The Anne Arundel County home-buying season usually coincides with the arrival of spring. This year, however, spring is coming alongside a virus circling the globe. The Coronavirus effect on Anne Arundel and Annapolis Real Estate has just started to show.home-buying season usually coincides with the arrival of spring. This year, however, spring is coming alongside a virus circling the globe. The Coronavirus effect on Anne Arundel and Annapolis Real Estate has just started to show.
This spread of COVID-19 “coronavirus” has caused our Maryland Governor to issue Shelter-in-place orders in the entire state while nationwide a record 3.3 million Americans filed for unemployment last week. If you are in the market to purchase a house, all the uncertainty might have you worried about the housing market. Will this pandemic cause the Anne Arundel County housing market to collapse, as it did during the financial crisis in 2008?
Historically, we were headed into another competitive home buying season with low inventory and rock-bottom mortgage rates. Typically recessions normally have only a minor effect on the housing market, but the coronavirus is making our life and market anything but normal. Consider these latest statistics for Annapolis Real Estate:
The Federal Reserve implemented two emergency interest rate cuts since this crisis began, bringing the yield on Treasury bonds close to 0 percent. Furthermore, the stock market crash can have an effect on interest rates, too. The local housing market going into the pandemic was still strong – our team was still actively showing properties and listings went to settlement. Now the Anne Arundel County housing market is not much better off. The supply is at near record lows, and demand is near an all-time high. This combination means home prices are also near all-time highs here and across most cities as many potential buyers are bidding on a limited supply of homes for sale.
On the demand side, January and February’s key indicators suggested that there would be a lot of buyers in the market. Low unemployment, solid wage growth, and low mortgage rates were the proof. But now, unemployment has skyrocketed, companies are introducing pay cuts to employed staff, and new home search traffic to housing market sites has dropped by as much as 40 percent.
But there is a different outlook. A recession and pandemic doesn’t change these circumstances for most people – housing is a basic need, and the decision to buy one is prompted by entering into a new stage of life. Even in full-blown recessions, the housing market is incredibly durable. Consider that in some previous recessions home prices have actually gone up.
We are receiving a lot of questions from our clients, but one of the frequently asked question is what do we do heading into the Home Buying Season this year?
The conditions going into into the season were set for the spring being an incredibly competitive housing market. Inventory is low, demand was high, and mortgage rates are low. If you already own a home, you might consider refinancing while rates are low. But the coronavirus has changed everything and will alter what the landscape for home buying after the pandemic passes. Studies of previous pandemics suggest that home prices should stay the same but the the economic fallout of COVID-19 could be sweeping.
Any prolonged mortgage payment suspension could cause chaos in the mortgage industry and lead to a liquidity crunch, where lenders don’t have the capital to lend to potential homebuyers. Lots of experts believe that there is a chance the damage to the mortgage lending infrastructure may be limited – it’s possible a quick recovery would bring the Anne Arundel County housing market right back where it was prior to the pandemic.
This is a very uncertain time for everyone. Our goal is to provide accurate information to help you make the right decision for you and your needs. If you have questions we are here as a resource for you, please don’t hesitate to ask. We are all in this together!