Coronavirus and the Real Estate Market - A Special Update
A Special Message from The Swan Team
With all the uncertainty in the U.S. and around the world today, how do you make powerful and confident decisions regarding your real estate plans? We hope this special edition newsletter will help you understand how the Coronavirus is currently impacting the housing market. In times like these, working with an informed and educated real estate professional can make all the difference. Please contact us with any questions or needs you might have. We are here to help.
Everything You Need to Know About The Coronavirus and Housing!
The Coronavirus and Housing: Despite all the news swirling about the Coronavirus, the Orange County real estate market is still rocketing forward with an Expected Market Time of 48 days.
At first, news of the Coronavirus seemed like a distant crisis on the other side of the world. Then, at the end of January, the first case on U.S. soil was announced. It was not until the end of February when top federal health officials warned that the virus would spread in the United States. The Coronavirus is beginning to interrupt daily life. There are no more samples at Costco. After the kids’ soccer matches, the handshake has been replaced with a fist bump. Parishioners are no longer holding hands or offering a hand in peace. Starbucks no longer allows reusable cups. There are signs in the grocery store limiting the number of certain items. As the virus began to spread out of control not only in China, but South Korea, Italy and Iran, Wall Street and financial markets around the world panicked and moved their money out of stocks and into long term bonds, United States treasuries. When that occurs, long term mortgage interest rates fall. So, how will the Coronavirus outbreak affect housing? There is no absolute, 100% certain answer. Instead, it all boils down how long this crisis will last and how large of an impact it will have on United States soil and the rest of the world. In China, the number of new cases is dwindling, a glimpse of hope that this too will end. Currently, the data does not indicate any change in the local housing market. The supply of homes to purchase in Orange County is at its lowest level for a start to March since 2013, and demand (last 30-days of pending sales) is at its highest level since 2016. With not enough supply and strong demand, the Expected Market Time (the time between pounding in the FOR-SALE sign and opening escrow) is at 48 days, a HOT Seller’s Market and its lowest level since 2013. As a direct result from the COVID-19 outbreak, mortgage rates have dropped to a record low and will most likely drop even further. There is a chance that they break below 3% and into the 2’s. This inevitably will provoke many more to purchase, juicing demand. For a $750,000 mortgage, today’s 3.25% rate amounts to a $492 per month savings compared to March 2019’s 4.4% rate. That’s a savings of $5,904 per year. If rates drop to 3%, it’s a $594 per months savings, or $7,128 per year. And, at 2.75%, it’s a savings of $694 per month, or $8,328 per year. In doing the math, it is easy to see how lower rates will stimulate demand. The impact on affordability is astounding
Regarding the supply of homes, the Coronavirus may inhibit some homeowners from placing their homes on the market the longer the outbreak lasts. For now, there has been no real noticeable change in the number of homes coming on the market. Year over year looks nearly identical. That is something to watch as housing makes its way through the hottest season of the year, the Spring Market. As for demand, the virus could turn some would be buyers into fence sitters, not desiring to purchase in this environment of uncertainty. Yet, at the same time, many fence sitters will be replaced with more buyers looking to cash in on these record low mortgage rates. Some potential purchasers are worried about the overall economy and a potential recession instigated by the Coronavirus. But, the economy has a far way to fall as today’s macroeconomic United States charts are really strong. It is important to keep an eye on everything: consumer confidence, employment, jobless claims, regional manufacturing, Leading Economic Indicators, and housing starts. The GDP could take a hit, but it most likely will not drop below zero. Even with an economic slowdown, ultra-low interest rates will juice demand. Demand in the luxury ranges is a bit of a different story. The luxury market is somewhat tied to Wall Street and is a bit more vulnerable to stock drops and wild swings. Currently, the high-end data does not indicate any change, but it is something to mindfully watch. In the past couple of weeks, luxury demand in Orange County increased by 5%. The Coronavirus will affect the housing market to some degree, but not to the extent that many fret about. Society tends to worry about the worst-case scenario and overreact. Housing will not fall off a cliff. In fact, housing today is HOT and is heavily leaning in favor of sellers. Mortgage rates in the 3’s, or high 2’s, will help prop up the housing market. Worrying about the worst-case scenario is an exercise in futility. Instead, have faith that the present day’s advanced, connected, collaborative society will overcome this virus. Do not panic; instead, wash your hands frequently and be prepared for the current housing expansion to continue.
Do you want to know what your home is worth? Contact us today to get a free Home Valuation. Click here for a FREE Home Valuation
Here is What We Know....
1. In the last 5 virus outbreaks, the stock market reacted. 2. After the reactions, the market returned. 3. A stock market correction does not = housing crisis. This isn’t a time to panic. Know the facts.
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NEW LISTING: Stunning Pacific Hills Pool Home!
18 Altezza This immaculate Pacific Hills pool home on a cul de sac offers the perfect combination of space, warmth, functionality and California indoor/outdoor living. Boasting 4 bedrooms and 2.5 bathrooms, this meticulously maintained home leaves a lasting impression. Contact us today to schedule a tour!
In Escrow: Meticulously Maintained Home!
28691 Walnut Grove The Swan Team is thrilled to announce that after only 2 weeks on the market this beautiful 3-bedroom, 3-bathroom home in the gated community of Canyon Crest in Mission Viejo is In Escrow!
In Escrow: Open Turnkey Beauty! 23415 Princeville After only 1 week on the market this turnkey 3-bedroom plus loft detached home in the gated community of Cypress Point is in Escrow!
Want to get your property sold quickly and for top dollar? Contact The Swan Team now.
SOLD: 3 Bedroom Home in 55+ Community
21497 Bastia This 3 bedroom, 3 full bathroom home with a view Sold after only 4 days on the market. This home is located within one of Mission Viejo's coveted 55+ communities, Palmia.
Remodel Your Life with Mission Viejo's Own Cara Clark The uber-talented nutritionist and mom of 4 daughters, Cara Clark, of Cara Clark Nutrition is also a Mission Viejo neighbor that has written a new book with HGTV star, Christina Anstead, called The Wellness Remodel. In this book, the two authors discuss the importance of creating balance and prioritizing physical and mental self-care through food and nutrition, exercise, and mindfulness. The Wellness Remodel goes on sale April 14, 2020 through all major retailers including Amazon.com. Click here to pre-order your copy of The Wellness Remodel now.
Love where you Live. Give where you Love.
Together Everyone Achieves More. The Swan Team is more than just a team; we're family. We're on a mission to help you love where you live and give where you love. If you buy or sell your home with us, we'll donate $1000 to the school PTA, booster club or 501(c)3 organization of your choice! Our oversized checkbook and pen are ready to make many of these checks. The next time you are thinking of buying or selling a home, work with us and have us put our money where our mouth is! You make it all possible. Learn more here.
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