June 29, 2020
There must be some light showing at the end of this tunnel. How do I know? More people are looking ahead to what our economic recovery looks like AND to what our real estate market will look like.
What I find interesting is the diverse array of opinions about what will happen next in real estate.
When we talk about “the real estate market”, it is important to define the area we are talking about. Broad national numbers don’t necessarily apply. This was certainly true in the last downturn and the subsequent recovery – and it remains true now.
The most reliable information about “the real estate market” is local, and here is what has been happening in Bergen County: The number of homes coming on the market and the number of homes accepting offers both dipped substantially in the initial weeks of the quarantine. After mid-April, despite the lockdown, those numbers started to improve. And as this chart shows, they continue to increase weekly:
In fact, week over week, we have far outpaced last year's numbers. (Contrast this to national reports of a slowdown in May.) The question everyone is asking is whether or not this is pent-up demand that will fade away, or whether it's a long-lasting trend that will lead to increased prices.
Well, the experts are all over the map on this one! The virus and other challenges currently impacting the industry have created a wide range of views regarding the future of home prices. Here's a list of analysts and their projections, from the lowest depreciation to the highest appreciation:
- CoreLogic: Year-Over-Year decline of -1.5%
- Haus: Year-Over-Year decline of -1%
- Zillow: Year-Over-Year change is forecast to bottom out at -0.7%.
- Home Price Expectation Survey: Decline of -0.3% in 2020
- Fannie Mae: Increase of 0.4% in 2020
- Freddie Mac: Increase of 2.3% in 2020
- Zelman & Associates: Increase of 3.0% in 2020
- National Association of Realtors: Increase of 3.8% in 2020
- Mortgage Bankers Association: Increase of 4.0% in 2020
Even with this range of predictions, no one is expecting wild price swings - and certainly not the crash we saw in 2008.
It's been a crazy, uncertain year - but not for real estate. Our prediction? Don't try to wait out this market.