The Covid 19 pandemic has transformed the housing market from its spring season typical peak into a deep valley. Buyers, fearful of venturing out or no longer qualifying for mortgages, are on the bench. Sellers, not wanting to risk infection from strangers in their house or fearing a decrease in prices, have pulled their homes off the market or have decided not to list. Sales activity has dropped sharply, up to 70% in some areas. The resale market is being hurt badly although new construction is pushing forward. Spring is the traditional high point for the housing market as buyers want to be settled-in before the new school year starts. Of course, that also could be delayed.
One remaining bright spot is low interest rates. However, with soaring unemployment and tightening credit, only the most qualified buyers with jobs will be able to take advantage. Job stability is now a main issue for lenders who are checking employment within 3 days of closing escrow. The slower market is not only evidenced by the sharp drop in listings but also by cutbacks in real estate companies. Seattle based Redfin furloughed 40% of its 1500 agents until September. The heavy advertising of companies such as Offerpad and Opendoor has seemingly disappeared and they have allegedly suspended buying activity.
How will all of this affect prices? The opinions among the experts are split between severe and modest declines. Sellers might not sell at all instead of taking a discount. Renovations which could increase values may be put on hold. Instead of predatory sellers or lenders, we may now encounter predatory buyers. All of this turns on when the pandemic ends as the National Association of Realtors anticipates a rebound in economic activity when that happens with no lasting effect on prices. Low interest rates will also drive the rebound.
For nearly 40 years, Attorney Lester Berman has practiced in the areas of real estate and litigation matters representing clients throughout the state of Nevada.
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