As news is changing on a daily basis, we wanted to share a new update on how the COVID-19 coronavirus is impacting the housing market. Here’s the latest.
The sharp decline in investment and retirement account assets could mean fewer buyers.
Many homebuyers use money from their investment accounts and even retirement accounts to fund their downpayment on a home purchase. Because the stock market has taken such a hit, investors may be reluctant to sell assets right now to fund their downpayment, or they could simply be feeling less like they can afford to buy right now.
According to USA Today, as of March 11th, the Standard & Poor’s 500 is down nearly 20 percent – from its record high, the broad index is off by 18 percent from its high on February 19th, and the Nasdaq Composite is down 3.3 percent.
The crisis could actually boost foreign investment in U.S. real estate.
It may not be all doom and gloom however. According to an article in Million Acres, China, which has experienced the biggest economic impact so far from COVID-19 so far, is also the largest foreign buyer of residential real estate in the U.S., accounting for 17.2 percent of foreign market share.
In recent months, Chinese investments in American real estate had dropped due to a strong dollar and the U.S.-China trade war. However, as foreign markets struggle under the impact of the virus, investors naturally look for more stable investments, including real estate. Thus far, the U.S. has not been hit as hard by the pandemic as China or Italy, which makes it a more attractive place to invest in real estate.
According to Million Acres, in recent weeks the online real estate market Roofstock – where investors look for rental property investment opportunities – has reported a staggering 450 percent increase in users from Asian countries.
Slowing the spread of the virus will make it more manageable, from a healthcare and economic perspective.
The reason that it makes sense for people to work from home, for children to be out of school and daycare, and for retirement communities to limit visitors is that all of these measures help to slow the spread of the virus. When the medical community and economic systems have time on their side, everyone benefits.
While most experts agree that COVID-19 will impact the economy and therefore the housing market, the depth of the impact can be managed somewhat if we all take precautions. Volatility can have a big, negative impact on the stock market, which then impacts the housing market.
This is why it’s so important to government agencies, both at the state and federal level, to be upfront and specific with concrete data on the spread of the virus, such as how quickly people are being tested and how many are being tested, and how quickly it’s spreading. Factual data enables people to plan, which provides a level of stability. A lack of information will lead to a lack of preparedness, and neither the stock market nor the real estate market likes surprises.
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Intempus Property Management has been serving satisfied property owners, investors, buyers, and sellers for two decades. We pride ourselves in helping property owners get the most from their real estate investment, and in providing them with the highest level of service and a completely worry-free experience. And we love helping tenants find the perfect place to live. So, whether you’re looking to invest in, buy, sell, or rent a property, contact us. One of our friendly team members will be happy to answer any questions you have!