This Too Shall Pass – An Interview with Dr. Lawrence Yun on Coronavirus, Economy and Real Estate Market
These are unprecedented times in our history. It’s natural to feel fear and uncertainty, but it’s also vital to remember that we have faced and conquered many crises in the past. On the whole, we are in a strong position. We have record low unemployment and solid banks. Our currency is robust, our credit is excellent and we have many options available to us to support the economy. In the housing market specifically, because we were at the center of the storm previously, we’re in really good shape and are well set up for this crisis in many ways.
To help you actively prepare for what’s ahead, I recently interviewed Dr. Lawrence Yun, Chief Economist and Senior Vice President of Research at the National Association of REALTORS®, about the effects of COVID-19 on the economy and the housing market. His expertise will help you replace fear with facts and successfully navigate this difficult time for our country, our world and specifically our marketplace.
The Real Estate Market Will Rebound
It is heartening that some economies, like China and South Korea, are already starting to bounce back from this crisis. According to Dr. Yun, if the so-called “economic quarantine” is of short duration here, we can anticipate that there will be quite a strong real estate rebound after perhaps one or two months of lackluster activity. With builders underproducing over the past few years, there was a housing inventory shortage going into this situation. This is in stark contrast to the recession 12 years ago when we had overproduction. If the length of the Coronavirus impact on the real estate market is short, it’s predicted that there will actually be a housing shortage here again soon.
Spring Selling Season Pushed into Summer
Dr. Yun advises that, if the economic shutdown is short, there will just be a delayed spring buying season. The normal spring season could occur in August or September and we might then experience a fairly robust sales market in that period. In fact, there may well be pent-up demand coming that we need to prepare for. Because more people will be working at home during this period, we may begin to see folks realizing they want different homes that fit their lifestyles in a better way. In essence, the housing market has huge potential for growth.
Federal Rate Cuts Will Affect Consumer Mortgage Rates
With the Fed cutting its rate to 0 percent, Dr. Yun says the country’s very accommodating monetary policy means that mortgage rates will be at historic lows. The most recent data shows about 3.3% and it could even go down to 3%, according to Yun. Half of Americans don’t have any exposure to the stock market, so they’re mainly concerned with low mortgage rates. In terms of buying, if you feel your job is secure — and many jobs are — this could be the perfect time to take advantage of the record-low mortgage rates. There may be less buyers in the market during the crisis, which means there’s less competition and potentially more room for price negotiation.
The Economy will Bounce Back
Dr. Yun predicts that four of the next five years will probably be improving years. People planning for the long-term future in real estate will do well. Taking this longer-term perspective is critical because it takes you out of the short-term panic. This is a difficult time, yes, but it will pass. Dr. Yun believes that, even if it takes a little longer to contain it, there is such a solid fundamental for the real estate market that things will play out very well over the long haul.
In these uncertain times, it’s vital to arm yourself with facts so you can prepare for and deal with any challenges in the industry. Listen to the latest episode of The Brian Buffini Show to get more updates on the real estate market and motivation during this time.
For more tips, inspiration and advice on how to navigate the real estate industry during the COVID-19 outbreak, visit our Buffini Bonus Resource hub for ideas.