Virus, virus, virus. All we’ve heard for a couple of months now is about the virus and adapting to it being in our midst, living and working (or wanting/trying to work) with it, and the changes it has been making to our lives. The question we are now getting most often is, “What is it doing to the market?”
The answers among our peers are amazingly varied and each as correct as the other as nobody knows at this point. As with most such predications, one must assemble the information, establish perspectives, and draw one’s own conclusion. With that, here are some of the variables to put in your think tank.
Inventory in the lower price points has been scarce. With rents high, investors are likely to hold their rental assets, unless they have a noncompromising position with tenants that are mandated to have a roof over their head whether they pay their rent. That risk exposure may cause an investor to sell. Owner/occupied in that price range may be more impacted by furloughs, layoffs, shutdowns, etc. causing them to hold … or sell.
If out of work, sellers might be getting nervous about how long their unemployment or other benefits will last. If they opted to take the forbearance “offered” by their lenders they may be impacted by unintended consequence restrictions, i.e., their not being able to get a new loan for one year. That would limit their ability to buy up, or down, depending on the direction they are headed once sold. With the government effort to stabilize them in place, they may just opt to do that which would continue to limit the inventory.
There was good demand for new housing before the pandemonium hit, and the builders have been able to continue working in Northern Nevada. Sales offices have had to adjust their policies and procedures, but the industry has continued to work, if not to flourish. This is helpful with the scarcity of inventory.
Interest rates are near all-time lows giving buyers more buying power and incentive. Prices have held their own, but remember, the economy was at an all-time high right when the bug hit. There was economic positivity everywhere with jobs, money and hope abounding. We are only two months past that with major governmental efforts made to prevent too much of a backslide. It will be awhile before home owners are in real trouble so what will drive prices down? Demand is good even though the folks from our primary buyer source, California, haven’t been able to legally visit us due to mandates in their state. What will happen when the gates open up again? Will they bail as soon as possible, or will it take them awhile to get footing in their market?
Showing homes takes more time now as the Agent must fit the showings into half-hour increments. Sometimes showing time slots aren’t available for a couple of hours. Setting up three homes can get spread out over six hours. Buyers can get frustrated with the extra effort and loss of showing momentum and the enthusiasm it creates. They compromise their wants/needs out of frustration, slow their looking, or bear down determined. Their agent has a lot to do with helping them during this frustrating situation to hang in there and find the right home, or quit the process. No gain in quitting, stay the course with your positive, hard working, agent.
Interest rates are good, inventory is scarce but can change on a dime, buyers are plentiful, prices are all over the board churning in a “confused sea,” the public wants their economy to resume in the robust nature that they remember if only it can, and real estate is real not paper. Buy or sell for you and your family and keep your life moving. This is different than the 2008 collapse and owners are better positioned to weather the storm both from their equity position and the helping mindset of the government and lending institutions.
There is no answer to where the market will go, only what you feel in your heart. Don’t try to time the market, it is like catching the proverbial falling knife, you may get cut. Figure out what of the above affects you and how, then act.
When it comes to choosing professionals to assist you with your real estate needs… Experience is Priceless! Jim Valentine, RE/MAX Realty Affiliates, 775-781-3704. firstname.lastname@example.org