When will the home prices start going down as a result of COVID19?

All real Estate is local ~ but most markets seem to be having an inventory shortage currently. Our job as an agent is to inform the Buyers and Sellers of current market conditions and let them make their decision based on the information provided. I never try to forecast way into the future, but what goes up must come down at some point.

Like you Beth, I'm in the same area and similar frustrations with unrealistic buyer perceptions. Market numbers are the facts, that's what I share. I recently had a buyer during COVID who's gone dark... I'll assume it's because of her friend in Iowa giving her market advise. We viewed three homes, all under contract within 24 hours while she "thought things over," and questioned the comparables. Oh well, I had a feeling about this one... those feelings are usually right! :)

Prices are not falling in the areas I work in the Kansas City metro -- quite often, multiple offers.  Isn't it enough that interest rates are at historic lows?  I do sympathize with you when the "friend" or relative is also in real estate in another location--not the same !!

When the pandemic hit, we all tried to figure out what would happen to the markets. 

The stock market went down on Mar 20 to around 19000, but promptly went back to the 25000’s and we were all in awe.  Who saw that coming?

The real estate market moved along at the beginning of the pandemic using pre pandemic comps and stayed flat.  Mortgage brokers, Realtors, appraisers, buyers, and sellers proceeded as if things were normal and transactions continued.

In Pasco County, we saw strong demand from buyers including many getting away from the cities, the pandemic, and the protests. 

The pandemic has had a strong effect on supply, or should we say the lack of supply.  Homeowners who might have sold have chosen not to because they do not want to move during a pandemic.  They do not want to go through the selling process, they do not want strangers/buyers walking through their house. 

The governor has a moratorium on foreclosures and evictions.  This has been extended through July 31 and it is expected to be extended another month at least.  It is a good thing, because we will potentially have tens of thousands and more homeless people with nowhere to go, no job and no money. 

How imbalanced is the supply and demand for real estate in Pasco County?  For comparison over the last 10 years or so, Pasco has had around 4500 to 5000 residential properties available, of those we usually had 1000 or 1500 homes under contract meaning there were around 3000 homes to choose from.   Today, July 21,2020 there are less than 4000 homes, 2366 of them have a contract leaving under 1617 properties available.  Only 1100 of them are single family residences.

The net effect is that prices have been strong.  Who saw that coming?  What can we expect from here?

The narrative in the press regarding real estate has not given a clear picture.  Lawrence Yuen, chief economist for the Florida Realtor’s is predicting a 4 % rise in prices in Florida this year.  If supply stays this tight, he will probably be right.

The Federal government has pumped $2 trillion into the economy and it is expected that it will do more.  This combined with the moratorium has had a huge effect in helping avoid a stock and real estate collapse

Since February 7, there have only been a handful of foreclosures filed in Pasco County.   None of these have been mortgage foreclosures.   

Many of the homes that are in arrears have been given a furlough on making payments.  This means that these mortgages are not even on the list of future foreclosures.  These homeowners will be required to make up the arrears at some point.  If they cannot, they will be subject to foreclosure.  All of these mortgages have had the same time frame for furlough, and it stands to reason that they will all default in the same time and become foreclosures around the same time.

When the moratorium ends, the foreclosures will be trackable real time.  That means we will be able to monitor foreclosure filings within one hour of being submitted.    Each day we will count them.  Each week we will total them and each month they will be tabulated.

The narrative in the press will start to pick it up.    Have you noticed how the press focuses on unemployment numbers, seeming to be more sensational when they are bad?   This type of focus and press will be our future as the foreclosure bubble approaches.  

It can take 5 months and more for a foreclosure to become part of the supply chain.  So, this inventory is a long way off.  We will see pre foreclosures, short sales, and evictions first. 

What else can we expect? 

As the press reports the mounting foreclosure statistics, you can imagine the conversations.  “Honey, it looks like there will be a lot of foreclosures, maybe we should sell our house before they come.”

Buyers will suddenly be aware that the current inventory is going to expand.   The competition for homes will diminish as expectations of a large future inventory becomes prevalent.  

Suddenly, sellers will become concerned that their home may not sell.  As this concern mounts and the supply of real estate expands it is hard to imagine that prices will stay firm.

Should you sell your unnecessary real estate?   Do you have real estate that, if the market corrected 30-40% you will have wished you sold?

Call me Randy Jenkins and my team to discuss.

Randal Jenkins Bill Sanders Eric Jenkins   727-409-4663   www.409home.com

Coldwell Banker F I Grey and Son Res

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New Port Richey Fl 34653

Prices aren't going down, but appraisals are starting to come back low in the DC Metro Area.

There is no sign of that here on the Monterey Peninsula. Homes are going under contract in record numbers. Inventory is starting to tighten up.  But then we are a very desirable place for people who want to "escape" from the San Francisco Bay area and San Jose. Don't see prices coming down here any time soon.

I don't think the prices have gone down at all in my area and I don't think they will as a result of this pandemic, only time will tell though.

Hi Beth Atalay. While we had a few hiccups in our market in March and April, listing prices never went down during that period, and have since gone up. Inventory is at a 15-year low, the median sales price in metro-Phoenix is its highest level ever, and mortgage interest rates are at a 50-year low. This all equates to a buying frenzy with over-asking offers and bidding wars on many homes. COVID hasn't done much to slow the demand down, at least here, anyway. And I feel your pain with the family member Realtor from another state! Good grief! ;-)

What a well written and timely post, answering the main questions on many buyers' minds!    Thanks for sharing your years of experience, with helpful annecdotes.   And Congrats on getting your post in the Daily Feature E-mail!

Beth, our market has been under-supplied since August 2017. Because of that, good homes normally don't last a few days and most sell for full price or beyond. It seems crazy that we are three years into low inventory, but it has actually gotten worse rather than better.

Our prices are holding at this point. The market has been remarkable.  Do not know when the bubble is going to pop.

Great post.

It really does depend on demand no matter where you are and people really don’t realize that it all depends on what the trends actually to the demand.

Location, location, location!  Spot on advice.  Trust someone in that area to know the market vs. someone outside the area.  Great post!

Great information, thanks for sharing.  I hope you have a great day.  Stay safe.

Hi Beth, I think that Florida is going to be a boom destination due to many medical and political factors.  Inventory is tightening up and I think we will see many more from the NE and other areas wanting to move here, especially Central Florida.

So many people are getting priced out of Southern California right now and we don't see them coming down anytime soon.

Why do people (buyers) say they are waiting for prices to come down?  Can't they come up with a better excuse that this to remain renters?  I love questions?

I have clients who think the same thing - and they need to get over it!