Cause or Cure: Real Estate & COVID-19
Unlike 2008 and the Great Recession, Housing is not the cause of the economic turmoil. This time, Housing may actually be the sector to help cure the economy.
As 2020 began, the year for real estate brimmed with optimism. Locally in Centre County, closed residential sales for the first quarter were way ahead of last year and, in fact, higher than any of the last 5 years. By March 31st, the Centre County Realtors had closed 292 properties.* Considering that this period included the second half of March (when many closings were necessarily pushed out to further in the year), that's pretty incredible. However, as the coronavirus shut down state after state and indiscriminantly tore up the economy and our daily lives, it started to take a toll on housing as well. You'll read where mortgage applications are down, new listings are not coming to the market, and buyers are putting their real estate plans on hold. Yet, that could all be temporary. Temporary and misleading as an idicator for the rest of the year. With such a strong start to the year, housing could make an equally strong comeback. Unlike the Great Recession, when the coronavirus spread across the United States, housing was not overbuilt (in fact there wasn't enough inventory) and not overpriced (in fact house buying power way outpaced the median sale price). It was on good trajectory to meet the demand all while mortgage rates were still at historic lows. Responsible lending has all but taken the place of the predatory lending associated with the 2008 recession. The future was bright. Wouldn't it seem that once the virus has been controlled (not an easy task and certainly not an overnight fix), that the job market would regain it's stability and that the economy might rebound? While every day life will not be ordinary for some time to come, there's no reason to think that the worst will occur either.
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*Data Source: CCAR MLS 1/1/2020-3/31/2020 Residential Properties in the 5 Centre County School Districts.