How will the Coronavirus impact home values?
Depending on if you’re in the market to buy or sell, you’re likely wondering how the Coronavirus will impact home values over the course of the next several months.
Will sellers be forced to sell their home at a discount? Will buyers be delighted by multiple price reductions?
To set the record straight, I talked with Pat Riley, President/CEO of Allen Tate Companies and Phyllis Brookshire, President, Allen Tate Realtors.
First things first, we need to understand what the market was like, pre-Coronavirus. According to Brookshire, we had about two to three months of supply, give or take for varying price points and markets.
By definition, we know that any time there’s less than six months of supply, the market shifts to favor sellers. It’s simple economics– the less supply, the more demand, resulting in an increase in home prices.
So now that we know what the market was like, let’s get a clear picture of what it is today.
Will we still be in a sellers’ market this summer and fall?
“We will continue to see a lack of supply through fall, and I believe a well-staged home that is marketable will sell very quickly in this climate,” states Riley.
Phyllis agrees, adding that “In certain price points and certain areas where supply is especially low, we’ll continue to see a sellers’ market. It will take time for supply and demand to balance out and unless new construction significantly increases its pace of bringing supply on the market, the conditions won’t be able to change.”
What impact do you think the Coronavirus will have on home prices?
“This market slowdown was caused by a health crisis, not by a foundational issue in the real estate market. Prices are a result of the balance of supply and demand. Supply continues to be extremely low and demand is still strong, so expect prices to remain stable and most likely increase,” says Brookshire.
Related reading: 5 facts that prove this time is not like the last time
Do you still anticipate bidding wars and offers over asking price?
“Because of lack of supply pre-Covid 19 and now even less, yes, it’s likely that we will still see bidding wars and offers over asking, if a property is in the right location and in good condition,” says Riley.
Do you think lower interest rates will encourage more people to buy?
“I expect more first time buyers to enter the marketplace, and potentially even increase their overall budget, thanks to low interest rates,” says Riley.
To add to that, Phyllis predicts, “As consumer confidence increases, we will see more buyers take advantage of the interest rates available.”
Home prices will remain steady and could possibly increase, thanks to low supply and steady demand. Ready to get started with your homeownership goals? Let us help!