How is Covid 19 changing real estate?

Wow Covid 19 has changed things quickly!

Its amazing how quickly things can change! March 1st 2020 we were rolling right along in Flagstaff with low interest rates, increasing supply and buyers at the ready when that inventory supply increased. March 25th 2020 and there are just a handful of new listings, buyers are worried and sellers are fearful of showings. The Flagstaff real estate market has come to a grinding halt but that could present opportunity for many. Will this last? Will the market tank? What should someone do right now that wants to buy or sell? To answer the question of will the last, who knows. The Flagstaff Real Estate market will be impacted, likely much less drastically than the economy as a whole but it depends on how long this all lasts. If we are relatively ‘back to normal’ by Mid May I see very little long term effects, if it takes until fall there will be some fall out in the Flagstaff Real Estate market. The longer it takes the more investor owned properties will hit the market. Those properties that are used as vacation rentals are no longer producing income and will not be able to stay afloat as the duration of this shut down increases. We will also start to see second homes and vacation properties in Flagstaff hit the market as people need cashflow due to the Stockmarket being down. Primary residences likely won’t have a huge effect as far as foreclosures or short sales as many people have significant equity in their properties. Those that don’t have a lot of equity will likely still be able to sell if needed as interest rates are extremely low and buyer demand is still present in many segments of the market. However selling in this market is definitely changing and in order to get top dollar an agent that uses the right marketing is crucial. Answering question two, will the market tank? Most economists say there is not much reason to anticipate a huge decrease in market values. For many of the same reasons as listed above there is a lot of stability in the real estate economy with substantial equity that many homeowners have. This change in the economy is not due to economic factors its an economic reaction to an outside factor. Compared to the real estate crash of 2008 this is completely different and will likely end entirely different as well. I don’t see any reason to suspect we will see a real estate value downturn or even a buyers market. I doubt we will see sellers rush to sell during the pandemic for a variety of reasons which will keep the market in low supply. Question three, what should someone do if they are looking to buy or sell? If you are considering buying, it depends on whether your employment has been effected. I don’t see any reason why you should wait or decide not to buy, in fact its probably better to buy during the pandemic than after. There will likely be a huge pent up demand that hits the market as soon as this ends. Assuming this doesn’t drag on for more than a couple of months there will likely not be enough supply for the demand. Interest rates will stay low, many workers are getting extra cash from the Corona Virus bill that will help them with a downpayment, and furloughed workers that were considering buying will be back and work and ready to be a player in the market. Waiting could be costly as prices would likely jump if this scenario plays out.

Selling in this market

If you are a seller should you list or wait? In my opinion it depends on the situation. If you are selling and not purchasing a replacement home then I would wait. I anticipate values will go up after this pandemic is over so waiting it out is likely a good choice. If you are downsizing (in value) then I would also wait. An increase in value of your current home will outweigh the value increase of the property you are buying if you are downsizing. Waiting is likely a prudent decision. If you are selling in order to upgrade then I would not wait. As values increase you’ll be paying more for your replacement as the value increases relative to the increase of your current home. So, if I decide to sell what is important right now? How do you market a property and accomplish all of these things?  

Buying in this market

As is the case in any market it’s important to be prequalified and ready to make an offer. Speaking with a lender is critical right now as guidelines are changing and the lending industry is adapting to the changes occurring the world. You may have to be a little more patient than normal. With fewer listings hitting the market, finding what you want may be a little trickier than normal. With some patience though you will likely find a house that has less competing buyers than you’ll see once this all ends. The Arizona Department of Real Estate has issued several clauses and is working on an addendum for us to use to help protect buyers in the event of shutdowns, closures, etc. Looks like the government is going to be sending most Americans a check for thousand(s) of dollars. There is also word that they may also be allowing for one to pull from their 401k penalty free. This added access to cash can help make a huge difference to a first time home buyer or even buying a bigger home or avoiding mortgage insurance. That combined with incredibly low rates means many people will be in an ideal situation to purchase real estate. As long as you are not currently effected in a way that prevents you from qualifying this may be a great time to look a purchasing a home!

Contact Nick

If you’re looking to buy or sell I’ll be working and available to help in any way I can! Call, email or text me. 928-225-9333!
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