Corona-Virus and US real estate what to belive?

The lowest mortgage rates on record are colliding with the prospect of an economic downturn prompted by the coronavirus outbreak, setting the stage for an unpredictable spring selling season in the housing market.

Early indications suggest that rock-bottom borrowing costs may not be enough to lure many home buyers amid the current uncertainty. Economists are tamping down earlier expectations that cheap rates and a strong job market would boost the housing market in 2020 following years of sluggish growth.

As the expanding coronavirus outbreak slows economic activity, roiling markets around the world, there’s a 60% chance of the U.S. economy going into a recession this year, said Mark Zandi, a chief economist at Moody’s Analytics. That economic disruption would batter the housing market despite record-low mortgage rates.

“Housing is being buffeted by two gale forces moving in opposite directions,” Zandi said, referring to low rates and virus-fueled economic turmoil. “The question is, what’s the end result of all that? In all likelihood, the recession will trump the lower rates.”

The virus arrived just in time for the housing market’s key season, which was shaping up to be one of the strongest in years. An unusually warm winter brought buyers out early to take advantage of the low rates and they’ve had to battle for listings that are more scarce than ever

When purchase application data adjusting to population hit an all-time low in 2014, we still have over 5,400,000 total home sales and new and existing homes. When rates were as high as 4.75%-5% we didn’t see a collapse in homes sales.

In fact, existing home sales only lost 170,000 in sales year over year. Today, we are in a much better place than in 2014 in terms of demographic demand and more people working. Rates, even at 4%, are still relatively low and purchase application data is at cycle highs with seven straight weeks of double-digit growth. 

However, if people are in fear, you have no idea how the public will act like. None of us foresaw that the hoarding of toilet paper was going to be a story in 2020. Even with low rates, we simply don’t know the scale of what home buyers or sellers will think with this historic horrific event in the short term.

...