As more confirmed cases of the coronavirus (COVID-19) pop up across the United States, repercussions of this outbreak are heavily impacting everyday life. With the potential for long-term effects lingering on the economy, it’s important to keep a clear perspective on how the virus might affect the housing market.
Coronavirus and the housing market
According to housing analysts at Nationwide Economics, the housing market will see some disruption as a result of both the coronavirus itself and initiatives to contain the spread of the virus. But in their 2020 Q1 report, they express optimism for the overall state of the housing market this year. The report predicts that the housing sector, “will remain a source of growth for the economy in 2020.”
Other prominent housing economists have echoed these sentiments in recent days (see here and here). Factors leading to this positive outlook include:
- Low mortgage interest rates
- Solid job gains
- Above-trend wage growth
Because many local markets are continuing to show positive outcomes, it’s still not certain that the housing market will face a downturn even as cases of the coronavirus increase. In fact, 60 percent of all metropolitan areas analyzed in the Nationwide report have a positive housing market ranking, signaling healthy trends. The top five markets stretch across the U.S., including cities in Georgia, Michigan, Ohio, New Jersey, and Florida.
See also: How COVID-19 Is Changing Home Buying and Selling
Factors that keep the housing market positive
Demand for homes remains positive when a series of external factors align that make it easier for people to afford a large purchase. Here’s a closer look at the three factors making an impact today:
1. Interest rates
Interest rates encompass two distinct areas, short-term and long-term. Short-term refers to interest on things like your credit card, while long-term impacts mortgages. In early 2020, a 30-year fixed rate mortgage had an average interest rate of 3.4%, which is low compared to the past few years. Additionally, Federal Reserve rate cuts in the wake of coronavirus concerns will likely keep rates historically low. This not only makes it easier for homebuyers to purchase a home, but it also helps current homeowners interested in refinancing for a lower monthly payment.
2. Unemployment rates
Unemployment rates have continued to go down in the U.S. since 2012. As of early 2020, the unemployment rate was around 3.6 percent, which is almost a half percent lower than it was at the start of 2019. When unemployment is low, more people earn income that allows them to budget for a home purchase and pay their mortgage. This in turn keeps the housing market healthy.
3. Employee wage growth
When employment wages grow, more people can afford to buy a home. Just like with unemployment rates, wage growth contributes to a favorable housing market. Although growth today isn’t moving as quickly as it has in the past, increases continue, potentially making it easier for people to finance large purchases like a home.
The negative side of the coin
Of course, not every observer is projecting a rosy picture for the housing market. Coronavirus fears may scare off potential buyers and sellers just as home-buying season starts heating up. If cases of the virus continue to spread, home construction could slow with workers staying home. The number of showings, open houses, and on-site appraisals could drop as social distancing becomes more common.
Uncertainty in the wider American economy will probably trickle into the housing market, according to an economist with the National Association of Realtors. People are less likely to make a large life decision such as buying or selling a house when the state of the economy is in flux.
The reality is that impacts of coronavirus on the housing market will change from market to market. Some areas will be harder hit by virus than others. As always in real estate, supply and demand will depend more on local factors than national concerns.
Further reading: 2020 Housing Market: What You Should Know
Keeping homes salable by keeping germs out
Because the housing market may remain favorable for sellers, keeping a healthy home is more important than ever. As concerns over the spread of the coronavirus heighten, here are a few ways to help lessen the risk of infection infiltrating your home.
Focus on high-traffic areas and items in your home
Clean and disinfect areas with the most contact with people. Focus on doorknobs, bathrooms, light switches, and frequently used furniture. Equally important to the places in your home touched the most, are the items constantly in contact with hands. Cell phone cases are a big carrier of germs, along with children’s toys. These items become germ transporters fast, so it’s important to clean them regularly. Keep antibacterial wipes stocked and close by.
Keep shoes out
It’s no secret that the bottoms of your shoes are dirty. They step in everything, including germs, and a lot of nasty stuff too small to see. You bring all that into your home when you walk inside. Leaving your shoes in the garage or on the back porch can reduce the risk of introducing unwanted viral visitors into your house.
Create a clean hand policy
Even if you spend a lot of time reminding your family to wash their hands after using the restroom, when there’s a heightened concern about illness it never hurts to enhance your policy. Suggest hand washing take place before meals, after socializing, and when you come home from work or school. If you or anyone in your home is coughing and sneezing a lot, thanks to seasonal allergies or a cold, they should wash their hands more frequently. If soap and water isn’t available, use hand sanitizer with at least 60 percent alcohol in it.
Wash sheets and clothes routinely
While it’s unknown how long the coronavirus survives on most surfaces, it’s a good rule of thumb to remove germs from your sheets and worn clothing by washing them once a week. Doing the laundry in hot water rather than cold increases the chance that items come out of the dryer germ-free.
Beyond these tips, refer to the Center for Disease Control and Prevention’s steps to prevent illness for more helpful ways to reduce the spread of coronavirus.
The best way to sell while the coronavirus is a factor
If you decide to put your home up for sale while the coronavirus is still a factor, the biggest potential problem may be how long it takes to sell. As quarantines happen, or people with heightened risk decide to stay home, you may get fewer showings, slowing down the sale process. People may also cut down on their activities in general to minimize exposure to unfamiliar areas. If this happens, and your home sits on the market for too long, you may end up having to lower your price to sell.
Avoid this issue altogether by working with an off-market buyer like Sundae. Our process means you can sell your home without having to list it. Through a careful evaluation, our experienced Market Experts can provide a reliable cash offer on your house with no fees or closing costs. We also offer a cash advance of up to $10,000 to help with expenses during the transaction. Take advantage of a strong housing market without the stress of listing your home.