Of course, it is! We haven't experienced a global pandemic in our lifetime. We haven't had an economic shutdown like this before. Uncertainty is understandable and people tend to fear what they don't understand. With all that said, it doesn't mean there are not opportunities for people who can act in this unprecedented environment.
During the recent Great Recession, housing prices experienced dramatic reductions in value due to the subprime mortgage crisis. Homeownership in the U.S. peaked in 2004 at 69.2% when lenders with questionable practices would approve almost anyone who applied for a mortgage.
Since the Great Recession, Congress and the mortgage industry enacted significant rules that require a person to actually qualify based on the ability to pay back the loan, cash and savings necessary to close, the house securing the loan and sufficient credit history.
Both first-time buyers and investors were able to capitalize on opportunities during that recession by acquiring properties at below market prices. These buyers had good credit, the necessary down payment, income and the willingness to act at the moment. Interestingly, those prices did not stay depressed for long.
Today, there is a big part of America that has good credit, the necessary down payment and sufficient income to qualify but are in a wait and see posture. It is understandable that both sellers and buyers across the country are uncertain whether now is a good time for them individually to make a move.
Consumers should understand the difference in the ability to qualify for a home and the ability to afford and maintain it. If a buyer is secure with their income and job status, a real estate market with less competition can definitely be an opportunity.
Currently, the homeownership rate is estimated at 65.1% based on the U.S. Census Bureau. This is only slightly lower than its all-time high.
"The housing sector enters this current recession underbuilt rather than overbuilt" states Robert Dietz, chief economist with the National Association of Home Builders, "that means as the economy rebounds ... which it will at some stage ... housing is set to help lead the way out." Ali Wolf, chief economist with Meyers Research, believes housing will be the hero this time "Last time housing led the recession. This time it's poised to bring us out."
The majority of housing economists don't expect prices to fall because we're still experiencing a housing shortage. Both existing homes on the market and new construction cannot meet the high demand from buyers, some who have been trying to buy and have lost bidding wars.
There is probably an equal number of sellers and buyers who are waiting to see what happens to the economy which will reduce the overall sales. However, for the sellers who are in the market, their prices may stay solid based on the lack of inventory for the buyers who are staying in the market.
All real estate is local and each market, in its various price ranges have their own current characteristics. If you would like to investigate how it might affect your decision to buy or sell, now or in the near future, we can arrange a video meeting. We can provide you with current inventory levels in your area and price range, recent sales and current demand levels.