Faced with the economic uncertainty caused by Covid-19, it’s important to look at historical data to understand why today’s situation is extremely different than anything we have experienced before.
Honestly, there is much that remains unknown at this time. While the financial market moves in response to the coronavirus outbreak have been reminiscent of the global financial crisis, today’s situation is extremely different.
This Is Different Than 2008, This Is A Health Crisis Not A Financial Crisis Housing played a key role in causing the recession that occurred in 2008.. According to the Financial Times, “debt was at the center of the issue as banks, without restraint, offered subprime mortgages to countless Americans who were in no position to take them on. The banks doubled down by packaging them into mortgage-backed securities to sell to other institutions. After the housing bubble burst and Americans could no longer pay mortgages, the banks were left holding the bag.” Today’s market is not the result of the structural collapse of a financial system, but rather a time-limited health crisis we will overcome. Each one of our markets is in just as much high-demand as it was before this began. This is an important point to keep in mind as it’s highly probable that whenever this passes, the economy will recover quickly.
Recession Does Not Equal Housing Crisis. From a historical perspective, of the last five recessions in U.S. history, three of them saw increases in housing prices. Two of those three saw prices appreciate faster than the historical average.
There are Opportunities Now. There are buyers and sellers in every market. With the Fed reducing rates to stimulate the economy and the Government pouring money into the economy to offset the closing of businesses, there could be a strong rebound and inflationary pressure when the Coronavirus has run its course. While rates remain low, and people are looking for stable investment opportunities, now is still a great time to purchase.
The Business of Real Estate Continues to Move Forward. Pacific Sotheby’s International Realty and our affiliates in Mortgage, Title, Escrow, Appraisal, and Recording are all OPEN for business. We have secure technologies in place to support our clients through the entire transaction process.