lasteele

Is the market dead for now?

We have a new condo being built, and our home went on the market last week. The first week we had multiple showings daily. Our realtor thought we'd have an offer on the weekend, and then the person/couple abruptly pulled back from buying a house now. There is another couple who are interested, but otherwise, the market seems to have gone dead. In fairness, the state is pretty well shut down, although our realtor says houses are still being listed and going to pending status. Our Midwest area has been a seller's market for a while. My concern is owning two houses (via a bridge loan) in this economy, which I am presuming will only worsen for a while. Is anyone seeing market action near them continue?

Comments (73)

  • worthy

    Works for lap dances too. (So I've heard!)

  • function_first

    in the same boat here. we were trying to not move twice. we went ahead and listed this week as planned and have had 10 showings so far, two more happening today, one tomorrow. Seems people are still looking.

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  • Just Me (Zone 6a)

    @function_first Good luck! I'm sure there are lots of us in the same boat.

  • jill302

    Within the last few days we had a friend accept an offer on a condo and make an offer on a house. Have not heard yet if the offer was accepted. That said our friend found this house before we had the “stay home” order. We are in So Cal. I think this will really slow our market down

  • L L

    My brother and I listed my mom's house the first week of March, before everyone began to quarantine. My mom passed in December and I had an urge to put the house up quickly because I was feeling uneasy about the market. Her house is in a very desirable area and we were prepared for an easy sale.

    The first weekend there were open houses, many people and a couple said they were going to submit offers. Then all the stay at home orders started and now it's been silence, of course. We're hoping to wait it out and hopefully be able to sell after things are ok again.

  • opaone

    This pandemic is probably most like the 1918 Spanish Flu. Though possibly/likely fewer deaths. The 1918 Spanish Flu was followed by the roaring 20's.

  • bry911

    This pandemic is probably most like the 1918 Spanish Flu. Though possibly/likely fewer deaths. The 1918 Spanish Flu was followed by the roaring 20's.

    Uhmm no it isn't. First, our economy is a completely different beast now than it was then.

    Next, the Spanish flu was followed by two recessions before we could restart the economy. The 1918 - 1919 and 1920 - 1921 recessions were pretty devastating but largely overshadowed by the Great Depression. The 1920 deflation was the largest single year deflation in U.S. history, prices dropped by almost 40%.

    I work with some premiere labor economists and they have no idea what is going to happen. There are simply too many unknowns right now to even pretend to project the future. The length this lasts, the government response and relief efforts, whether or not it changes consumer spending, etc.

    There is a lot of evidence that epidemics like these curb discretionary spending and slow down the economy. If we spend months in fear of the this virus the lasting effect could mean a significant shift in consumer demand. We might have drastic increases in liquidity as demand for luxury goods dives. Or it could go the other way. We really just don't know.

  • DLM2000-GW

    I agree - the unknowns are too significant to make any real predictions. But bry - do you really think with the unemployment picture there will be any liquidity (and pent up demand that can be addressed) outside of the very wealthy? My fear - because I operate on a glass half empty - is we are in for a long slow recovery and we will have a huge segment of our population left behind - again, and even more extreme than what we have now. My libertarian son goes even further in his dire predictions but I can't dwell on that.

  • worthy

    our economy is a completely different beast now than it was the

    Hey, just hoping for the best!

    I've been well aware of the 1920-21 forgotten sharp quick recession before the rise of Keynesian-based central bank money printing.

    On the economic front, this could well be different. Hard money Austrians such as Reagan budget director David Stockman have been predicting the worst for a long time.

    But if social distancing flattens the curve, treatments are ready in a few months, and effective vaccines by next influenza season, a different story perhaps.

    Each time Washington opens the taps, the stock market dives again. "Free money" that fuels real estate speculation may not spell economic salvation.

    ****



    But north of the border, the US still looks like a safe haven. The C$ is now flirting with its all time low vs. the Yankee dollar--US$1 buys you C$1.44-C$1.46, up from C$1.28 just a couple of months ago.

    ****

    Boy, is this getting distant from "shiny chrome" or "polished brass"!

  • ulisdone

    And then there is the $1+ Quadrillion in Derivatives held by the big banks...

  • bry911

    "But bry - do you really think with the unemployment picture there will be any liquidity (and pent up demand that can be addressed) outside of the very wealthy?"

    People, even the wealthy, don't have liquidity now. I am saying that incidents like this can fundamentally shift a society's economics. It can cause changes in risk appetite which lead to different values.

    So any prognosis is based on some assumption that could itself be completely wrong. Put simply a roadmap is a great tool when you know where you are. It is worthless without knowing where you are now. We have no idea where we will be when we get to the other side of this.

  • whaas_5a

    Lack of planning by the government and pure fear sent the market into a downward spiral.


    If we as a whole continue to let fear take control we will be in for a multi year recession.


    “If we spend months in fear of the this virus the lasting effect could mean a significant shift in consumer demand. “


    This is why we need leadership in all facets to step up - including all of us. Do your part - be safe be smart but don’t sit back in fear.


    Just me, if your are financially stable do your part. Sell your house and build that condo.

  • Just Me (Zone 6a)

    @whaas_5a Believe me, that's just what I want to do. And FWIW, I feel a lot less financially stable in the last few weeks watching my retirement accounts. I had no fears of a bridge loan in November. Now, I REALLY want to sell first.

  • jmm1837

    The problem is that not that many people are actually really stable financially these days. Mortgages, car loans, credit card debt, limited savings - most people don't have a big financial cushion for hard times. And now, with dividends plummeting, small businesses nearing collapse, and large ones laying off staff or cutting back hours, there are a lot of people right on the edge. Like it or not, the economy as a whole is going to take a massive hit and we have no idea what sort of world we'll be looking at in six months.

  • lafdr

    I know 2 people who closed on houses this week. But showings may be stopped as the corona virus spreads.

  • opaone

    It's easy to predict doom and gloom and many people revel in doing so. Reality is rarely as bad as predictions. It's wise to plan for bad times (have sufficient savings/liquidity, don't get overextended with credit, etc.) but almost always unwise to make rash decisions expecting them.

    Right now with all of the uncertainty is not a good time to make decisions or make financial moves if you can avoid it. Stick with wherever you were at a week ago and see how things in the coming weeks and months shake out. Doing otherwise could lead to a lot of sorrow.

    Going in to this the US economy was doing extremely well. It was due for a minor correction and there were some signs of that coming but what was expected is a long way from a recession or sustained recession. Yes, a deep and sustained recession is possible after this, but not probable unless this level of shutdown lasts for at least several more months.

    To the OP's question, the market is certainly slowed for now but doesn't appear at all dead. If we come out of lockdown in the next few weeks then my guess is that most of the people who were looking for a new home and likely a few others will jump back in and given the now shortened season we could well see a more robust market.

  • bry911

    I am just going to copy most of my response to you from the other thread where you also posted an optimistic prediction...


    If you need to believe that everything will be fine when we come out the other side, that is great and I encourage it. However, never put your heart between your wallet and your brain.

    To believe that we are going to come out of this in the same position we were when we went into it, is crazy. To believe that demand for equity over liquidity is going to be high when the entire country just found out how precious liquidity is, is way more than optimistic. When this ends it is going to take months before people start spending money on things like houses. If I were gambling on housing markets right now I would invest in rental property because that is going to be a high demand market on the other side of this.

    Your best bet right now is to wait. Interest rates are going to stay low because low interest rates and purchase incentives are the only ways we have to jump start housing and it is going to need a jump start. I bet you a phenomenal number of pendings have suddenly come back on the market all over the country and there are not going to be showings. Sellers who believed their house was going to sell fast are now facing the reality of no showings at all and a lot of uncertainty. House prices are going to fall before this is over. They may come back up in a year or two, but they are going down.

    ----

    The housing market doesn't die. People are always willing to buy, just not at the price other people can afford to sell. When equity markets collapse, all equity markets collapse. It isn't like the stock market dies and the housing market flourishes.

  • jay06

    I'm curious if the Covid situation will immediately affect pricing and would like to hear from others in that listing stage right now. As I mentioned before, our buyers just backed out two weeks before we were supposed to close and we're in the early stages of building a new place to be finished in August. In February, they offered our full price after one showing--$449,900--before we actually went live on the MLS. We now need to consult with our agent on marketing strategy--when to re-list and at what price. Currently, she's advising to go with the same price and I'm in cautious agreement to maintain some sort of confidence. We last sold and bought in 2016, losing $127,000 on our place purchased in 2007 (thankfully, not underwater). Seeing the value rise nicely on our current place, we decided to sell again now, thinking we'd recoup some of those losses, which we would have until our buyers pulled out. What are the opinions here? Maintain pricing levels pre-Covid? Drop them?

  • chocolatebunny123

    Not a pro, but I have a friend that works in real estate and we've talked about this quite a bit.


    My state in under a shelter in place order, but real estate firms have not been ordered to close. Her firm was very busy (as this is the peak season for listing) up until about a week ago. They are holding off on any new listings for now unless the owners have to move for something like a job transfer.


    I watch what is going on in my area (because I've been wanting to move for ages) and houses that have been listed for a while are drastically reducing their prices. I've also noticed some being pulled off the market right now. My non-expert opinion is that people that need to sell are doing anything they can to try to.

  • Just Me (Zone 6a)

    @jay06 Not sure of your market, but around us there is a shortage of housing. If you had a full price offer that quickly, I would try for that price again, especially if you are planning to wait a bit before re-listing. You can always drop it, but you can't raise it. Just my two cents.

  • jay06

    @Just Me (Zone 6a) Thanks for the encouragement. We've also been told there's a shortage of housing in our area, a suburb of Chicago. And we'd like to do our part in not panicking (yet), unlike our former #%*+@! buyers. :-)

  • bry911

    The Dow futures market opens at 6pm on Sundays, it hit the 5% limit down in well under an hour, (I heard it took just a few minutes).

    I don't believe your former buyers were panicking, from all present indicators we are headed for the swirly water in the porcelain bowl. If there is any way I could get out of a home purchase right now I would. Things will get better, this will not last forever, but I assure you the rate of ascent will not match the rate of descent.

  • DLM2000-GW

    The Dow futures market opens at 6pm on Sundays, it hit the 5% limit down in well under an hour, (I heard it took just a few minutes)..... Things will get better, this will not last forever, but I assure you the rate of ascent will not match the rate of descent.

    Ugh. Trying to stick to the recommendation to only look at investments 2x/year and I already had the first look in early Feb. Don't want to look now.

    I can't imagine the stress and uncertainty people must feel surrounding home building, selling or purchasing. A few weeks ago we were car browsing. That came to a screeching halt, don't even want to venture into a purchase of that size let alone a house. But the dealers we visited have all contacted us with 'deals' - some are even bold enough to call them corona deals 🙄. Businesses are hurting and sadly many will not be able to weather this storm - that includes builders.

  • scout

    I agree with bry911. If there is a prolonged time period to a treatment or vaccine, and I think there will be, my fear is people will hoard cash when this is over. If people hoard cash during the recovery, the recovery will be slower as people are not purchasing goods and services. I think employment will improve though as people will still need basic goods and services, but maybe not luxury goods. If the banks can keep the interest rates low, it will help the housing market, but they have not been as low lately apparently due to the increased demand for refinancing. I am very fearful that it will be a protracted time period before we are out of isolation and this will have detrimental effects on the economy. I fear housing prices will drop, like they did in 08. I am trying to refinance now before they do before my house will appraises for less than the loan.

  • Just Me (Zone 6a)

    Well, I'm sure real estate isn't going to be on the essential business list, so that means it's all on hold until mid-April. Suspect that builders will be in the same boat, but who knows? Crazy, crazy.

  • jmm1837

    I suspect things are going to be " on hold" a lot longer than a month. Here in Australia, the government is expecting many of the restrictive measures in place to last for six months, because that's how long they expect it will take to control the virus. I think a lot of people are seeing this as a mere "blip" and underestimating what its really going to cost us all.

  • jay06

    In Illinois, Realtors actually have been put on the essential business list. However, our agent tells us no one is currently looking since most others are under a stay-at-home directive, so it's pretty much on hold anyway. Residential construction is also continuing around us, with a full complement of contractors currently parked at a new build we can see from our house. It will be interesting to see how government leaders deal with the current health restrictions vs. the economic impact they have. It's a political hot potato.

  • Just Me (Zone 6a)

    @jay06 We haven't heard about builders either way yet, but our shutdown is new today. So time will tell. Showings have basically stopped, which is not surprising. Even if they're considered essential, I don't think most people are going to move forward.

  • Just Me (Zone 6a)

    @jmm1837 You're probably right. They're probably overly optimistic in these restrictions in hopes of keeping people sane. I see them extended more than once if I'm honest.

  • 5iveminutesorless !

    In our little city in Texas, in a lockdown order, our home and commercial construction continues...they fall under critical infrastructures. This is the case for most states with SIP order...matter of fact today we saw so many construction workers working...

  • Just Me (Zone 6a)

    @5iveminutesorless ! Our builder is only working on homes that need to be enclosed (walls, roof, etc.) to protect their investment per their email. There aren't any HVAC, plumbers or electricians working on site, and I know there aren't any inspections being done. So they're essentially on hold.

  • Trish Walter

    In Indiana, construction and real estate are considered 'essential' which is good news for my hubby [land developer] and our house. so far it's slow going but still moving... not sure what will happen in next few weeks.


  • btydrvn

    In general if you have legal worries i would consult a lawyer...opinions are information sifted thru personal experiences...and informative perhaps to learn more questions to ask...but you need legal advice to protect yourself ..the sooner the better...

    Just Me (Zone 6a) thanked btydrvn
  • A S

    In our area most renovations and in particular renovations in condo buildings are cancelled. Strattas are shutting it down. My brother is a project manager for a custom build firm and they are working but with such tight guidelines it’s very slow.

    Real estate seems to magically still be unfolding though. People are buying and selling.

    We just easily found new tenants for our rentals suite too.

    I think this is just the start of full shut down in my area though so I suspect a couple of weeks from now will be very different

  • keith Dcil

    Short answer is no: the market is not dead, yet. In my area building is classified as an essential industry and construction work continues. The problem is permits are only being issued if they were already in process and few on-site inspections can be scheduled. The permit offices are closed to the public and are working only online. Builders are shifting staff to any work that can be done without permits and are holding back on spec homes. Sales offices are saying completed inventory homes from ultra luxury to starter condos are selling... but they expect an April /May slowdown when inventory runs out- which will hurt because spring is a busy selling season in this area. A couple of my market areas are resort 2nd home markets and they are effectively shut down for now because their customers are not traveling . National publicly traded builders ( my clients) have the resources to ride this out but smaller builders will have a tougher time. The question is will there be pent up demand when this is over and if so, will the resale market benefit from the lack of new-home inventory this selling season. Even further ahead, Another question will be whether this virus will cause a resurgence in demand for new homes in the farther out exurban areas. With more people/companies forced to try/allow teleworking and schooling their kids from home living farther away is now a possibility when long commutes and school systems are no longer factors. This could help the country’s affordability crisis.

  • function_first

    FWIW, our house went on the market last Wednesday. We had 15 showings over 5 days (no open house) and by Sunday we had 2 offers. both over asking. I think that speaks to the low inventory we've had all year, though. So, it might be different in other areas.

  • Just Me (Zone 6a)

    @function_first That’s great news for you! Can you share the general area you live in? This really seems to vary by region.

  • function_first

    Thank you, Just Me. In metro Boston area.

  • Stax

    In tomorrow's Real Estate Section of The Washington Post it has its annual Market Assessment for the DC area. While it acknowledges uncertainty, it certainly does not reflect the nay saying doomsday predictions some are presenting here in this thread. Indeed, the market remains robust here.

  • bry911

    I said what I wanted to say in this thread, and so I am hesitant to post again, but feel under the circumstances I need to clarify my advice and position.

    Last week 2.5% of full time workers filed for unemployment benefits. It is naive to believe that is the end of unemployment applications and it may not even be the worst week. I don't know, the virus knows, and it hasn't been kind enough to let me know its plans. I promise you that the housing market will be affected by unemployment, how much depends on things that no one can know right now. Including someone who does a real estate market assessment for the D.C. area.

    However, as a financial professional I will stand by one piece of advice as absolutely correct. Hope that the market comes back fast and easy, but plan for it not to. You shouldn't stop living your life but you should certainly plan more conservatively. For example, I typically move before I list my previous home, I would have no problem listing a house in this market but I wouldn't buy a house before I sold my current home in this market.

    So if a move is in your future you should plan on a significant struggle to sell your home. If you don't have that struggle, then that is great for you. However, if your plans depend things remaining the same and it doesn't pan out that way it can be devastating. I would also advise against transitional buying right now. If your life strategy depends on your house appreciating over the next five years, I would rethink that strategy, it could happen but there is a very real possibility that it will not.

    In closing, let me modify my previous comments. The market is not going to die. I believe the market is going to move strongly to a buyer's market. However, if you are looking at your home and making future plans based on the market, your safest bet is to assume it is dead for now.

  • Stax

    Saying it over and over does not make it correct. I make no predictions, however I do not blindly accept the predictions seemingly based on speculation being frequently espoused here.

    You need to read the article before representing the contents as some form of fake news.

  • A S

    There will absolutely be impacts to the market. Just because we haven’t seen them yet doesn’t mean they aren’t coming. This is very early days and we will see issues down the road. Anyone buying/selling right now likely had that plan in place before the pandemic happened. What will be interesting will be watching the rest of spring, summer and fall unfold.

  • bry911

    You need to read the article before representing the contents as some form of fake news.

    I didn't say it was fake news. All economic models are based on assumptions. No economic model is better than the assumption it is based on. A better way of saying it is all economic models are correct if the assumptions they are based on are correct.

    We don't know what the economy and consumer spending is going to look like on the other side of this.

    Here if you want a second opinion try http://gregmankiw.blogspot.com/2020/03/thoughts-on-pandemic.html Or if you lean towards the other side look to Krugman. Every prominent economist on the planet is saying the same thing (The Austrian school and the Keynesians are even in agreement). They and I, could all be wrong, but if if you are looking for a horse to back, I suggest the guys who are preeminent economists over the writer for the Washington Post. NOT that a dark horse can't win, so it is your money, do what you want.

  • scout

    I’m with bry9111 on this. The largest stimulus package in US history was just passed. And there is more to come. We are facing an unprecedented crisis in modern history which will no doubt have lasting repercussions. I’m hopeful that eventually the market, jobs, and economy will all rebound. But until there’s direct evidence of medical advancements or innovative ways to open our markets back up and get people back to work, I’m preparing for the worse, albeit hopefully short term.

  • chispa

    I just heard from a realtor friend that Real Estate got listed as an essential service, at least for LA county, not sure if it is statewide. Housing is such a big part of the Southern CA economy, that there was no way they would shut it down completely. Agents in my area are using more photos, video tours and private/single showings using masks/gloves/disinfectant and whatever else the buyers/sellers request. No open houses.

    There were several new listings in my area the last few days, so it seems many sellers are sticking to whatever plan/schedule they had in motion before coronavirus.

    I think many buyers are on "pause" right now just waiting to see what happens over the next few weeks.

  • 5iveminutesorless !

    Whatever the case maybe, we just want our builder to finish our house lol...we are almost done with framing/boarding...all utilities are now on site..we shall see. I'm thinking plumbers and electricians are still working, I see their vans out and about, if anything they need work to survive this pandemic.

  • worthy

    It will be informative to see the March re-sale home stats and how they vary by region.

    Looking at our market, the third largest city in the US/Canada, I'm wondering, "what virus"?

    1 March-31 March sales in main part of central, mid and north Toronto

    Well-priced properties in the core are selling, often above realistic asking prices. Let alone by buyers playing the old-time real estate agent game of "list low and try for an auction."

    As the pandemic lengthens, and the Province extends the duration and restrictions of the Emergency--real estate sales still "essential"--I wonder how long this will continue?

    Our private equity mortgage business is on hold. Investors are unwilling to extend credit to sub-par borrowers now that evictions, even the filing or hearing of same--indeed, the Courts themselves--are on indefinite suspension.

    Across the country, the Big Six banks have agreed to payment postponements on more than 213,000 mortgages. (US residents: multiply by 10 to understand the impact.) Unemployment is currently estimated at 10%, rising to as much as 15% by the third quarter, according to the Parliamentary Budget Officer.

    Ottawa last week committed C$82 billion in salary supplements (Canada Emergency Response Benefits) for everyone laid off due to Covid-19 layoffs.

    More aid multi-billions promised since.

    Mount Everests of debt as far as the eye can see don't spell a booming housing market to me when the pandemic subsides. (But I'm no economist!)

  • mtpo

    I’m surprised that people are still showing their homes if they are still living in them. After several years of planning, we started building a new home right before any info regarding COVID-19 hit the news. We planned to sell our beach condo and use funds from that sale towards the new place. Exactly when it was time to put our beach place on the market, the mayor closed down the beaches and told tourists and those owning second homes at the beach to stay away! The R.E. agent we planned to use was cancelling scheduled open houses. He told us it didn’t make sense to list right now. Some of our beach neighbors that have their places on the market have dropped their prices so much they’ll be taking big losses. Looks like they are panicking. Maybe they are in financial trouble themselves and need to sell. We planned to sell our small city condo after we moved into our new home. That would have been nice as we could clear out before bringing the painters in. If we do that now, we‘d have to carry 3 mortgages (beach, city, new house) until something sells. However, we don’t want to list our city condo while living in it. We’re social distancing from our family and friends. It doesn’t make sense to avoid seeing our own kids and yet have RE agents and potential buyers tromping through when they could be carrying the virus. Would anyone really make an offer from just seeing a place online?


    When we talked to our banker about a mortgage on the new house, he said the banks are also panicking because until the banks start selling MBSs to the Feds, they are stuck holding all of the mortgages they’ve made in recent months and they are worried about liquidity. No one other than the Fed will buy up the mortgages(or MBSs). During these uncertain times, mortgages and MBSs are very risky investments. We think we’ll still be able to get a mortgage for the new house but this sure is not playing out as we planned! To make matters more confusing, we have no idea about when to apply for a mortgage because we have no idea when our builder will finish the new house. Guess we’ll apply pretty soon and hope for the best. Crazy, eh?

  • Denita

    We are working primarily with virtual showings at this time. The physical showings have almost, but not quite, come to a halt. There are still people that have to have a place to live and those buyers and tenants are being shown places physically - but it is rare and far between at the moment. I am in SE Florida where there is a lock down for the 4 counties Palm Beach, Broward, Miami-Dade and Monroe. When there is a physical showing it is typically a vacant property and everyone is practicing at least 6 ft social distancing. Plus many of us have disinfectant wipes, soap, paper towels and hand sanitizer. Today I am showing a property to someone who urgently needs a place to live and will be wearing a mask as well. Again, very few actual physical showings, mainly computer work and virtual showings.

    I've had sellers change their mind on listing their owner occupied places and I completely agree that bringing in people to see the property isn't appropriate at this time.

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