Everyone is asking what is the Coronavirus Effect on real estate through June 2020. It doesn’t make any sense – our economy is taking blow after ugly blow, but the multiple offers keep happening and prices seem to be going up. What the heck is going on?
Since I am a complete data nerd I am going to dive into the numbers in just a bit, but here are some top level observations that might help explain the situation.
Inventory and Interest Rate Drive The Market
The biggest driver is the complete lack of inventory. In some areas we are still down double digits over last year’s already very tight inventory numbers. This is worse than not having enough Valentines for everyone in the class.
At the same time people are in the mood to buy because interest rates are almost stupid low. In some cases the interest rate is nearly a full percent below last years rate – and that means homes are a lot more affordable than they were last year. In a very real sense, homes have been “on sale” throughout the Covid Crisis.
Potential Home Sellers Beware
Not every house is getting multiple offers and sky high prices. There are only two reasons why a home might not attract the dramatic sale.
- The list price is too high
- The home needs a lot of work and/or is not well presented
Home Buyers are eager to buy, but they are also petrified of “scary unknowns”. The purchase price and monthly payments are known items, but what about future repairs? Buyers are afraid that an important system will need Big Dollars in the future.
Home sellers often mistake “It’s working just fine” for “a home that seems worth a million dollars”. Is it impossible to see how a buyer dropping a million dollars might have different expectations for the definition of “works just fine”?
DIGGS Advice: We don’t know one another, yet, but I am still going to give out my advice. If your life plans include selling in the next couple of years I would sell right now. Like, today. The near future is ridiculously hard to see, but we know it is good for home sellers right now.
And, if you plan to sell today, make sure your home is Best In Show when it hits the market.
Bonus Read: Is Staging Worth It?
Home Buyers – Is It Better To Wait?
The competition from other buyers is intense. They are lined up, quite literally, to see a home and submit an offer. Interest rates are unlikely to go up any time soon so…. do you need to be part of this crazy market right now?
It seems like a bad business move, but the purchase of a home isn’t always “just business”.
Reasons It Makes Sense To Buy Now
- Your current home won’t work for a COVID Life.
- Life changes, so your home needs to change (death, divorce, birth, job, etc)
- The right home comes on the market
- Seize The Day – you were planning a move before COVID and you see no reason to delay your life
Bonus Read: How To Know When It’s The Right House
Summary: Coronavirus Impact on Real Estate Sales Through June 2020
- Inventory levels are down approximately 30% from the already low levels in 2019
- Closed Escrows are down about 50% from last year
- New escrows are up significantly in June and the first part of July
- Months Supply Of Inventory continues to indicate a strong sellers market
See The Coronavirus Impact on Real Estate In Your Area
My Coronoavirus MLS Tracker spreadsheet is a thing of Nerdy Data Geeky beauty. I track a whole bunch of data points every single week in seven different areas: Glendale, La Crescenta, La Canada, Sunland/Tujunga, Pasadena, Altadena and northeast Los Angeles.
I want to know two basic things: how do we compare to last year’s activity and how are we progressing each week?
If you are a numbers/stats/charts person you are going to love this. You understandably mistrust a salesperson’s interpretation of the data. I gift my raw data to you. See it, analyze it and draw your own conclusions.
If this stuff is not your natural gig, but you still want to understand the numbers, see our explainer post and video: Coronavirus Real Estate Activity Tracker [Video]