- According to Mark Zandi, chief economist with Moody’s Analytics, there is a 60% chance of recession
- Economic disruption from coronavirus spread could heavily impact housing market
Last month, housing market experts were anticipating a hot spring selling season. This month, all of those expectations have changed.
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Mark Zandi, the chief economist with Moody’s Analytics Inc., said, “Housing is being buffaloed by two gale forces moving in opposite directions from low rates to (the now declared pandemic) coronavirus. The question is, what’s the end result of all that? In all likelihood, the recession will trump the lower rates.”
Unwanted realities many could ignore two weeks ago hit home this last week. Stocks have dropped to the point of rendering the market a “bear.” (Bear markets are down markets just as bears paw things down into the ground and bull markets are up markets just as bulls fling things up into the air with their horns.) Just last week’s down payments are evaporating. The lightning-fast decline in oil prices is likely to harm energy-sector-dependent states such as Texas. And people are just staying home, not going to movies, not going to restaurants and not buying things that the week before were considered “normal” consumer purchases.
Housing experts are now saying that such economic distresses are likely to slow home sales and at least flatten, if not decrease, home prices.
Even Lawrence Yun, chief economist with the National Association of REALTORS® (NAR), who thought last month there was a 5% chance of recession is now saying there is a 40% chance of recession. He also is saying that the coronavirus could dampen sales by some 10% in the short-term.
Yun said, “The stock market crash is no doubt raising economic anxieties, while the coronavirus brings fear of contact with strangers.”
Which markets are likeliest to be hit? Epicenter tech markets such as Seattle and San Francisco that have soared over these last years may see the steepest declines. And, more affordable markets and entry-level homes that have surged in value by, in some cases, +60% will also be affected.
George Ratiu, the senior economist with realtor.com, said, “If there is a marked economic slowdown accompanied by job losses, that would put a lot of pressure on homeowners. We would see a change in the inventory situation. Instead of a severe shortage, you would start to see inventory ramp ups as people get interested in offloading.”
Thanks to CNBC.