By Jason Holtman
Wow! What a crazy time to be alive! So many unknowns and uncertainty, it’s difficult to put this all down on paper. The novel coronavirus (COVID-19) has definitely shifted my thoughts on this article.
For the past five years or so we have been talking a lot about low inventory and what it means. Housing analysts view a market as balanced when there are six months of available supply. Wisconsin dropped to just 3.4 months of supply in February. At the same time, Wisconsin set a new winter home sales record with sales topping 14,000 for the first time, according to an analysis of existing home sales by the Wisconsin REALTORS® Association (WRA), which is crazy.
According to the WRA, low inventories pushed prices up more than three times the rate of inflation this winter. Affordability remains strong, primarily due to a fall in mortgage rates, which is why there are so many buyers out there. “Mortgage rates have fallen to near record levels, which is good for affordability,” said WRA President & CEO, Michael Theo.
With that said, we are now starting to hear about the possible recession nearing. The initial effects of the Coronavirus may have pushed the start of the recession earlier than expected, but a recession was inevitable if you look throughout history. What does this mean for your home values and the market? “I don’t expect the slowdown to be like the last recession where prices fell,” says realtor.com® Chief Economist Danielle Hale. “There are more than enough buyers out there to keep home sales from slowing in any major way.”
Bottom line, the effects of the virus on the economy have been substantial and quick, and there are certainly many unknowns moving forward. Uncertainty aside, the housing market and home values do remain strong.