heads on the main-stream media, to scoop up properties that may not appreciate as quickly as when the financial markets are running strong.
The Housing Market Prior Pre-Coronavirus Outbreak
The US economy was strong prior to the coronavirus outbreak in December 2019.
- Unemployment numbers were at a 50-year low. The Dow Jones Industrial Average surpassed the 29,000 mark
- Most American’s 401k’s were at all-time highs
- Home prices have been rising year after year where HUD and FHFA had to increase FHA and Conventional Loan Limits
- Job numbers for February 2020 came out at 273,000 new jobs added
- The housing market forecast for 2020 was strong with median home prices hitting historic highs at $300,000 which was 7% higher than the previous year
- Home sales were increasing 10% year after year for many years
- There were more buyers than inventory
- January home prices were up 7% year over year, and home sales were up 7% as well
- The housing market forecast for 2020 was strong and 2021 was expected to be stronger
- Many homebuyers had issues with finding homes since inventory is scarce
- Then the coronavirus outbreak hit and hell broke loose
- Demand for materials such as lumber, aluminum, steel increase but also the inventory gets reduced due to the effects of the coronavirus impact on the economy
- This increases the cost of materials due to disruption in production
- New homes may get delayed due to the trickle-down effects of supply affecting home construction and sales
- The 2020 housing market took a turn for the worse
- Many pre-approved homebuyers are now on hold
- What good is it getting the lowest mortgage rates in history when you may not have a job?
It is still too early to determine the impact of the housing market due to the coronavirus pandemic.
Forecast On Mortgage Rates
There has been a surge in increased refinance mortgage applications. This surge of sudden new refinance mortgage loan applications bombarded lenders where many lenders have stopped taking new loan applications until further notice. Other lenders have drastically spiked mortgage rates even though rates are at an all-time historic low. In a sense, this is like price gouging. Home purchase mortgage applications have plummeted significantly due to economic fears. For homebuyers who feel secure with their jobs, this will be a great time to buy a home. Others working in the transportation and/or hospitality industry may be affected by the coronavirus pandemic economy due to the uncertainty of their employment. The longer the coronavirus pandemic lasts, the more impact it will have on the economy. The stock market has entered bear market territory. Everyone is worried about a pending recession and how serious it will be. The US 11-year bull market has ended due to the coronavirus pandemic. The Trump Administration seems like they are on top of everything and are doing their best in being transparent to Americans. This is a developing story. We will keep our views at Gustan Cho Associates updated on any developments in the days and weeks to come. Stay Tuned!!!