Coronavirus & Real Estate What does it mean for Buyers & Sellers?

As coronavirus spreads, people are becoming more cautious. Public gatherings, from conferences and music events to restaurants have been canceled and closed. In the long term real estate has always been a good investment (and you have to live somewhere). Following are some thoughts on how the coronavirus outbreak could affect the real estate market moving forward. Note that this changes day by day.

Interest Rates
With the Feds emergency interest rate reduction in early March, rates dropped to a fifty-year low. Then a surge in refinancing caused interest rates to go up again to manage that surge. Right now they are back to the 4% range. While it's unfortunate they didn't stay lower for long, they are still historically low.

Sellers
The Denver metro market has had frustratingly low inventory for the last 10 years. A steady increase in homes coming on the market began last fall and 2020 looked promising for a more balance market. However, with the spread of coronavirus, sellers are more leary of having strangers in their homes. Many are delaying listing. Additionally, buyers are may be in a different position and pull back causing prices to dip.

Buyers
Some buyers are choosing a wait-and-see approach. However,
coronavirus will take out a group of buyers – those who are simply unable to buy due to reduced income or a job loss. Others who are in very secure jobs are actually in an improved position because the overall market is weaker.

Investors
The market has been getting more difficult for the investor. Metro Denver rents have dropped somewhat starting late last year. Investors can benefit from lower interest rates but that benefit can be offset by declining rents. Then, along comes coronavirus causing a downturn in the whole economy. This will cause more downward pressure on rents in the short term, but we may also see prices drop. With a buy and hold approach, it could be just the place for your cash.

Creativity Abounds
The real estate market will not come to a complete stand still. Thanks to technology, showings and open houses can happen virtually. Contracts are electronically shared and signed. And closings are going virtual, as well. We can eliminate t the risk of exposing anyone to the virus and still accomplish buying or selling.

For up-to-date reports on local price changes, click here and type in your zip code. 

If you are thinking of buying or selling and have questions about the market, feel free to contact me.