Coronavirus Scares Stock Market, But Home Sales Remain Solid
Wow, what a difference a month makes. The Coronavirus did more than spook financial markets as stocks tumbled nearly 4% overall in 3 short days, losing some 6 trillion in value. Ironically, this bodes well for interest rates, which were already at an 8-year low. The Fed has made it clear that in the face of this crisis, they won’t hesitate to lower again. Remember, the Fed rate does not directly affect long term rates, but there is a definite trickledown effect. Our country has been through recent epidemics and one pandemic. There is no need to panic here. We will need to learn extra precautions, that maybe we have been a little lax in practicing and be vigilant. The financial markets will recover, as they always do after an emotional response spooks traders. In the meantime, this is an awesome time to buy a home. Purchasing power as a result of loans in the 3-percentile range, go a long way in absorbing some of the shock of 6.7% year over year appreciation, more numbers to follow in next paragraph. Inventory is truly at historic lows as many cities in Orange County fall below 50 homes, others under 100. Housing shortages is much more of a long-term crisis than the Corona virus will be in the long run. If you are thinking of selling, you are definitely in the drivers seat right now, and buyers need to think in terms of final and best offer in their initial offer. A word of caution; with these rates so low, there is a temptation to refinance and pull money out. Remember, equity build up is one of the best paths to a fully funded retirement, or towards building your down payment for your next property. Please don’t use your home like an ATM, that isn’t the purpose of the American Dream.