Anybody who tells you that they know what will happen to home values or numbers of sales over the next few months is probably deluding themselves.
Having said that, some economists have had a much better track record than others in this regard, and Lawrence Yun, who is the Chief Economist of the National Association of Realtors has made some interesting observations lately.
First of all, with regard to numbers of sales, as opposed to sale prices, For the full year of 2020, Lawrence Yun projects a 13.5% drop in home sales, compared to the 3% increase that was expected prior to the pandemic.
This is not too surprising, in my view. As soon as we entered the “Shelter in Place” phase, it became very difficult for buyers to visit homes for sale. Agents were initially relying on “virtual home showings” with video etc., and some buyers bought homes without ever visiting them. Significant numbers of sellers just took their homes off the market for a variety of reasons, and this resulted in a huge reduction in numbers of homes for sale. So unless this quickly moves in the other direction, a large reduction in numbers is very likely.
Now on to prices. On this subject, Lawrence Yun predicted that home values would not fall at all this year, but, “are likely to squeeze out a gain in 2020 to a new record high.” Yun said prices would increase 1.3% for the year, with local market variations. The upper end of the market, he noted, would see prices drop. Zillow also predicts that home prices will fall slightly – probably around 2-3% this year. To put things into perspective, home prices dropped more than 27% nationally during the Great Recession, from their peak in 2006 to the trough in 2012, according to the S&P Case-Shiller Indices.
All this is opinion, and national opinion at that. We always have to remember that real estate is local. My own observations show that there is a vast shortage of homes for sale, and there are plenty of motivated buyers in most areas and price ranges. Recent closed sales data shows numerous cases where homes have sold above list price and with multiple offers. Our market is very active.
The best news is that things are starting to get back to normal now. Granted it is a “new normal” but homes are easier to show, more are coming on the market and more sales are being agreed at all price points.