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Covid Fatigue
- By Leonard Steinberg
- Posted
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What is worse in real estate than a market where buyers feel prices are too high and don't raise their bids and sellers think prices are not high enough and are not willing to negotiate? Gridlock markets are possibly the most frustrating for agents.....and the consumer.
In the past few years in numerous areas around the country negatively impacted by the SALT tax deduction limitation, many homeowners were simply unable to sell their large home with high real estate tax bills. The devaluation that happened by this gridlock - mostly in some suburbs - was astounding. It also put lives and planning on hold. New COVID-related demand re-awakened and unlocked these stagnant and de-valuing markets, a combination of new interest in larger homes outside of large cities as well as pricing that had become super-attractive....and much lower than three years before when the valuation decline began. There is one upside to gridlock: With far fewer actions/transactions, no clear pricing trends register. Unfortunately, the few transactions that do happen can often register large price declines and sway averages, something that drives valuation perceptions. This too can create demand. Like all gridlock moments, sooner or later they end too and after a period of gridlock, a wave of activity can be unleashed, mostly via perceived value.
Gridlock is frustrating for everyone: buyers, sellers, and agents. A free-flowing market with a healthy balance between buyer and seller expectations is the best kind, but very rare. So is gridlock good? I don't think so. Holding up people's lives is never a good thing in my humble opinion. Unfortunately, these gridlock markets do and will continue to happen....and then like all markets they too will unlock.
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DID YOU KNOW? In celebration of Pride Month, Robert will be chatting with the Executive Director of GLSEN Eliza Byard TODAY at 4pm ET and their conversation will be live-streamed in the Compass Workplace group. GLSEN is an organization recognized worldwide as a pioneering leader in the fight for educational equity and in making sure that LGBTQ students are able to learn and grow in a school environment free from bullying. Thank you to Elizabeth Ann Stribling-Kivlan, OUT at Compass and Compass Cares for pulling together this event!
DID YOU KNOW? Russian President Vladimir Putin now has a “disinfection tunnel” installed at one of his official residences to protect him from contracting the coronavirus. Could this become the next X-RAY machine we have become so accustomed to at airports?
DID YOU KNOW? Mortgage applications to purchase a home rose 4% last week from the previous week and were a remarkable 21% higher than a year ago, the 9th consecutive week of gains and the highest volume in more than 11 years! The average interest rate for a 30 year fixed-rate mortgage decreased to 3.30% from 3.38% (CNBC)
DID YOU KNOW? Retail sales, a measure of purchases at stores, at restaurants and online, increased a seasonally adjusted 17.7% in May from a month earlier. Expect more GOOD NEWS headlines like this over the next few weeks and months after weeks/months of bad headlines. While the higher you climb the further you can fall is true.....so too is it true that when you have fallen to a deep low, chances are it's up, up, up from there! (WSJ)
DID YOU KNOW? Builder sentiment jumped a striking 21 points in June to 58, the largest monthly increase ever in the National Association of Home Builders/Wells Fargo Housing Market Index. Any reading above 50 indicates a positive market. In April, it plunged a record 42 points to 30. Of the index’s three components, current sales conditions jumped 21 points to 63. Sales expectations in the next six months rose 22 points to 68. Buyer traffic more than doubled from May to June, from 22 to 43.
“The dollar is going to fall very, very sharply,” - Steven Roach, Yale University, citing growing debt and diminished savings. If this happens, could it spur a new wave of foreign buyers? Again, this is just one of many predictions/opinions.
DID YOU KNOW? The total of new COVID-19 cases from the top 5 states in the USA is 2.5X that of the next 5 states, to put things into perspective. The top 5 states have a total population of around 108 million, while the next five have almost 47 million people. So the top 5 have a ratio of 78.7 new cases per million inhabitants. The next 5 have 71.7 new cases per million inhabitants. A cheap and widely-used steroid called dexamethasone has become the first drug shown to be able to save lives among COVID-19 patients in what scientists said is a “major breakthrough” in the coronavirus pandemic.
DID YOU KNOW? Housing starts that measure how many single-family homes builders break ground on probably will fall to 770,000 this year, the lowest level since 2015, according to the NAR. The 1.47 million properties on the market at the end of April was the lowest ever recorded for the month, according to NAR data. Americans created 11.4 million households in the 10 years through 2019, according to Census data. Builders sold 5.2 million single-family homes in the same period. In the prior decade, they sold 10.4 million new houses. Supply disruptions and the COVID-19 lock downs that ensued have made the situation worse. (Housingwire)
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DID YOU KNOW? American biotech company Novavax has started the first human study of its experimental Coronavirus vaccine and expects initial results on safety and immune responses in July. Last week, Moderna reported positive development on its vaccine trial: all 45 participants had developed coronavirus antibodies. Merck plans to work alongside IAVI, a non-profit scientific research organization, to develop a potential vaccine against the Coronavirus. (CNBC)
DID YOU KNOW? Lumber prices for July delivery are up 46% from a low on April 1 and 15% higher than a year ago, indicating a rebound in construction demand. With trade tensions with China worsening, don't expect construction costs to go down: the exact opposite is possible. (WSJ)
DID YOU KNOW? Current cash levels are above a historical average dating back to 2005. Cash allocations have risen to nearly 14% for Bank of America clients. Over $1 Trillion could enter the markets soon..... the S&P 500 is up more than 35% since March 23. (CNBC)
DID YOU KNOW? French GDP fell 5.8% in the three months to March, while Italy’s GDP contracted by 4.7%. In the previous quarter, their GDP fell by 0.1% and 0.3% respectively. GDP in Germany and the U.K. was down by around 2%, with GDP for the entire European Union shrinking by 3.3%. U.S. GDP fell by 1.2% in the first quarter, compared to 0.5% in the previous quarter. The second quarter could be as bad, if not worse as shutdowns extended. The World Bank has forecast a worldwide GDP contraction of 5% this year.....although I think we should always judge a year at the END of the year! After a big fall.....expect big rises! I am optimistic! (CNBC)
DID YOU KNOW? Mortgage availability has tightened sharply as lenders impose tougher income, credit-score and down-payment conditions and drop some loan types altogether, such as home-equity lines of credit. If you have any clients seeking to buy now or over the next few months, be certain to evaluate their credit scores early and connect them with a 'credit clean-up' consultant ASAP to improve their score.but a strong credit score alone may not be enough, so pre-approving buyers early may be more important now than ever. JP Morgan Chase said it wouldn’t make loans without a 20% down payment or a credit score of 700 or above. Wells Fargo stopped allowing cash-out refinancing loans. (WSJ)
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