Potential Benefits to Come out of the Looming Housing Crisis
According to a housing report released by Realtor.com on Thursday, April 2, the current housing market in the United States is experiencing a 13% downturn, and it’s expected to keep dropping off. However, there are quite a few people in the real estate industry and in the economic sector who see this as more of an opportunity to be better once the Covid-19 pandemic has passed.
As every major health official and every organization has agreed, the Coronavirus will pass. At some point, effective treatments will be released, just like every other incarnation of the Coronavirus, and SARS-2-Covid-19 will fade. At that point, people are going to start returning to work, commerce will pick up, and the housing market will once again be thriving. In fact, some experts claim that this slight downturn may actually help the market prosper
How “Stay at Home” Orders Can Help
The reasons that some people think that the virus pandemic can be a good thing for housing, once it’s passed, is that many people who were considering selling their homes have been put on hold. Not only are they on hold, but they’re stuck in their homes, unless they’re working at essential jobs or going to the grocery store. Schools are closed, most jobs are closed, and most businesses are closed, save those pushing essentials. So, what effect does this have on people stuck at home? Some experts in the real estate market believe that this will spur a lot of remodeling.
Millions of homeowners out there already have the supplies on hand to redo their floors, paint their walls, upgrade certain parts of their home, etc. They’ve just been putting these projects on hold due to their busy lives. Since they were rarely home, they just never got around to fixing things up. However, with more homeowners stuck indoors now, this is causing a lot of people to pick up those brushes and to get those floors laid down. Fixing up the issues in their homes is giving them some busywork to do while this pandemic runs its course.
In terms of how this relates to real estate, this means that once the pandemic passes and some of those people start listing their homes on the market again, the homes are going to be appraised and sold for a higher value. This could very well be the kick the real estate market needs to bounce back. If, right out of the gate, the swath of homes going up for sell are all high-end homes available for a premium price, this spurs market parity, and more and more homes start listing similarly.
Things Could Get in the Way
The real estate market needs the flow to go along with its ebb. It’s not a one-sided market. All the people in the world could start selling homes, but if no one is out there buying them, that does more harm than good, as prices need to keep falling and falling before anyone buys, which discourages people from putting their homes up for sale. And one thing that could really hinder a bouncing back of the housing market is mortgage lenders like banks refusing more people for home loans due to the slower economy.
Likely is the case that some initiatives will be presented to mortgage lenders to spur on their action, even if it needs to be government-backed loans, which is an idea that has been floating around Congress for over a month now. The idea with that plan is to encourage banks to start lending, effectively ensuring that they will receive their money regardless.
The best-case scenario here would ideally be for banks to act a little selflessly, and attempt to help the economy out by being more open with the mortgages they’re lending. This way, people who want homes can more easily get them. Though altruism has historically not been the strong suit of the housing market, hence the 2008 collapse caused in no small part by mortgage lenders refusing to eat any sort of financial loss, especially if it was between that and evicting people out onto the streets.
The truth is that during times like these in America, everyone has to pull their own weight. If the housing market is expected to make a strong comeback, it’s going to take everyone playing the same ball game on the same field. No exceptions to the rule.
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