As of the day I’m writing this (March 13th) the coronavirus has barely touched Whatcom County (at least in recorded cases), but the effects are starting to ripple in rapidly. It’s now inevitable that the virus will hit our county in a major way. So things clearly will get much worse before they improve here. School closures being announced today was a big deal as well.
Looking at the housing numbers; As of the last 4 weeks, the Real Estate market is still “frenzy” level sales activity, with a 1.2 monthly supply of inventory under $500,000. And this is where about 80% of the sales in Whatcom County occurs. At all price points, the market is about as hot as I’ve seen in almost 17 years in the business here. And then the drop in interest rates near 3% has only pushed things to a further frenzy market.
And in the Seattle and Snohomish markets, sales are also still very strong. The coronavirus is about 2 weeks ahead of us in King county, and the Realtors I talk to in that market report that business is generally still very busy.
In the short term, our corporate leadership is predicting about a 10% drop in sales activity due to the combination of a few fewer sellers bringing their home to market, and some buyers staying on the sidelines.
Keep in mind though that a 10% drop in sales is not a 10% drop in home values. In fact, with a 1 month supply of inventory, there will still be upward pressure on pricing, and multiple offers on many homes in the low-to-mid price points this month. Most people that want to move this spring will still very likely be moving. And if there is less home sellers due to concerns, that actually keeps the frenzy going, as the lack of supply will keep inventory low.
With that all said, the economic impact of the shut down of schools, sports, travel, shopping, etc obviously is going to have a major economic impact that will affect housing. Vancouver B.C. residents are being advised to not travel across the border. A lack of sales across all sectors in our market is going to have at least some short term effects on employers and business owners.
So the economics of this will very likely have a bigger effect on home sales in the months to come. I’m not convinced YET that any of this will be enough to actually create a scenario where home prices are actually falling in 2020. But it certainly appears to be a scenario that should slow down sales enough to see home prices begin to flatten in most price ranges.
So one silver lining amongst all of the anxiety and negative effects of this could be some relief for home buyers that are indeed still going to qualify to buy. If this slows down what otherwise was poised to be a frenzy level spring housing market…this will certainly allow some buyers to get in the mix and buy a home without getting into a bidding war.
So just like anytime there is fear any market, opportunities will arise.