It is too early to know the full impact on the economy as the figures are pulled on an annual basis.
However, looking at the chart above regarding the duration of the past recessions the prior recessions, have lasted anywhere from 8 to 25 months.
This one is a bit different than any of the prior recessions as we all take part in physical distancing measures. What is different this go-around is that homeowners are reluctant to list their homes, and unmotivated buyers are more reluctant to view/ the homes out on the market. With the reduction in supply, we are noticing that the motivated buyers are jumping on the new listings that are coming out. This past week there have been multiple, multiple offers for homes that have been priced well and show well.
BCREA has offered some insight in comparison to the last recessions and offer their input predictions of what to expect and input from the past recessions.
The Summary of the Findings:
• The 2020 COVID-19 driven recession will be deep, though the duration may be shorter than past recessions
• We expect that home sales will post an initial sharp decline as households and the real estate sector adhere to social distancing
• As measures implemented to mitigate the spread of COVID-19 are gradually lifted, we expect that low-interest rates and pent-up demand will translate to a significant recovery in home sales and prices
Observing these findings, it appears the economists are expecting the decline to last months and not years. It is still early and we don't know the full impact and how long we will be socially isolating for. The one thing we do know is this recession was not caused by multiple bad business decisions,
Statistically speaking from the past over the long run the housing markets will rebound. People (me included) would love to be able to try and time the market, we don't want to buy now with the fear of the market going down, sellers don't want to give away there home. Timing the market can be dangerous, we never know where the bottom or top of the market was until it is too late and it has already past us. This market we are currently in is shifting into a buyers market for the buyers that have not been affected by job loss.
If you are buying a home for your personal residence, think longterm and where the market will be when you go to sell 5,10,15 years from now, buy smart and don't try to time the market if you find a good place that checks all the boxes take a shot at it, it might not be around for long and you don't know how motivated the seller is unless you make an offer. You might be able to buy today for less than the house was last month or last year, take that as a win.
If you are thinking about selling and buying in the same market, the trade-off tends to benefit homeowners looking to move up in the market place. If the market comes down 10%. What you can sell your home for decreased from $550,000 to $500,000 but when you look to buy the home was previously valued at $770,000 is now $700,000 you actually end up saving $20,000 in value. If you are making a lateral move the market conditions are somewhat irrelevant depending on "mini-markets". Downsizers tend to benefit less in this market, however, it could depend on "mini-markets" if you are moving from a house to a condo there could additional advantages and disadvantages.
If your thinking about staying put for a while, this is also a good time too look at mortgages and see if you can get a lower rate.
I hope everyone is staying healthy! Reach out if you have any questions or if there is anything I can do for you.
Have a great week!