Covid-19 Can’t Rob Us of Our Resolve
by Joel Carson
Utah Real Estate
Utah Real Estate
There’s nothing like a global pandemic to throw a wrench into the economy. If you feel a sickening sense of dread, you’re in good company. We all have a deep fear of the unknown and (in this case) the known. Covid-19 (aka Coronavirus) has turned our worlds upside down in ways we didn’t think possible two months ago. It’s okay to be concerned, but panic is not warranted here with regard to the economy. In the words of the National Association of REALTORS Chief Economic Advisor Dr. Andrew Yun, “This too shall pass.”
Your job right now is to stay healthy and help your family, neighbors and friends stay healthy. China and Korea are already seeing signs of economic recovery. We can fix the economy. We can’t bring your loved ones back once we lose them to Covid-19. Let’s focus on stopping the virus. The end to this national nightmare will be the beginning of a renewed economy.
A Message of Hope
In a podcast interview with Chief Economist and Senior Vice President of Research at the National Association of REALTORS® Dr. Lawrence Yun offered a pretty bright message concerning the United States housing market. In a May 19, 2020 interview with Brian Buffini on The Brian Buffini Show, Yun emphasized the strength of the market before it “caught the virus” and stressed the market will rebound. The less time it takes to clear out the virus, the faster our economy (and thus the housing market) will recover. He would know. Yun represents an organization 1.4 million strong. He maintains NAR’s existing home stats. He keeps a close eye on the affordability index. Trust that he knows home-buyers’ and home-sellers’ profiles better than anyone in the nation.
Yun stressed that on Feb. 4 when Trump gave his State of the Union Address, all economic indicators were good – no, great. That single factor will have a huge impact on the economy’s ability to recover. We know that if an individual with a compromised immune system or risk factors such as age, pre-existing conditions or limited resources including access to food and proper medical care contracts the virus, that person is far more likely to succumb to it that is a strong, healthy individual with a healthy lifestyle and easy access to great medical care. The economy is no different. There was a time when we watched our country’s economy burst and land in a country-wide depression. This isn’t that.
Salt Lake Housing Market Solid
Yun said at the end of February the housing market was solid, “The home sales comfortably above one year ago, home prices rising for a 90-plus consecutive month on a year-over-year basis. Home prices, unlike the stock market, do not move in a quick one way or the other. It tends to be much more stable. In fact, 12 years ago, when we had that Great Recession, the housing market was not on very solid fundamentals. We had overproduction, builders were building way too many homes.”
In contrast, the world-renowned economist pointed out builders today are actually under producing. That fact impacts supply and demand. It’s a completely different scenario, “And also, we don’t have that easy, subprime, loosey-goosey mortgages that were prevalent 12 years ago. Housing is on very solid ground, yet we are running into this economic quarantine — that’s how I like to phrase it, that is shutting down the economy temporarily.”
As a real estate broker and salesman in Salt Lake City and the surrounding areas for nearly 30 years, I can attest to the fact that our market has been hot. At the beginning of this year we were receiving multiple offers on many properties and searching for quality inventory for buyers eager to make their move. I expect the market to come back and come back strong. We’re going to have some catching up to do and I fear we will be seeing a backlog and an even more tightly-stretched inventory.
Remember the Great Recession? This is not That.
Buffini pointed to the strength of banking compared to the country’s Great Recession, “They have much stronger balance sheets than they had going into this last recession … When we went into the recession, our company experienced it earlier. It was January of 2007, and we came out of it and started to see light in January of 2013.” That’s a long time to wait. Again, this is not that.
“We are already seeing, in places like Korea and China where the coronavirus is starting to get into a mitigated state, where their economies are already starting to come back. There’s a lot of movie to play and a lot of story to play out here, but no matter what, this is going to be a shorter-term situation than what we faced with the last recession,” Buffini said.
Technically, Yun said a recession is indicated when the country’s gross domestic product (GDP) declines for two months; however, if you lose your job or your neighbor is out of work, it doesn’t take long to feel your own personal recession. It hits home hard and fast. Yun agrees that people who have lost their jobs through no fault of their own must be made whole. He is eager for the recently passed economic stimulus bill to take hold and begin lifting the country.
With regard to the housing market, “ … we have to remember, we had that housing shortage going into this virus situation, and if the duration of this virus’s negative impact is short, say, a couple of months, we’re going to run into the housing shortage right away, again.”
Bufinni said it’s important for home buyers and sellers not to confuse the stock market with the housing market. Some investors might have temporarily lost value in stocks, but in reality they haven’t lost anything unless they sell. He said home owners have not lost anywhere near 30 percent of the value in their homes and, again, they haven’t lost anything unless they sell.
Hang on for the Ride
Remember the old adage attributed to President Franklin D. Roosevelt, “Only thing we have to fear is fear itself?” This is the time to exercise patience, kindness, faith and hope. We’ll all be back in business in no time and the experiences of other nations who are at the end of this horrid global tragedy tells us this is a time to hold tight to our loved ones because economic strength is only as resilient as our people.