How Coronavirus is Affecting the Pierce County Real Estate Market
Here at Windermere Professional Partners our agents are understandably fielding questions from buyers, sellers, and agents alike regarding the strength of the local real estate market and how housing will fare in the face of a global pandemic.
The truth is, the underlying fundamentals of our local economy are strong as we enter this crisis. If the scales tip and we do see an economic recession, real estate market won’t be unaffected. That said, history has shown us there are opportunities for success in every market.
How is Coronavirus Impacting Pierce County Real Estate?
Many have asked about the relationship between the Coronavirus pandemic and the housing market. We know the stock market reaction has been negative and swift; markets don’t like uncertainty, and no one knows exactly how this will play out. There are, however, differences between the stock market and the housing market.
The housing market differs from the stock market in that the stock market is affected swiftly by sentiment. The housing market is based more on fundamentals like familial requirements, jobs, equity, interest rates, and so on. That said, there will certainly be market disruption if people are afraid to leave their homes. No one knows for sure where this transition will take us—it could settle down in some weeks, or it may be many months and we may end up with another “new normal.”
As of the writing of this piece there has not been a significant change in the number of contracts we typically see, but it is early. There is some thinking that there may be listings that don’t come onto the market right away as planned because the seller doesn’t want strangers in their home. If true, this would exacerbate the shortage of inventory that we already have. Buyer activity could slow with some groups that are making an elective move. For the most part, people continue to have housing needs and move up or down based on many personal circumstances and motivations.
If COVID-19 hits the economy hard enough and long enough by disrupting the supply chain, stifling tourism and inhibiting consumers, businesses will suffer, and that could cost people jobs which in turn could open the door to a more negative impact on our housing market. The good news is that in the last 10 years, national mortgage debt has remained at about $10 trillion while home values have soared to nearly $30 trillion leaving just under $20 trillion in equity as a cushion to weather a storm.
Real Estate Market Update for Beginning of 2020
Pierce County rolled into 2020 hitting on all cylinders. The overall economic index projected steady growth, and although Pierce County’s unemployment rate is higher than the national and regional averages, the rate remained steady.
While Pierce County home prices increased in value last year by 8.5%, the housing affordability index bucked the regional trend and improved in 2019 due to wage growth and low interest rates. This affordability continues to attract attention of buyers from outside our area. Throughout the recovery, Pierce County’s housing market has been lifted by Seattle’s white-hot job market and high housing prices. The average home is Pierce is 40% less expensive than one in Seattle.
Pierce County added 6,000 jobs in 2019 which is good, however, at the same time we added 15,000 employed residents. It is a fact now that 50% of Pierce County’s employed residents have their job outside of Pierce County.
The story of 2020 will be the availability of homes for sale. Entering 2020, there were fewer than 1,000 homes for sale in the entire county. In late summer and early fall 2019 when inventory levels usually build, we saw far fewer homes than usual come to market.
This low inventory scenario set us up with unprecedented Chance of Selling Sales ratios throughout the county as demand remains high. The first 75 days of the year saw the chance of selling climb from 148% percent to over 209%. For reference, a balanced market is 55%.
Each one of us will make our own decisions on how to navigate this event. For most of us, our families, our company, and certainly our country have faced game-changing crises like this before. If we stay calm, follow the advice of the experts, and play the long game, we will find ourselves on higher ground sooner than later.
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