With the coronavirus continuing its rampage across the globe, it’s not surprising that the market is constantly changing with the ebb and flow of the length of quarantines in each country. In particular, the US market, where many states are easing up on stay-at-home orders already.
George Raitu, Senior Economist at Realtor.com said:
“Uncertainty is the keyword for pretty much every aspect of the market for the rest of the year.”
Realtor.com has updated its data forecast for 2020. The updated report shows home sales are expected to fall 15% with prices flattening out. The original forecast was that home sales would only drop 1.8%, which shows the incredible impact that virus has had on the market.
Skylar Olsen, Zillow Senior Principal Economist explained that seller confidence is down but is expected to rise as we dive into the summer season. She said that listing numbers are actually up 6% from the week prior. That being said, Olsen claims it's still 39% lower for May year-over-year.
But how exactly is the virus affecting the market? Baby boomers not selling, Millennials wanting to buy, affordable secondary markets, and an unstable global economy are all key factors.
Realtor.com collected data shows an expected jump in sales for late summer into fall caused by a build-up of buyer demand, low mortgage rates, and fear of the coronavirus diminishing. And thanks to how far spread working from home has become, Millennial families are looking for larger houses that offer office space. This means less demand for inner-city dwellings and more demand for houses in secondary markets.
The issue experts are seeing now is decreasing numbers in new homes to meet demands. The prices for homes are lowering, making sellers less incentivized to keep their properties on the market. In fact, Realtor.com reported homes for sale were down 45% year-over-year in April.
Olsen said in an interview with Yahoo Finance that prices aren’t “down, down, down,” but more stable. With fewer options for buyers, they are more likely to accept a deal that they might have held off on if there were more options in the market.
So, Realtor.com has forecast a strong third quarter (all things considered), followed by a dwindling of sales numbers in the fourth quarter, as the second way of the virus is expected for fall and winter by experts.