We have been getting a lot of questions about what is currently going on in the housing market. With much uncertainty on the state of the economy, many fear that we have an impending housing crisis on our hands. Let me start by saying, per national economists, historical data, and supply vs. demand, there is no current evidence to support that. The market is moving, and in fact, 1,092 homes have gone under contract in the Greater Richmond area in the past two weeks. Houses are still selling. In fact, our most recent listing went under contract in 24 hours, with 15 offers.
Although the economy will inevitably slow down with people staying at home, not traveling, and retailers being closed, one thing that remains certain is that people will continue to have the need to move. There are still folks transferring into town, buying their first home, buying investment properties, or realizing that it is time to upsize or downsize. While most people are working from home, there are many factors that are driving folks to use this time to make the move they’ve been thinking about.
In 2008, the housing downturn was created by a supply in-demand problem. Too many new houses, not enough buyers. Today, on the other hand, we have nearly half the amount of new construction and a shortage of available homes on the market. The proverbial “bubble” we kept hearing about in ‘08 is not something we are worrying about today. The economy we are entering is caused by an externally induced factor, similar to the economy after 9/11 or the .com bust.
The graph below shows what happened during the past five recessions. While we cannot fully predict the future… We do not have reason to believe that a “housing crisis” will be on our hands. Real Estate is hyper-local, and we are basing our predictions off of the local numbers referenced above. What happens in the Richmond area might not be the case for New York City, which is important to keep in mind. For now, we continue to serve our clients through this and encourage you to not give up on this spring market if you were anticipating buying or selling this season. Interest rates are low and think of this as some “extra” time to be able to stay at home in what could be your new dream home.