Data from January and February, which predates the COVID-19 pandemic taking hold in the United States, indicates that, even through the winter months, the real estate market was hot.
With low mortgage rates, the market was looking promising.
But now we’re seeing signs that the market isn’t in such good shape.
Here are three indicators that the real estate market could be in a tough spot:
- Case-Shiller Tops 200
This is the gold standard of home price indexes, which measures nationwide home prices going back nearly 40 years as well as 20 various metropolitan regions. The Index today is at 213.8, which is 15.8% higher than it was at the peak of the housing bubble in February 2007. - Everyone’s Stuck At (Their Current) Home
According to census estimates of the 21 states, 14 cities, and 47 counties (and counting) that are currently under “shelter in place,” “stay at home,” or similar orders from their governments, more than 200 million Americans — roughly two-thirds of the U.S. population of 327 million — have been told not to leave their homes. Without being able to view homes or meet with agents, there isn’t much that can be done besides virtual walk-throughs. - Demand Is Already Waning
As expected, multiple surveys of real estate agents across the nation have reported a dip in demand.
However, this is not time to panic. This is a great opportunity for you to evaluate your holding strategies.
“Home prices aren’t on as steep an uptrend as they were in the mid-2000s, but they have certainly outpaced wage growth. And if the coronavirus causes mass layoffs and high unemployment, wage growth is likely to grind to a halt. That sets home prices up for a big fall.”