How has the "Corona Virus" impacted home buyers and sellers and particularly in Central Oregon?
Lawrence Yun, chief economist at the National Assocation of Realtors, assessed the impact of the cut on the real estate markets. "The coronavirus has quickly upended global economic expansion and introduced the significant uncertainty of a possible recession,"
This last week, you may have heard interest rates were cut and have been several times recently. However, the Realtors Sector will hold up well due to several possible reasons.
1. Hesitant home buyers will be enticed to take advantage of low interest rates
2. Commercial Property prices will rise due to higher returns
Zillow Economist, Jeff Tucker said, ""The housing crash during the Great Recession left a lasting impression on our collective memory". People have not forgotten 2008 and it scares people.
He goes on to say, "But as we look ahead to the next recession, it's important to recognize how unusual the conditions were that caused the last one, and what's different about the housing market today. Rather than abundant homes, we have a shortage of new home supply.
Rather than risky borrowers taking on adjustable-rate mortgages, we have buyers with sterling credit scores taking out predictable 30-year fixed-rate mortgages. The housing market is simply much less risky than it was 15 years ago, and our experience in recent localized recessions shows how home prices can weather normal economic headwinds."
Basically what Tucker is saying is that people who are currently borrowing have much better credit than they did in 2008. It is not the housing market that will cause a possible recession.
A recession is "A period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters"
A recession means the economy takes a dip for at least 6 months...
We are in the LONGEST running economic recovery (approx. 12 years) in American history.
What ends a recovery? A slow down.
It's important to understand that a recession is nothing more than a slow down in the economy. It doesn't mean we are going to repeat 2008. The Great Recession of 2008 was caused by a housing slowdown and a mortgage meltdown. This possible recession is being caused by very different circumstances.
We can expect an economic slow down due to all the precautions being taken. The natural consequences of 6-8 week closures will be an economic slow down. It's an important time to be cautious and adaptable. We don't need to panic. Panic often causes a domino effect. Instead, we can choose to be level headed and hopeful! We made it through the Great Recession, and will get through whatever is to come.
It's a very important time to support local businesses. Restaurants and even small boutiques are offering curbside pick up!
Central Oregon is a WONDERFUL area to live and we can be helpful and positive.
In 2001 we experienced the "dot com" crash. The stock market declined about 25% and as a result a lot of people pulled out of the stock market, but the housing market went up 6.6%.
Excluding the Great Recession, annual home value appreciation across all states since 1997 has averaged 4.6% during times of economic growth and 4% during recessions.
As some market observers predict a recession on the horizon, an analysis of recessions from the recent past shows that they often have a limited effect on the housing market.
The Feds lowered interest rates to 0% to stimulate the economy and help banks feel confident about lending money for short term loans. The 0% interest rate does not apply to long-term mortgage loans. Mortgage Interest Rates are changing daily, but still low (the 3.25-4.5% range)! This is a GREAT time to buy or refinance.
Central Oregon's recreational playground attracts people from other states. We have people browsing homes on Zillow more than ever as they are quarantined and even though there is some panic over the unknown, our overall message is to stay positive!
Expect the housing market to stay steady and interest rates to stay low.