This week, the number one question we get asked professionally is, “How do you think the Housing Market will respond to a global pandemic?”
Our response is that we are living in a time nationally and internationally we have never experienced before. None of us have lived in a global pandemic in the modern age and with so much interdependence on each other around the world. There has also never been a time with such a high level of immediate communication (regardless if the communication we receive is factual or opinion).
We want to be respectful of this virus and the danger it possesses to human life. We also are thoughtful about the impact it has had on individual lives with an almost complete shutdown of our daily lives and the individuals who have essentially lost their entire source of income for now. We hope the timeline for full recovery is rapid and complete in every regard.
We are also called upon as experts in the real estate field to give some guidance and help our past, present, and future clients in a time of economic upheaval. There is no crystal ball as to exactly how this will all play out or what the timeline is to return to a state of “normal”. When it comes to housing, we must look at the trends over years by using data sets to predict how the housing market will fair in the time ahead. To do this, we use the gold stand in the housing market: The Case-Shiller Home Price Indices.
The Standard & Poor’s Case–Shiller Home Price Indices are repeat-sales house price indexes for The United States. These indices are calculated and kept monthly by Standard & Poor’s, with data points calculated for the time period of January 1987 through the present. It has kept tract of the housing market during wars, 911, elections, economic downturns, energy crises, and so many other impactful events. It is the best predictor to how we will fair with the pandemic we are currently facing.
The housing market had had a steady and consistent trend upwards in comparison to the volatility of the Stock Market over the past 30 years.
The last major crash the housing market had was in 2008 when the sub-prime housing crisis merged with the devastating, stock market fall. This was a very rare event to have both occur at one time.
Important note regarding the housing market’s last crash: At the national level, home prices are 59% above the trough reached in February 2012, and 15% above their pre-financial crisis peak.
Surprising, but the data shows the pattern of changes in home prices bear no relation to changes in construction costs, interest rates or population.
We are not giving any advice with regards to the stock market. An investment professional should be consulted for this. The information we can provide is that the housing market has less volatility in comparison to the stock market overall. In very recent times, we’ve seen the stock market lose 20% of its value in one week. This is not the case with the housing market.
It couldn’t be clearer than over the past few weeks how very important it is to have a home to take retreat in and feel safe.
There is so much data to share that it can be overwhelming. The Kimberly & Daryl Team look forward to giving more information and insight as things move along. In a time of concern there is a flight to quality. Now, more than ever, it is important to work with seasoned professionals who are experts and highly respected in their fields to help make informed decisions be they medical, financial or real estate. We are here for you.