How will Corona virus impact the housing market?

    How will Corona virus impact the housing market?

    Apr 10, 2020

    Chief Economist Reminds Home Buyers and Sellers, “We are going through a health crisis, not a housing crisis”

    Chief Economist Matthew Gardner provided an update about the impact of the COVID-19 pandemic on the US economy and the housing market today, as a guest speaker on Title Wave, a virtual education series brought by Chicago Title/Fidelity National Title in Clark County.

    “Over the last month we went through the fastest economic contraction the world has ever seen,” said Gardner. “The virus hit, and everything went south very quickly.”    

    In the last three weeks, more than 16 million Americans filed for unemployment and Gardner expects as many as 20 million workers will be unemployed. However, he remains optimistic, predicting the economy and housing market will significantly improve in the second half of 2020.

    The US economy had 10.5 years of economic growth going into this crisis and was adding a quarter-million jobs a month in January and February of this year, said Gardner. He expects the economy to bounce back because the current crisis was caused by a virus and not something like trade wars, energy, oil, or corporate debt.  

    “Half the economy shut down overnight, which leads to layoffs, and that’s why unemployment goes up dramatically,” he said. “When the economy reopens a lot of those jobs will come back quickly. We’ll come back out on the other side in relatively good shape because we started in pretty good shape.”

    So what does Gardner predict this means for the housing market and home buyers and sellers? 

    ·      “We are going through a health crisis, not a housing crisis.” Like the economy, the housing market was doing pretty well when the pandemic started. The most significant issue will still be affordable housing. 


    ·      The financial crisis is hitting the rental market harder than the ownership market because most of the jobs lost are blue-collar jobs. Gardner noted that if you’re unemployed and making less than $39 per hour, you’ll come out better than if you were working due to the $600/month stimulus check you’ll receive for each of the next four months, possibly longer. 

    ·      A housing collapse like we saw in 2008 is not expected because exposure is less and home equity has jumped. In February 2020, the average FICO score on an approved loan was 755 and the average down payment was around 16 percent. 

    ·      Home sales will be down 10-15 percent, but home prices will be up about 2.5 percent. There are home sellers in markets where face to face meetings are still not allowed. His forecast depends on how quickly non-essential work restarts. 

    ·      We won’t move from a seller’s market to a buyer’s market soon. Buyers need to be comfortable with a job, the economy and the stock market. He said, “Buying a house is the most expensive thing you’ll buy in your life for 98 percent and that could be holding some buyers back, but they will come forward again.” 

    ·      The mortgage rate right now is 3.5 percent. By the end of the year, he expects the rate to be even lower. 

    ·      As a nation, we have 18 trillion dollars of equity in our homes. If you bought a home in 2012 it’s about 50 percent more than what you paid for it and in Seattle, it has doubled. 

    ·      Construction should be back to where it was at the start of 2020 by the second half of the year. Residential construction is a non-essential industry and is still remarkably expensive due to material prices, labor prices, zoning changes, and regulatory fees. 


    •  Markets susceptible to leisure and hospitality industries will take longer to recover.