With parts of the economy being halted for the time being, what will this do to the economy and real estate? A lot of this will be determined on how long the stay-at-home measures will remain in effect. I personally feel when you look at ALL of the data out there things will hopefully be back sooner than later.
Does this mean we are facing what happened in 2008 with the economy all over again?
Being a licensed stockbroker from 1999-2010, I went through the economic downturns of 2000-2003 and 2008-2009. I can speak on this topic with a wealth of experience and is of course my opinion. The economy was doing great until this happened, so this current predicament (as of now) is NOT financial in nature and it is important to remember that. Does that mean real estate prices are ready to take a downturn? Not necessarily.
How did the real estate market do when looking at the last 5 recessions? (See graph)
We can see that 3 out of the last 5 recessions held up well in Real Estate and the graph also illustrates the huge downturn from the 2008 bubble. In 2008, we were in one heck of a mortgage and financial mess with the banking system being in serious trouble. Banks are now in a much stronger position and the Federal Reserve has demonstrated they will do what is necessary to keep the credit markets from freezing up. With interest rates still at all-time lows and lower than normal inventory levels with the Denver market, this should at least keep prices stabilized as real estate is a core piece to the US economy.
What does the slowdown mean for the Denver Real Estate Market?
Will this likely cool things off with the seller’s market we’ve seen over the last few years? Hopefully yes. Prices simply cannot continue marching up the way they were as any potential future downturns would hit real estate prices much harder. We will need to pay close attention to when interest rates do start rising back to historical norms as this will very likely have an impact on housing prices. That’s the bigger issue to watch closely over time.
Hopefully this will bring some equilibrium to the market for buyers and sellers as well. This should also help encourage sellers to be more realistic in setting home prices and having a home ready to sell vs. the old “throw it on the market cause it will sell” routine we’ve seen the last few years with lazy agents giving bad advice. It’s too early to have any reliable data from the economic pause we are in, but this should also help inventory levels tick back up. Good agents like myself will continue to bring value to home owners and buyers and help you make sound financial decisions with your real estate needs.
What should you do moving forward?
While this current environment has undoubtedly caused many people to pause on making any moves with buying or selling a house, I strongly encourage you to keep your longer term plans on track and not let this short term situation sway you.
Read more about selling your home as it relates to this article by visiting:
Selling a Home in 2020 – https://fullerhomeoptions.com/selling-a-home-in-2020/
DMAR Article on Housing – https://www.dmarealtors.com/denver-housing-gain-despite-coronavirus-recession-fears-guest-post