People are talking and wondering what effect the Coronavirus will have if it comes to the US. We should prepare for and expect that it will as it is spreading across the globe, and we are not immune no matter how hard we try. Today we’d like to focus on a potential Coronavirus impact on real estate.
Let’s talk about what we know first. From a health standpoint, the death rate appears to be about 2%. Most people experience cold and flu like symptoms which might persist a bit longer than a cold. The flu death rate was about .1%. In 2018 61,200 people died from the flu, while about 42.9 million people were infected.
While Coronavirus appears to be very serious, it’s not something to freak out about. We can try to slow it down, but if it reaches pandemic status it will come. The young and the old are most at risk, like many illnesses.
What Will be CoronaVirus Impact on Real Estate Nationwide?
If it comes, what will be Coronavirus impact on real estate? Several things could happen. First, the economy will slow down. The virus is already affecting business worldwide. We are seeing oil prices drop, in addition to interest rates. A slowing economy lowers the demand for oil.
Home buyers can take advantage of lower rates. Yesterday at our meeting a lender was quoting under 3.5% conventional and under 3% for government backed loans. It’s a good day to be a buyer right now, and if you’re in the market, you should act now.
Rates are 1% lower than they were this time last year. This adds 11% purchasing power to a buyer. In January the median home price was up 2.1% over last year while the average was up 13.8% At the median level, buyers just gained about 8-9% purchasing power on interest rates alone, which adds fuel to the market.
The Coronavirus could impact travel plans for international visitors and Americans alike. Tourism could drop and vacation rentals could be hit from foreigners. However, we could see a boom from Americans who may become afraid to travel abroad and decide to stay in the US. We could see people decide not to take cruises and vacation in Florida instead.
Florida May Fare Better Than Others
While airline and cruise stocks may be hit hard, the impact on Florida may not be as severe as people can drive here. Luxury markets could be hit as we may have less foreign buyers here this year due to the virus. California comes to mind as Chinese buyers are not traveling and spending money here right now. Right now the virus is spreading across Europe, so expect to see more US luxury markets affected going forward.
Amazon has admitted it expect lower sales on its big sales day coming up. A lot of product will not come from China, so global sales will suffer. Short-term we could see an economic pull-back. Some people could lose their job over the virus. The only silver lining to all this was it’s happening at a time our economy was doing well, so at least it didn’t happen in a downturn.
While the economy could suffer a bit if we have a full-blown outbreak, there will be opportunity due to lower rates. From a human standpoint we hope they contain this thing and get it under control soon. The cat might already be out of the bag. If it is, we’ll deal with it as best we can. It may become a big inconvenience. Meetings may get cancelled. Schools and major events might have some choices to make.
Buyers and sellers have choices too. Our suggestion would be, if a move is something you’re considering, do it now. Rates are in your favor.
Best Way to Search For Properties On The Go
If you’d like the best search option available, check out www.mobilesearchapp.com It’s simply the best mobile search app on the planet. It allows you to search at the neighborhood level anywhere in the US. This is a great way to beat the crowds and see what’s available.
If you have questions feel free to call us 239-489-4042 Ext 4 Ask for Sande or Brett
Good luck, and wash those hands every chance you get!
See last week’s article “Interest Rates and Housing Inventory Levels Shape Direction of Market”