With high demand in housing and low unemployment rates prior to the COVID-19 pandemic, the housing market was headed toward an exceptionally strong year in 2020. Of course, many things have since changed, and understandably, anyone looking for homes for sale in the Seattle area, or trying to sell their house, may be anxious to know where the housing market currently stands and where it is headed for the remainder of the year.
Although the uncertainty surrounding the prospective outlook on the virus makes it difficult to predict anything in certain terms, there are some basic measures you can still consider to analyze how the housing market is going to withstand the economic effect of the pandemic. Let’s take a look at some of those factors facing the Seattle real estate market, as well as the rest of the country.
The Immediate Effects Of Covid-19 On The Housing Market
The overall effects of COVID-19 across the world have been tragic and devastating. Officially declared a pandemic on March 11, the virus has since claimed over 100,000 lives in the United States alone. Due to the necessary shelter-in-place orders and the economic fallout that followed, more than 30 million Americans have filed for unemployment since the start of the outbreak. These statistics paint a stark picture of the current economic hardships facing the country.
It’s only natural for such a wave of economic and social change to affect the housing market; after all, many of us remember the bitter 2008 financial crisis all too well, during which some homes were reduced by 30% in value. But in 2020, many experts believe the housing market is poised to withstand the projected economic recession much better than it did in 2008.
In fact, a study conducted by Zillow analyzed the effect on the housing market from previous pandemics, and found that, while the number of sales and real estate transactions did decrease, the home prices did not. In fact, in some cases, they actually grew.
Today’s housing market seems to be following these predictions. There was an immediate 40% drop in traffic to major real estate websites following the outbreak and lock-down orders. In spite of astronomical unemployment numbers and the general economic uncertainty, there has been over a 5% increase in applications for mortgages in May. While housing prices were feared to take a hit from all the turmoil, housing prices are still projected to rise by 4% in 2020, according to Fannie Mae.
What Keeps the Housing Market Resilient During the Pandemic?
Unlike the 2008 crisis, which was largely caused by the burst in the housing bubble, the effect of the pandemic – though extreme in its own right – shouldn’t have nearly the same repercussions on real estate value. For starters, there are federal regulations in place to halt foreclosures and minimize the direct effect that the economy could have on today’s housing market.
The interest rates across the country are also dropping, with the average currently currently running between 3.5% to 3.125%. This should further incentivize buyers to take advantage of the great opportunity. Furthermore, the current volatility seen in the stock market could actually strengthen the housing market with investors flocking toward real estate to acquire more stable assets.
The other important factor in the housing market is that there is still strong buyer demand, which didn’t just vanish during the pandemic – it only paused. In places such as Seattle, where real estate is in high demand and short supply, motivated parties still find ways to move forward with their transactions, albeit in a more socially distanced manner.
What Should Buyers Consider in 2020?
With some sellers pulling their listings to try to wait out this tough economic time, buyers trying to take advantage of the current low interest rates may flood an already scarce housing market. In certain neighborhoods buyers are finding themselves back in the multiple offer situation of 2017-2018. Seattle’s lack of affordable housing will continue to be an issue for the foreseeable future.
The COVID-19 outbreak affects many things, but not the inevitable life changes that cause you to move to a new home. For those who are actively looking to buy a house in 2020, securing a low rate now means money saved in both monthly and lifetime costs of your property.
What Should Sellers Consider in 2020?
With still plenty of demand for housing and not as many competing listings, sellers should feel confident about their outlook in 2020. With the right approach and an experienced agent, you shouldn’t experience extra difficulty selling your house this year. Just keep in mind, selling your home during the pandemic still requires some adjustments, so prepare to digitize aspects of the process if you want to offer your buyers an in-person experience that they may not be able to get otherwise.
Final Thoughts
Despite every effort, it’s almost impossible to predict the outcome of this pandemic in certain terms. Because the eventual upturn and economic recovery depends on the progression of the COVID-19 virus, so does our country’s return to a new “normal,” including the housing market.
Yet, for those currently looking to sell or buy in 2020, the outlook isn’t as dire as some would assume. In fact, the housing market remains a unique stronghold in the otherwise chaotic state of affairs. In times like these, more than ever, experienced local real estate professionals can help you navigate the Seattle real estate market despite any occurring changes or shifts.