In our wildest dreams, no one could have predicted the roller coaster ride the year 2020 has been for most Americans. The novel coronavirus pandemic has impacted and disrupted almost every aspect of our lives, not only with increased public health concerns but with millions thrown out of work and the country thrown into an economic recession. With so much upheaval, one of the gnawing questions homebuyers and investors have is: What type of impact is the COVID-19 crisis having on the real estate market?
As it turns out, the answer seems to be as complex and, at times, unpredictable as the coronavirus itself. While the housing market has definitely been affected, it hasn’t been in the ways most people would have anticipated. In fact, the state of the market has changed dramatically during the pandemic both throughout the United States and particularly here in Atlanta, to the point that if you took a snapshot of the market in July and again in October, you would see two completely different situations. Let’s take a closer look at how the housing market has reacted to COVID-19, what it is doing now and what we might expect going forward.
Initial Impact of the Pandemic
Most of America first felt the brunt of the coronavirus outbreak in March 2020, when President Trump declared a national emergency and most of the nation went on lockdown to stop the spread of the disease.
At this time, the economy essentially ground to a halt — as if the economy were a train and the emergency brake had been applied. The slowdown deeply affected the real estate market during March and April: there was virtually no home buying or selling. Real estate offices were closed due to shelter-in-place orders, and no one was leaving home to look for houses.
After the initial lockdowns, the train slowly began to churn to life again. Like so many in the workforce, real estate agents figured out how to work from home, setting up virtual showings so clients could view properties remotely. Eventually, the lockdowns were eased, and agents began returning to their offices, implementing new safety measures to protect homebuyers, homeowners and themselves. But to look at the numbers from those first few weeks, they resemble a full market crash due to the lack of activity.
The Early Aftermath and Unexpected Trends of Covid 19
As stay-home orders were lifted, businesses reopened and financial markets began to stabilize; the housing market also began coming back to life over the spring and summer months of 2020. We got a clearer picture of how the market responded to COVID-19 — with some surprising trends emerging.
Home Prices Up, Not Down
In times of economic uncertainty, one might expect housing prices to decline. In fact, they went up, especially here in Georgia. The reason: higher demand and lower inventory. As stimulus checks went out and the Federal Reserve made emergency cuts to interest rates, homebuyers began flooding the market, incentivized with fresh down payment money and the promise of low mortgage rates. The problem was, home sellers were not selling. Skittish due to the pandemic, homeowners were reluctant to put their homes on the market, and the number of new listings shrunk. Almost overnight, a buyer’s market became a seller’s market. Bidding wars ensued, and home sales and home prices soared — to an increase of 9.1 percent over last year by July, according to the AJC.
Migration to the Suburbs
Over time, another interesting trend began to emerge. While there has been fresh interest in urban living over the past few years, people are now escaping the densely populated cities where the virus could spread more easily. As a result, demand for single-family homes in the suburbs and rural areas skyrocketed in some parts of the country. Not only did this increase home prices in suburban areas, but it also caused a construction boom as builders tried to keep up with the demand for new homes.
Market Recovery Amin Covid Environment
By October 2020, despite the ongoing pandemic, the real estate industry had made a full recovery in most places. Here in Atlanta, the market has returned to pre-COVID levels and is even on track to exceed last year’s numbers. Interest rates are low, mortgage applications are up, lenders are still eager to lend and demand for real estate as well as housing prices are still high … meaning the market is essentially healthy.
Looking Past 2020
As of November 2020, coronavirus cases are again spiking across the entire nation, including places like New York and San Francisco that had stricter mandates. Different cities and states across the country are now discussing the possibilities of new restrictions and stay-home orders to combat what appears to be a “second wave.” While the real estate market has survived and even grown since the first appearance of the virus, we cannot rule out another slowdown if new quarantines or shutdowns are called for in the months ahead.
What Does It Mean for You?
If there’s anything this pandemic has taught us, it is not to rule out the unexpected. While the market remains healthy, now is the best time to take advantage of it. For first-time homebuyers, investors and those looking to upgrade or downgrade their home, it’s an excellent time to take advantage of low-interest rates and available home inventories. Sellers also have the advantage of less competition, higher market values and plenty of eager buyers.
At Atlanta Fine Homes Sotheby’s International Realty, we keep a close eye on the latest market trends to help our clients get the best value whether they are buying or selling. To schedule an appointment, contact us today.