With the world and the country in the grips of a pandemic not seen before in our lifetime, we thought it would be best to try and answer some questions regarding the COVID-19/Coronavirus issues when it comes to the real estate market here in Northern Arizona.
How The Pandemic Will Affect The Housing Market
We have had a lot of people ask us the past few weeks how this pandemic will affect the housing market in Flagstaff. Like everyone else in the country we are taking it day by day, as it is constantly changing. With us being under quarantine here for the last three weeks and the CARE act just getting passed a week ago we are still trying to sift through the information that the stimulus package entails. The housing market still has a low inventory here in town, but with spring here and the warmer weather ramping up, this is when, in any normal year, the busy season would begin. However, this year is not normal. With the virus spreading and social distancing in effect, the market is in a gray zone. If you are looking to sell your primary residence and move to another area, there may be challenges because of a lack of employment and an uncertain time frame as to when this pandemic will be over. There are still lots of second homes on the market that are being shown and going under contract, but most agents are using safety precautions before, after, and during showings. For example, the use of masks in public, as well as gloves and disinfecting wipes, are the new norm. It seems in the short-term the virus is and will continue to affect the number of homes listed, as well as the number of buyers willing to buy and move during uncertain times.
Buying A Home During The Recession
Another question that people have asked is whether buying during a recession is a good time to buy? The answer is greatly dependent on your financial situation, as the prices of some homes may be lower and the sellers may be more ready to sell as soon as possible to recoup capital lost during a recession. This is, however, a hypothetical question. We are in uneasy times with record unemployment and the economy at a standstill, but we cannot forecast what will happen three, six, or nine months down the road. If you are in a situation during a recession to purchase and have the means to do the work needed to fix/update homes, then the market is open to you.
If you are considering purchasing right now you are likely considering getting a loan. The mortgage rates are all over the place right now and a lot of loan programs are going away. Rates are still at historic lows, but a buyer may need to pay points to obtain the lower interest rate. It is important to have a good lender in your corner who is tracking everything as they change day today. If a program or a rate isn’t available today that may not be the case tomorrow.
Will Housing Prices Drop?
During this quarantine, we have read many articles on whether housing prices are dropping. In our current market, the answer is no, as we still live in a very desirable area with so many great things to offer such as quick access to the hiking trails to get some fresh air during this time of social distancing. Our continued low inventory levels are keeping prices high. The answer to this question is constantly changing just like the news we hear day today, and we would recommend that you stay on top of the information coming out on a weekly basis concerning everything as we are so connected in so many aspects of life.
The virus has affected all of us in many different ways, and one of these is in the rental market i.e. VRBO, Air Band B, short-term and long-term rentals. Here in Arizona, Governor Ducey instituted an executive order stating that you cannot evict a tenant for 120 days for failure to pay rent. This does not mean rent is not due, as most homeowners who own homes and rent them out still have a mortgage every month, and if these loans are not federally backed by Fannie Mae or Freddie Mac they are still due every month. We would recommend that all tenants reach out to their property manager if they have not already opened that line of communication, to see if there is any opportunity for rent deferment or modified rent payments. Regarding the short-term rental markets like Air B and B and VRBO, they are the most affected by COVID-19. The owners rely on that income on a month-to-month basis. With travel restrictions and social distancing in effect, these properties are mainly sitting empty. There are some heart-warming stories circulating about how homeowners are helping medical professionals who are on quarantine from their families to stay in these short-term rentals to help prevent the spread. This is one more thing that we will have to wait and see about, what happens May 1st, and moving forward into the summer as most families are not working and staying home.
In conclusion during these unprecedented times, and we think the best plan of action is to be patient. We know this is hard for many out there, but it is in all of our best interest to stay at home and stop the spread to try and get back to normal as soon as possible. We here at the Elite Team want to extend our thoughts and well wishes to everyone out there who are missing their families too! If you have any questions regarding real estate here in Flagstaff, we are here to help!