What Does the Coronavirus Look Like for the Fall Housing Market?
If you had asked any real estate agent their housing market predictions for the coming year, they would overwhelmingly be positive. 2019’s fourth quarter looked as though it was ushering in the new year with a strong and steady real estate market with no overt signs of a recession on the horizon. And then the novel coronavirus came along and threw the economy into an uproar. Let’s take a look at how the virus will impact the summer housing market.
A strong fall
Before the coronavirus began its global spread, the U.S. housing market looked strong going into the spring. And while agents predicted a slow shift towards a more balanced market, sellers would still have the stronghold with low inventory levels. Perhaps one of the most significant trends was the fact that mortgage rates were expected to remain low, encouraging many new buyers to enter the market.
Different outlook in a matter of weeks
If you’ve ever walked outside in summer and noticed budding trees and blooms that weren’t there the day before, you have an idea of how the housing market changed overnight. Simply put, the novel virus has turned the real estate market on its head, and overturned almost all agent predictions for the year.
HomeLight, a property-tech company surveyed agents across the country to get a feel for the state of housing markets, and things were tracking above what was anticipated in the fourth quarter. In fact, 94 percent of agents surveyed reported that low-interest rates were continuing to bolster sales, and 62 percent of agents said bidding wars were increasing in frequency. This is significant because 2019 Q4 surveys featured 79 percent of agents reporting increased buyer activity due to low-interest rates, and 19 percent of agents responded that bidding war activity (notably down from the previous quarters).
The perfect comeback story
While there really was no way to gauge the coronavirus’ real estate impact at the beginning of summer, the Cape Cod real estate market is the comeback kid. The summer season proved many predictions and outlooks wrong. Instead of completely upending the market, it surged in June and July, with the only thing slowing progress being the lack of available inventory.
Recession more likely
Perhaps the most compelling result from HomeLight’s survey is the increase in agents believing the country is heading toward a recession by the end of 2020. In Q4 2019, only 12 percent of agents predicted the country would be entering a recession by 2020’s end. Today, 40 percent of agents believe the United States will enter a recession by the end of the year.
In a nutshell, agents across the country are seeing a definitive lull in market activity, making the Cape Cod market an exception. We anticipate fall to be as strong as the summer, with low mortgage rates fueling buying. However, inventory is low in the area, with sellers delaying listing, preferring to stay put, and wait COVID-19 out.
For more on COVID-19 and the real estate comeback, check out HomeLight’s Top Agent Insight Survey from Q2.