I want to start off this post with a quote/meme I saw which perfectly sums up the present day:
“I don’t even remember what we used to talk about before the coronavirus.”
While it’s a very serious issue right now, we need to remain positive and think of ways we can best prepare for the potential worst. I consider myself lucky to be able to write this post from the comfort of my home with plenty of food in the fridge. While it’s not a great situation for me personally given my career, I am still conducting business however I can and limiting my expenses.
Being quarantined helps with keeping expenses low, and that’s something everyone should be focused on right now. Are there bills you can cut or lower? What are some non-essential services that you can postpone for now? Go through your bank and credit card statements to see where you can save.
We will get through this and we will come out stronger. Times like these tends to shed light on what’s most important in life and where we are expending too much time/energy/money. Once we are past this, we will be more efficient and effective people for evaluating our situations now.
Which brings us to the real estate market. Obviously things have slowed down tremendously. Showings, while still happening, are much less frequent and generally done virtually. Open houses are discouraged, hand sanitizers and protections are in place for in-person showings, and meetings are done via computer or phone. However, business is still moving forward, and we will sustain this for as long as needed.
The effect on the real estate market as a whole depends on the length of this quarantine and how fast we can bounce back. I don’t have the answer. No one does. These are unprecedented times. We’ve had market crashes and recessions before, but coupled with the fact we shouldn’t leave our homes adds a whole new layer to consider. There are economists that have shown/believe that the faster the drop means the faster the recovery. Is this an overreaction? Are we resetting things after a decade of prosperity? Time will tell.
Lending standards have been much more stringent since 2008 and homeowners today have more equity in their homes than before. They can sustain a short time of economic downturn. If people are able to go back to work in a month or two, we shouldn’t see too much of an effect on the real estate market here in Chicago.
Right now, we will probably see inventory rise as some deals fall apart and new sellers are putting their homes on the market. There are substantially less showings which means less deals coming together. All of this combined means an increase in supply. If this ends in two weeks, we could see the floodgates open and buyers out in full force, quickly finding a place after losing some search time. It could correct with the surge in demand. But we also may see buyers more cautious as they start looking again.
Either way, I’m predicting we will see inventory rise, either exponentially or gradually, depending on the length of the quarantine, the potential bounce-back in the economy, and the unemployment rates. If demand doesn’t meet the increased rate of supply, prices will have to come down.
I hope everyone is able to manage through these tough times and see the light at the end of the tunnel. I’m remaining optimistic that things will turn around soon, but I’m also taking necessary precautions in case they do not. I hope you’re doing the same.