Hello to my Friends, Colleagues and Clients,
I know there is a lot of anxiety out there about health, the economy and the housing market. I am not an expert on the pandemic or the stock market so I will leave that to others. I DO know housing having been through 3 recessions since I got my license. Oh, you have probably forgotten 1986 or 2001 in addition to 2006. This crisis is more like 9/11. It event driven. Just like the macro burst of 2 years ago, it has postponed, not killed our market. Home values are still rising at a normal, 
uninflated rate. There are some huge factors that will drive our market come June..or maybe July.
1- AFFORDABILITY– Interest rates in 2006 were 8%-today they are 3.5%. Even though incomes have risen only slightly it means that homes are more affordable today than any time in history. In 2006 to buy a MEDIAN priced home with a MEDIAN income Buyers were using 25.4% of income on housing. Today it is 14.8%. This an AFFORDABILITY OPPORTUNITY FOR BUYERS.
2- LOW INVENTORY- As Realtors, we not only look at # homes on the market but how fast they are selling. It is SUPPLY vs DEMAND. We call it the absorption rate. In 2006 the absorption rate was 8.2 months. That does not mean that it will take a home that long to sell but that if no additional homes came on the market, at the rate the current number of homes sold it would take that long to deplete 100% of the listings. #listings divided by #listings sold/month= Absorption Rate. The current rate is 3/1 months. Average market is between 4-6 months. What this indicates is that we do not have enough inventory to currently meet demand. This is a LOW INVENTORY OPPORTUNITY FO SELLERS
3- RELAXING MOTGAGE RESTRICTIONS- We have swung from crazy subprime lending to the point that it was almost impossible for first time buyers and others to get loan. With relaxed guidelines as to what constituted a financeable condo complex(no owner vs. renter restrictions) to lenders requiring less down for investors (25% vs 30%) to banks offering 0% down plus down payment assistance to QUALIFIED first time Buyers, it opens the doors to a large pool of Buyers.
4- LARGER BUYER POOL- Besides being easier to get a loan there is an influx of some new markets.
-Those who lost homes to foreclosures and short sales are now back on their feet and qualify to buy. Remember that in 2006 these homes accounted for 30%+ of those sold.
– Millennials who needed to pay down or off college debt have done so.
– Move up Buyers who had delayed the move because of the equity loss of 2007-2011
have now gained most of that loss back and have paid down their mortgages to the point they can look for the next home.
What about the current unemployment crisis? It is temporary. Must of the bail out funding is forgivable to corporations only if they rehire.
Should Seller’s take their homes off the market? Absolutely not!! You can deny showing but hat do you think all of these quarantined people are doing right now? They are on the internet looking at houses!! I see the numbers!!
I am still predicting a record breaking year for real estate. I have listened to Lawrence Yun (Chief Economist for the National Association of Realtors), Ben Carson (National Secretary for HUD) and many others. I study statistics and trends and I trust my gut. Hold on the wave is coming. I even got an offer on a condo I have listed this week. The tenant did a facetime call with the Buyer and gave her a virtual tour.
I know it is a scary time. Call me with questions. Stay safe.