What To Expect From The Ann Arbor Market Once The Economy Opens
Since March 23rd it has not been possible for a home buyer to physically view homes or for real estate agents to go into clients’ homes for any reason. Effective Thursday, May 8th, real estate agents, home buyers, and sellers can get back to work. The question that remains is – what will the real estate market look like?
Prior to COVOD-19, We were setting up for a record year with an early and strong start to the spring selling season. Now, as parts of the economy begin to start up again, it remains to be seen how the housing market will be affected. Here is how we see things playing out.
Our Early Predictions.
Inventory will get even tighter.
While there will be a flurry of new listings in May as delayed listings hit the market, many sellers may decide not to sell this spring. With the risk of new waves of COVID-19, they may decide to wait it out for a safer time. An already tight market will continue to be tight especially in the lower price points.
Low-Interest Rates Will Prevail.
There are no signs that interest rates will rise as a result of COVID-19, so these are still golden times for financing a home purchase will continue.
There will be Reduced Buying Power.
Some buyers will be pushed out of the market altogether, some will choose to wait, and others will be pushed out of higher-priced markets due to financial strain as a result of COVID-19.
Prices May Decrease.
…. But don’t expect a fire sale. Especially in markets like Ann Arbor, there are people that NEED to move. Even during the stay at home order, we received lots of buyer inquiries and demand remained strong. We expect this to continue, with more buyer caution, however.
Once buyers see good homes getting snapped up quickly, their appetite for making strong offers will come back, and buyer demand will stay strong as a result.
Demographic Factors Will Continue To Effect The Market.
Millennials and Baby Boomers need to make moves. Millennials are now in their prime home-buying years and the nation’s largest generation. Baby Boomers are at the age where downsizing, single-level living, and warmer climates are driving a need to move. While COVID-19 may affect economic factors for individuals in these groups, the Millennials and Baby Boomers will be driving the market with strong demand.
The Recovery May Be Slow.
Some industries will not open up as quickly and when they do they will recover slowly, taking hits that will affect the whole economy. Think about the airline, restaurant, and tourism industries, as well as businesses in towns where universities may not welcome students back this coming fall.
People affected in these industries won’t likely be making a move this year, and since the longterm effects of COVID-19 are still unknown, it is hard to say what our economy will look like this summer and into the fall.
Ann Arbor Is Resilient.
The Ann Arbor area is on the right side of nearly all socio-economic trends and provides jobs in resilient markets such as healthcare, tech, and university. The potential for the university to not reopen, or at least not fully reopen, this fall will undoubtedly affect local business, but there are still medical professionals and tech jobs that are being filled every day.
Having sold real estate in Ann Arbor during the great recession, I witnessed first hand how resilient our economy is and am hopeful that we will weather this latest storm as well.
Our Recommendations For Buyers and Sellers:
Don’t wait to get your house on the market.
After May 8th, there will be pent up demand for good houses that buyers will scoop up quickly. These deals will likely close by the end of June and, due to the unsure nature of what will happen with Coronavirus numbers this fall, if you wait too long into the summer to list your home, you may find that it will sit through the winter.
Hire An Agent With Knowledge And Access To Technology.
Hire an agent that has the tools available to streamline the buy/sell process. Deals that have been closing during the stay at home order have done so almost 100% virtually. Inspections, appraisals, and even closings can be done using virtual tools that minimize the number of individuals that are together in an enclosed space at one time.
Even though the stay at home order is set to lift on the 15th, we expect social distancing measures (that include limits on gatherings of greater than 10-people) to persist for some time.
Agents that use cutting edge technology effectively provide a great advantage to both buyers and sellers. Expect your agent to use technology to communicate and negotiate your real estate transaction effectively from anywhere in the world.
Condition Is More Important Than Ever.
Homebuyers will be making purchase decisions based on virtual walkthroughs and more homes will be purchased without the buyer visiting until after a contract has been bottom-lined. Some won’t visit until after inspections have been completed.
Homes with little guesswork as to the condition will sell quickly, for the best price and with fewer fall-throughs. Condition conveys confidence to the buyer which translates into higher prices for sellers.
React Quickly to Market Changes.
Market conditions are changing at breathtaking speed and successfully buying or selling a home now requires a quick reaction to market changes. With such a huge economic swing and unknown social factors, the market will be in a constant state of adjustment. Work with an experienced agent that can interpret the market and prepare a rational and systematic strategy to achieve your real estate goals.
If you have more questions about the market or about real estate opening up this week, contact us!