Monday, June 1, 2020 / by Vanessa Saunders
From Vanessa Saunders, MBA, MIMC , Broker Owner, Global Property Systems Real Estate.
Finally when you thought you couldn't bear another blog about Corona Virus, social distancing and PPDs, here's a good one. It's from T3-Sixty, a monthly brief providing analysis on the most important trends and developments in real estate, as well as a quick digest of the most notable news in the industry.
In this case, it's about real estate recovery, and the opinions of four prominent economists (you may even have heard of some of them) about when and how the real estate market will return to pre-crash levels. This blog is a summary of the full article.
Interviewed are Lawrence Yun, NAR chief economist; Skylar Olsen, Zillow senior principal economist; Michael Fratantoni, Mortgage Bankers Association chief economist; and Danielle Hale, realtor.com chief economist. Each is asked the same three questions:
1. What key stats are you watching in assessing a recovery?
2. When will the market turn back on? How will we know when it’s back?
3. When will the market return 100 percent back to normal? What’s normal look like?
Usually, these kinds of articles are about as much fun as a barn dance full of bean-counters. This one isn't boring. And to be on the safe side, I've edited out any use of the words "pandemic," "virus," "mask" and "six-feet away" from of the questions and answers here.
If you prefer to throw caution to the wind and read the full report, (it's about a ten-minute read, including some interesting charts and graphs that nicely illustrate where's we've been and where we are likely to be going in the near future,) click Coronavirus Recovery by the Numbers: 4 Real Estate Economists Weigh In, May 2020.
What key stats are you watching in assessing a recovery?
Days-on-market to see if newly listed homes are quickly attracting buyers.
Pending sales and mortgage applications as indicators for sales volume, new listings for signals of seller confidence from existing homeowners, construction levels for longer run indicators, among others.
Purchase applications, housing starts and home sales increasing again on an annual basis.
To assess the housing market, we track total inventory, days-on-market, median listing and selling prices, new listings, and mortgage financing trends. We’re watching economic data closely, particularly jobs data, since workers who have income will drive a housing recovery.
When will the market turn back on? How will we know when it’s back?
If buyers quickly take inventory, then getting back to normal will happen sooner – perhaps even by year’s end.
New listings and pending sales are inching up from record lows, and page-views on our site are higher than they were last year, all signs that people are easing back into the market.
Rising consumer and household confidence leading to increased home sales and more homeowners listing their home on the market to buy a new one.
All real estate is local, and market recoveries will vary across the country. In some areas, sellers are gaining confidence to get back into the market, but we’re still a long way from normal.
When will the market return 100 percent back to normal? What’s normal look like?
Home sales in 2019 were 5.3 million nationwide. Getting back to normal will mean home sales reaching back up to this level – the monthly sales stat on an annualized basis. This should be combined with stable home prices to limit foreclosures.
In terms of transaction volume and prices, we expect those to recover to pre-pandemic levels (themselves a strong high water mark for housing) by the end of 2021. Normal before this crisis looked like strong interest from a large generation of millennials hitting life’s home buying milestones — getting married and having kids.
We’re in an economic crisis induced by a public health emergency. Addressing the root cause — defeating the vXXXs or neutralizing its threat with effective treatments or a vaccine will be key to restoring confidence in person-to-person interactions that drive a lot of economic and housing activity.
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