Economists tell us that there is an ebb and flow to our economy. Any time there is a recession looming, the housing market takes a big hit. People aren’t moving to new jobs in new cities as much nor are they looking for their next home purchase if no additional income is coming in – so they stay put.
Many Americans have also lost their jobs, small business owners have lost their customers, and all of this takes away buying power and consumer spending. Some may have started 2019 or 2020 with dreams of upsizing or downsizing, moving to a different school district for their children, or making a move to a more desired climate.
One challenge in the current economy is that sellers do not want to lower their expectations on the price they should get for selling (which is sometimes an incentive for buyers) and buyers may have had to change their priorities or hold off on making a purchase – or be unsure that they can sell their current home when looking to buy a new one.
Experts suggest that this summer, which is the timeframe we typically see as being the hottest time for buying and selling homes, there could be a 30-40% drop in home sales due to the coronavirus. But there’s another issue at hand – inventory. It’s just not there.
The average amount of homes sold in the US in 2019 was 5.34 million according to data from statista. According to Yahoo! Money, “Last month’s inventory of 1.50 million homes for sale was the lowest March figure on records dating back to 1999, according to the NAR. That was also down 10.2% from a year ago.
March sales activity partially captured the effects of the efforts to contain the pandemic, which included social distancing and the shutdown of non-essential businesses in many parts of the country.
While housing sales edged up 0.8% from a year ago, the increase was boosted largely by sales of homes priced at $250,000 and higher. Homes priced at $100,000 or less saw a 18% drop in year-over-year sales, while homes between $100,000 and $250,000 fell 4%.”
Trading Economics tells us that “Sales of new single-family homes in the United States plunged 15.4 percent from the previous month to a seasonally adjusted annual rate of 627 thousand in March of 2020, below a downwardly revised 741 thousand in February. It is the lowest reading since May of 2019 and the biggest drop since July of 2013… At March’s sales pace it would take 5.4 months to clear the supply of houses on the market.”
We hope for the best and that everyone can just hold on for a little bit and that this is just part of the ebb and flow. Our economy has seen ups and downs, booms and recessions, so of course, we are all holding our breath a bit hoping to ride out this storm.