In just a short 2 months since the shelter-in-place order due to COVID-19 across the globe, most people are predicting that the "real estate market will be worse than the 2008". What's your prediction?
As some of you may know, I have been tracking the local market trend since I became a realtor some 20 odd years ago. As an original hi-tech nerd, I have always believe that data help us make better decision in most cases. The mortgage industry meltdown was the major cause of all the shortsales, foreclosures we saw in 2008. Will this pandemic spread by these tiny viruses bring down our economy? With the growth rate we have observed across the Bay Area since ~ 2012, most people have been predicting that real estate market will eventually crash.
The media has been talking about the big spike in unemployment rate. I thought it would be interesting to compare housing inventory and the unemployment rate during these period. All the major employers' presence in Silicon Valley are the main reason for our housing market demand and growth.
Even with the spike we have been hearing, the currently unemployment rate is not quite where it was in the 2008 time period. The lowest interest rate that we see, continue to fuel and maintain the housing market steady. The inventory is still very low. Home in good neighborhood, price right are still selling within days with multiple offers.
So how will COVID-19 impact the local Real estate market? I am paying attention to the slope in the unemployment rate. It has a similar slope we saw in 2008. If companies continue to have to shutdown, major layoff(s) will most likely be the inevitable. And if those layoffs prolong, we may see that major correction in our real estate market, that everyone has been predicting for years, now.
What do I recommend to our sellers and buyers? Sellers - we are seeing the peak in equity growth. This is the best time to sell! Buyers - with the interest rate hitting the all time low, you are going to be the bigger winner when buy and keep your properties for 5 plus year. If you have seen my other posts, the market data has shown that Real Estate is still the safest investment overtime. For those investors looking for the quick profit, I would say: "your guess is as good as mine". There are just too many variables to consider for any short term investments.
Good luck to us all. I am hopeful that test kits and a vaccine will be available soon. I see masks, 6 ft handshake staying around until at least 2021.
Nick Pham | 408.425.5304 | DRE: 01365281