I actually went back & forth about writing this, because there are just so many unknowns with our current state of affairs. We are all in uncharted waters and one way or another, the Coronavirus pandemic has affected everyone reading this.
I absolutely do not want to get into predictions of what might occur over the course of the next few months, however, I do feel that it’s important to let you all know what we’re currently experiencing in the real estate market so that you can make the most educated decisions for you and your families.
What we’re currently seeing
As of today, we are still seeing fairly strong buyer activity. We have seen fewer showings on homes, but we are still receiving offers quickly on listings that are priced correctly. This is especially true for homes under $300,000 where there is just not enough inventory for first-time homebuyers. In fact, this past week we sold two homes before they were listed, and another after just one day on the market.
While I’m sure we will ultimately see a slowdown of some sort, we anticipate real estate will keep moving forward in the near future as the mayor of Nashville has deemed real estate an essential business. This means that if you are currently under contract or plan on buying or selling a home, then you should expect to be able to do so, with maybe few slight changes along the way. Real estate agents are still showing homes, but are advised not to travel in vehicles with their clients and to minimize contact with the homes they are viewing. Our team has also begun to implement 3D tours on many of our listings in order to provide virtual open houses like the one below.
3D Virtual Tour
We have also partnered with a team of lenders and title companies Keller Mortgage and Surety Title, who have committed to a completely digital system to ensure that you can still close on your home remotely from anywhere.
Why this is likely not 2008 all over again
The Great Recession in 2008 was caused by a house of cards where mortgage loans were given to just about anyone old enough to sign a contract. The banks then bundled the mortgages into securities and sold them to other financial institutions. This artificially drove the price of homes up as well due to more demand because more people were now able to get approved for a home loan.
When these same homeowners began defaulting on their mortgages in mass numbers, banks and institutions that held these securities began to fold. The economy was swiftly brought to its knees due to self-inflicted wounds that had been mounting for years. Since the Great Recession, lending laws have become much more strict, which helps to protect us from making the same mistakes of 2008.
Our current situation is much different.
The coronavirus is an external influence on an extremely healthy economy, with a housing market that has record low home inventory and even lower mortgage rates. There is no doubt that this epidemic will take its toll on all aspects of our life. However, it is very possible that we will rebound much faster from this economic shift because of the solid foundation the economy and housing market had before this shift, which was not the case in 2008.
Why this is still a great time to buy a home
The coronavirus outbreak could decrease demand for housing in the short term, which would actually be beneficial to some homebuyers in highly competitive markets like Nashville. On top of that, mortgage rates are at an all-time low and very likely dropping even further as the Fed just slashed rates to zero. These factors could make purchasing a home more affordable than what we’ve seen in years.
Is it a good time to sell your home
While we are still seeing good buyer activity, If you are serious about selling your home, this is probably not one of those times that you want to test the market with a high list price. I think we can all agree that things are moving very rapidly and there are just too many unknowns to take your chances on pushing the price if you absolutely need to sell your home. Everyone I have spoken with believes that home prices will not likely drop drastically, if at all. Instead, it is suggested that we will witness a slowing or plateau of home value appreciation until the markets return to some sort of normalcy. Also, with rates and inventory extremely low, we still consider the market to have favorable conditions for selling a home.
If home prices do actually begin to fall and interest rates remain extremely low as well, then I would say that the only time it is preferable to sell is if you are a “move up” seller. In this case, you would likely receive less for your current home, but you will also likely get a better deal on the next more expensive home and at a lower mortgage rate.
If you have any questions about what we are seeing in the real estate market feel free to contact us here.