How Will The Coronavirus Impact The U.S. Housing Market In The Next Year?

** This is an incredibly fluid situation and the information was correct at the time of writing! Looking forward to later on in the year and the next is more important than panicking about the now.

As the Coronavirus spreads further across the U.S., many have begun to question its effects on everyday life, small businesses. and of most concern, the economy. We’ve seen firsthand the drastic effect that it’s had on the stock market, which goes very much hand-in-hand with the real estate market. 

For this very reason, it seems that many have begun to question the degree to which the Coronavirus will affect the U.S. housing market and what this means for agents and buyers.

How will the Coronavirus impact the U.S. housing market in the next year? The now widespread Coronavirus could have a number of effects on the U.S. housing market however the real question lies in exactly how much and to what degree. The start of the year saw an increase in the housing market, but with the financial panic amid the virus and its potential to fuel an economic recession, that could change drastically.

Just as volatility exists within the stock market, the rise and fall of the real estate market is nothing out of the ordinary. However, high volatility rates can have major effects. In this case with the Coronavirus, the housing market has experienced both highs and lows at a fluctuating rate. 

How Foreign Buyers Will Affect The Housing Market

Recently, foreign buyers have begun investing in U.S. real estate out of fear that the economy may crash in the midst of the Coronavirus pandemic that has so far claimed thousands of lives. China is the hub of large foreign trade deals and goods manufacturing amongst many other things and is also considered the largest foreign buyer of residential real estate. 

“Considering China is the largest foreign buyer of residential real estate as of The National Association of Realtors' (NAR) 2019 International Activity in the U.S. Residential Market, accounting for $13.4 billion of $77.9 billion, or 17.2% of the foreign market share, the coronavirus could greatly impact investor activity, but surprisingly in a positive way.”

Source: How the Coronavirus Could Impact the American Real Estate Market

Although the U.S. is the latest country to experience the spread of the Coronavirus, it hasn’t been hit as hard compared to Italy, the site of the outbreak, China, and other countries around the world. Amongst many other countries, China has begun investing money into the U.S. housing market as their own experiences downfall as a result of the virus outbreak. 

“But as confidence in their own real estate and other foreign markets falters, investors are moving their money into hard assets, like real estate, in areas like the United States, who to this point has not suffered greatly from the spread of the disease.”

Source: How the Coronavirus Could Impact the American Real Estate Market

The Effects: Good And Bad

As of right now, we will most likely see an increase in foreign buyers while the prevalence of the virus and its effects on the economy remains relatively low compared to other countries. In the next coming weeks to months however, there’s no denying the fact that America could experience its first recession of 2020 and all since its last from 2007 to 2009. 

The overall status of the market will remain relatively unchanged for now and we can only hope it doesn’t fluctuate too far from that downward. 

The good and bad of the Coronavirus effect on the housing market and cut pretty clear at this point. Obviously the worst-case scenario is that the economy crashes along with the real estate market values. This would mean plummeting values in real estate, both residential and commercial, and negative returns on housing investments made by buyers and sellers. 

The good would most likely be a continuum of what’s occurring now: an increase in foreign buyers. As far as good goes amongst American buyers, sellers, and agents, that would be difficult to project. It’s very unlikely that there will be an increase in buying, as many citizens are struggling financially in general and especially in the wake of the Coronavirus. 

As many others around the world wait out the spread of the virus, those looking to sell or buy real estate, both resident and agent, should cautiously do the same.

For more information on how the effects of Coronavirus on the U.S. real estate market, you can visit the following links:

• Mortgage Professional America: How Will the Coronavirus Impact the US Housing Market? 
• Philly Voice: How Will the Fed’s Rate Cut Impact the U.S. Housing Market Amid the Coronavirus Outbreak?
• Bloomberg: Best Housing Market in a Decade Could Succumb to Coronavirus
• Wall Street Journal: Coronavirus Looms Over Crucial Spring Season for Housing Market

What Does This Mean For The Future?

As the widespread effects of the coronavirus rapidly change on a daily basis, it’s hard to exactly pinpoint what the future holds for the sustain of the U.S. real estate market. As the situation rapidly declines as of now, it’s likely that things will get much worse before they begin to improve. 

With several states now under mandatory “shut-ins,” retail and other servicing businesses will suffer as a result. The decline of the economy will cause many to lose their jobs and most devastatingly, their incomes. With many non-essential businesses forced to close their doors to incoming business and working employees, their income will rapidly decrease. 

A decrease in income will then cause businesses to struggle with paying their employees and possibly rent as well for those with retail stores, office spaces, and such. And even for the employees, the decrease in income will affect how they will pay their rent, mortgages, utilities, and other essentials. 

All factors, in combination with the potential fall of the economy, could too result in the disastrous decline of the U.S. real estate market. Emphasis on “potential” however, as it’s still too early to make any concrete predictions on how the real estate market will be affected by the coronavirus, whether mildly or by extreme measures. 

The Future Of The Real Estate Market

In fact, some economic experts are still undecided on just how drastic the effects of the coronavirus will be towards the U.S. real estate market. 

According to experts, Kevin Thorpe, Chief Economist, and Rebecca Rockey, Global Head of Forecasting, of Cushman & Wakefield, “It’s premature to draw strong inferences about the virus’s impact on property market. Commercial real estate sector is not the stock market. It’s slower moving and the leasing fundamentals don’t swing wildly from day to day” (“Coronavirsu: Impact on the Global Property Markets”). 

On the other hand, Forbes recently published an article detailing the recent changes in buyer and seller activity towards commercial and residential properties. The most change has been in the percentage decrease in buyer interest most likely due to the volatility of the stock market. 

“In the commercial real estate industry, the impact is being felt even more strongly. For their part, agents who work with clients who are interested in buying commercial properties noticed an even bigger decline in buyer interest.”

Source: Tara Mastroeni of Forbes

Overall, as sellers and agents are forced to take extra measures when it comes to open houses and maintaining a healthy distance, many other real estate workers will have to establish a new routine that adheres to guidelines for stopping the spread of the deadly coronavirus. They too will join the 40 million+ fellow Americans that have already begun to do so.

If you are looking for a way to keep your business going during the crisis and even take it to the next level while others panic and batten down the hatches. Contact me now or visit thehomebuyerengine.com