(Published on - 3/9/2020 10:19:30 PM)
The corona virus, while statistically unsubstantial in terms of its overall impact on public health, has already had a significant effect on the national and global economy. While many sectors of the economy have been adversely impacted by the Covid-19 virus, the real estate market remains strong. Indeed, the Federal Reserve Board’s recent decision to lower interest rates has mortgage lending rates at historic lows. Some economists anticipate the Fed could lower lending rates again as a result of the corona virus. For investors, these lower interest rates are favorable offsets against PMI rates and inflation. These short-term measures taken by the Fed are beneficial to buyers and sellers looking to make a move in the near future.
An end to the current volatility on Wall Street is easily identifiable. The current setback is not the product of any economic or trade practice -- it is the reaction of investor speculation around what life will be like during a widespread corona virus pandemic. Once the corona virus is stabilized, the global economy will pick up where it left off. When the markets recover, the economy will be strong and real estate will have weathered the storm in a stronger position than when it started. There will likely be a stockpile of consumer goods that flood the markets in the short term, but overall, the economy will not only recover but accelerate to gain back the lost opportunities that resulted from the corona virus scare.
The relative strength of the real estate sector contrasted with the uncertainty on Wall Street is something we have seen before. Although mortgage backed securities played a central role in the 2008 financial crisis, that is NOT an issue today. The fact that the down-turn on the stock market has not spilled over into the real estate sector is a testament to the stability of the real estate market. If there were another bubble in the real estate market, it would have likely burst as a result of current market conditions. On the contrary, as any realtor will attest, mortgage lenders have tightened their scrutiny of loan applications, which has played a central role in the recovery of the real estate market over the past decade. Today’s mortgage products keep the real estate sector on solid footing and with rates as low as they are, qualified buyers and investors have an opportunity to lock in on attractive long-term financing options. If you are considering investing in real estate, or if you would like a free comparative market analysis on your property, contact me today to learn more about opportunities in the real estate market.