Navigating Real Estate in a COVID-19 World
A message from 8z Founder and CEO Lane Hornung:
“As we all face the challenges of the COVID-19 pandemic, our first priority at 8z is the health of our clients, employees and the communities where we live and work. We are also committed to supporting our clients through this challenging time.
Many of our clients are still out looking at homes, putting their homes on the market, writing contracts, and closing on life’s biggest transaction. As a company, we will be there for our clients.
In order to continue to provide the same high level of support to our clients, our entire organization will have to adapt, adjust and work together like never before.”
Real Estate in Times of Uncertainty
Much of the news these past few weeks has been regarding the unfortunate events and circumstances caused by COVID-19. Day-by-day and hour-by-hour, news is changing on how to best address the COVID-19 matter.
As your trusted Realtor, I’ll stick to real estate and defer to experts like the CDC for how to best address your health and safety. I don’t want to minimize the effect this current situation has on other aspects of life, but I wanted to offer some insights and reassurance regarding my area of experience – real estate.
You might be worried about your home’s value at this time of economic upheaval. That’s understandable and completely valid. The good news is that for most homeowners, the best course of action, as well as the easiest, is to do absolutely nothing. Just sit tight, be thankful that you have a nice place to gather with your loved ones, work from home, or even self-quarantine if needed. At times like this, it becomes abundantly clear that your home is so much more than just an investment.
Fortunately, real estate has historically proven to be a relatively stable and sound investment in times of crisis. For example, Dr. Marci Rossell, a leading economist who specializes in real estate, noted that the housing markets remained stable in the aftermath of 9/11.
In the days and weeks following 9/11, there was a real sense of panic and uncertainty. Airlines completely shut down, conferences and events were canceled, oil and stock prices became hyper-volatile, and news stories predicted economic activity could grind to a halt for quarters if not years. Sound familiar?
Fortunately, the shock that 9/11 delivered to the world economy was short-lived. It was a classic V-shaped economic deceleration characterized by a rapid decline followed by a rapid recovery. Housing markets were the least impacted by 9/11. Unlike the stock and bond markets, real estate markets move very slowly. At a time of economic uncertainty and volatility, based on past events it’s a pretty safe bet that real estate will remain a bastion of stability.
For those who are actively in the real estate market currently and wondering how the pandemic will affect buying or selling:
Buying A Home
- We live in a digital age of real estate where information is abundant and available at your fingertips, without even leaving your home. Interactive 3D tours even allow you to fully explore a home from the comfort of your couch. See an example HERE.
- This current COVID-19 crisis may actually slow down the market enough for an active buyer to have a greater opportunity to secure a home purchase, with less competition from other buyers.
- The recent rate reductions and questions about how the economy will impact a buyer purchase are valid. Fortunately, at 8z we have a team of highly informed 8z Mortgage lenders who can ease your concerns and help you navigate a path to the best solution for your situation.
Selling a Home
- 8z Real Estate was founded with the goal of always being a leader in real estate marketing technology. In times like these our forward-leaning marketing tools and strategies are helping sellers even more than anticipated.
- Our selling system incorporates the abilities for home buyers to view your home digitally in every manner possible. This includes the aforementioned 3D Tours, video walk-throughs, and high quality professional photography. We know buyers are searching voraciously online and we ensure your home stands out in their searches.
- In days and weeks ahead, we may see buyers making offers on our well marketed homes without physical showings. This is nothing new to us as we have provided this virtual opportunity for buyers and sellers for years, and we frequently work with out of state buyers who make sight unseen offers.
The Impact of Federal Reserve Actions on Mortgages
- The Federal Reserve has recently made some large interest rate cuts. However, it is important to remember that these cuts do not necessarily impact mortgage rates.
- We should hopefully see rate lock options stabilize. The question looms where mortgage rates will settle, but we should hopefully see the large swings slow down.
- It is unknown at this time if refinance interest rates will settle near purchase transaction interest rates. As of Friday, there was a noticeable spread (+0.5% difference in a refinance versus a purchase from some investors). The good news for all of us is that the stabilization of purchase mortgage rates is far more important anyway.
- There is still an industry back log of refinance transactions, which were locked prior to the fast and furious rate increases last week. This will still have an impact on appraisals, etc. A safe bet for now is to consider 10 to 14 days for a home purchase appraisal order, while refinance appraisal orders are approaching 3 to 3.5 weeks in some areas.
In these days and weeks ahead as news continues to come out about COVID-19, I want you to know that as your trusted real estate adviser I am on the front lines of the market. There are a lot of unknowns, but I will closely monitor the situation and am always available for any of your real estate needs, questions or concerns.
Wash those hands and give me a call. I welcome the opportunity to be of assistance.