A surge in COVID-19 cases is the greatest overall risk to the housing market, Ruben Gonzalez, the chief economist at Keller Williams, told Inman Friday.
Ruben Gonzalez | Photo credit: Keller Williams
As of Friday morning, roughly half of the states in the U.S. reported COVID-19 cases are increasing, while only 15 are seeing cases decrease, according to the New York Times.
“Currently, most residential real estate markets are continuing to function, albeit at a slower pace, with the exception being housing markets with the most severely impacted populations slowing to a near-complete stop,” Gonzalez said. “We continue to perceive any surge in COVID-19 cases as the greatest risk to housing markets and the overall economic outlook moving forward, and to cautiously observe conditions as social distancing guidelines are loosened across the country.”
Home prices have remained stable through the economic slowdown, but measures need to be taken to keep homeowners in their homes to keep the market stable, according to Gonzalez.
“The unprecedented speed and magnitude of the current economic shutdown has impacted real estate markets substantially, but so far efforts to keep people in their homes have succeeded in preventing what could have been a much more dramatic impact,” Gonzalez said. “Sales figures in most markets are down by double digits from last year — many from 20 percent to 40 percent — but price growth so far remains positive in the vast majority.”
The home price stability is a reflection that the economic shutdown is being distributed across both supply and demand, according to Gonzalez. Efforts to keep homeowners in their homes will be crucial to maintain stability, however.
Those efforts are mainly transferring Americans requesting mortgage forbearance, to a loan restructuring plan, as forbearance requests have skyrocketed at the same time unemployment numbers have precipitously climbed.
“Mortgage forbearance numbers rose quickly in April as unemployment skyrocketed, and making sure forbearances are able to continue and transition into loan restructuring smoothly when the employment situation begins to improve will be crucial to avoiding large waves of foreclosures that would likely lead to home price declines similar to those experienced in the last housing market crash,” Gonzalez said.
