How Covid-19 Is Affecting the Real Estate Market
For the past several days, we’ve been getting several calls, texts and DMs from people who are curious about how the coronavirus outbreak is affecting the real estate market. I wanted to put together this post to offer up my predictions on what the virus will do to the market – as well as clear the air a little bit.
Whether you’re a prospective buyer or a prospective/current seller, here’s my take on how covid-19 could affect you.
Buyers right now are somewhat hesitant, due in large part to the uncertainty we’re facing as the implications of the virus continues to unfold. However, the stats in MIBOR for Central Indiana right now are still pretty positive. While we’re seeing some decrease in pending sales compared to this time a few weeks ago, MIBOR reports 972 new listings in the first seven days after everything was shut down and schools were canceled. And only 88 listings have been withdrawn from the market—which indicates that sellers aren’t too worried about the real estate market coming to a screeching halt.
What’s the bad news?
Mandated business decreases and closures—like the service industry, hospitality and education—are impacting a huge portion of the population across the state. The bad news is, we don’t know how long such social distancing measures will be in place. So if you’re one of the many people being disrupted right now and you had plans to buy a home this spring, you probably want to put that decision on hold for the time being.
What’s the good news?
Interest rates are still at a historic low – below 4%. For comparison’s sake, the average interest rate over the past 30 or so years has been 6-7%! In addition to low interest rates, buyers can also likely expect less competition and fewer multiple bid situations – and you might even find a super motivated seller, making the deal even sweeter.
Over the past seven days, MIBOR reports 1,164 pending sales. While that number is 40% lower than it was during a seven-day period in late February, it’s still a very strong number when compared to the five-year average.
What’s the bad news?
As the U.S. is being impacted by covid-19, buyer uncertainty is peaking. Because we don’t fully know the implications of the virus on our country, we’re all facing a ton of unknowns. However, as more information becomes available and more and more people begin to adjust to this “new normal,” uncertainty will begin to decrease.
What’s the good news?
Again, while there are fewer buyers out there compared to two weeks ago, there are still over a thousand pending sales right now in Central Indiana. Given the uncertainty we’ve seen globally over the past week, this is a good sign that many people are still staying the course – and could continue to do so over the next few months. In addition, we in the Indy area aren’t facing a complete lockdown. We’re still able to leave our houses, go to work, and go look at a potential listing we might want to buy. Because we don’t know if (or when) such a mandate will happen, there’s some urgency to list your house now, versus in a few weeks.
The really good news for sellers is that people who express interest in buying your home right now aren’t doing so lightly. I’d equate listing your home right now to listing your home in winter: You’re probably going to get fewer showings, but the buyers who are in the market are going to be very serious. And more often than not, the most series buyers are the ones who come in with a really strong offer.
In addition, we’re all adjusting to new guidelines and mandates as more information about the outbreak becomes available. Take comfort in knowing that real estate agents are doing all we can to adjust to this “new norm” – like opting for web meetings over in-person ones, hosting virtual open houses and showings through FaceTime and Facebook Live, and more.
Overall, the financial market is really volatile right now. When the market is volatile, people tend to take their money out of stocks and put them into more secure assets – like real estate. In central Indiana, we’ve seen a 50% growth in real estate values over the past 10 years. And that’s Indianapolis as a whole: There are certain areas/neighborhoods where values have increased 200%, 300% and even more. We’re seeing a lot of people starting to consider shifting money from the financial market into the real estate market right now.
The best thing for you to do is to get in touch with your trusted real estate professional (cough cough) and talk about the best option for you. Whether you’re a prospective buyer, prospective seller or your house is currently on the market, let’s chat about the best game plan to help you achieve your goals.
I’m here to help, so use me as a resource. If there’s anything I can do for you, don’t hesitate to shoot me a message. Stay safe out there! Now go wash your hands.