Home prices could fall by as much as 4% because of the coronavirus pandemic, Zillow says

[libertybele]

Home prices could fall by as much as 4% because of the coronavirus pandemic, Zillow says

Economists at the real-estate company released a new report outlining their forecast of how the coronavirus outbreak could affect home prices and sales. The researchers outlined three different possible trajectories for the housing market, based on varying degrees of optimism regarding the recovery from the pandemic.

The medium view, in terms of positivity, suggests that home prices will drop between 2% and 3% through the fourth quarter of 2020. From there, researchers expected home prices to recover throughout 2021...........

...........But the more pessimistic forecast could make Americans looking to sell their homes anxious. If the coronavirus outbreak leads to a short-term recession, with a possible second wave of infections and more economic fallout, then Zillow Z, +2.37% expected home prices to drop between 3% and 4% and to remain depressed throughout next year.........

https://www.marketwatch.com/story/home-prices-could-fall-by-as-much-as-4-because-of-the-coronavirus-pandemic-zillow-says-2020-05-05?mod=home-page

[Elderberry]

I hope it drops some more. My daughter is going house hunting once the all clear is given. She has been saving up for quite a while.

[LegalAmerican]

Home prices could fall by as much as 4% because of the coronavirus pandemic, Zillow says

Economists at the real-estate company released a new report outlining their forecast of how the coronavirus outbreak could affect home prices and sales. The researchers outlined three different possible trajectories for the housing market, based on varying degrees of optimism regarding the recovery from the pandemic.

The medium view, in terms of positivity, suggests that home prices will drop between 2% and 3% through the fourth quarter of 2020. From there, researchers expected home prices to recover throughout 2021...........

...........But the more pessimistic forecast could make Americans looking to sell their homes anxious. If the coronavirus outbreak leads to a short-term recession, with a possible second wave of infections and more economic fallout, then Zillow Z, +2.37% expected home prices to drop between 3% and 4% and to remain depressed throughout next year.........

https://www.marketwatch.com/story/home-prices-could-fall-by-as-much-as-4-because-of-the-coronavirus-pandemic-zillow-says-2020-05-05?mod=home-page

House prices go up & down all the time.  Nothing 'new'. 

[IsailedawayfromFR]

I hope it drops some more. My daughter is going house hunting once the all clear is given. She has been saving up for quite a while.

Since prices are likely falling, may be wiser for her to wait a bit.  Interest rates will stay low, but real estate may tank.

[libertybele]

Since prices are likely falling, may be wiser for her to wait a bit.  Interest rates will stay low, but real estate may tank.

I think you are correct and that is a strong possibility right now. I don't think we're in any way out of the woods economically, not by a long shot.  I'm not an economic guru, but I was surprised at 4%; we could easily see a continued recession or even a depression and housing values would plummet.

We are just now starting to creep back as a functioning society and there's no telling the actual severity of this virus, nor the full economic impact.  Way too early to tell.  Lots of projections are being made, but I personally feel we may have a really rough road ahead of us.

[EdinVA]

Zillow is a tech company that runs a website, don't think I am going to make decisions based on their attempt to be relevant.

[LegalAmerican]

Zillow is a tech company that runs a website, don't think I am going to make decisions based on their attempt to be relevant.

 

[IsailedawayfromFR]

I think you are correct and that is a strong possibility right now. I don't think we're in any way out of the woods economically, not by a long shot.  I'm not an economic guru, but I was surprised at 4%; we could easily see a continued recession or even a depression and housing values would plummet.

We are just now starting to creep back as a functioning society and there's no telling the actual severity of this virus, nor the full economic impact.  Way too early to tell.  Lots of projections are being made, but I personally feel we may have a really rough road ahead of us.

In my opinion, real estate will be terrible in certain areas and ok in others.

I think we all know that corporate office real estate will be a disaster moving forward.

As far as homes, those in big cities will take a hit as people will tend to move away from population centers and into areas they feel are more protected with less contact and perhaps less public transportation needs.

I think the small cities will be ok as well as rural.

[catfish1957]

In my opinion, real estate will be terrible in certain areas and ok in others.

I think we all know that corporate office real estate will be a disaster moving forward.

As far as homes, those in big cities will take a hit as people will tend to move away from population centers and into areas they feel are more protected with less contact and perhaps less public transportation needs.

I think the small cities will be ok as well as rural.

As far as Corporate Real Estate, I think a lot of that thinking has already been factored in.  There are some REITs out there right now, that  are seriously oversold.  Again, a risky play, but huge upside if you pick the right ones. 

[IsailedawayfromFR]

As far as Corporate Real Estate, I think a lot of that thinking has already been factored in.  There are some REITs out there right now, that  are seriously oversold.  Again, a risky play, but huge upside if you pick the right ones.

Are you suggesting that Corporate Real Estate companies who command a rent of x amount now will be able to command that amount once the rental agreement with the rentee expires?  What about RE commissions when those properties are sold for less?  What about the large amount of vacant  office space that will be out there when the rentees are gone and a huge effect is no new office space are being constructed?  ETC.

Not sure what you mean by 'factored in'.  There are an awful lot of components to the Corporate Real Estate world.

[catfish1957]

Are you suggesting that Corporate Real Estate companies who command a rent of x amount now will be able to command that amount once the rental agreement with the rentee expires?  What about RE commissions when those properties are sold for less?  What about the large amount of vacant  office space that will be out there when the rentees are gone and a huge effect is no new office space are being constructed?  ETC.

Not sure what you mean by 'factored in'.  There are an awful lot of components to the Corporate Real Estate world.

Factored in, in the sense, the equity is significantly oversold..  much like airlines are right now. And how oil companies were 3 weeks ago.  When you can get companies at below hard value market cap.....  The risk is significantly minimized, and return cash wise ,maybe less than pre-crash timeframe, but still significant,and maybe greater on a return percentage basis. IF you buy at depressed prices.

If you are assuming that life never returns to normal. than , I'd shy away from speculative investments.  Myself?...  I think there are some great opportunities out there on the dip.

[Cyber Liberty]

Zillow says the Zestimate for my Castle went up 10% in the year since I bought it.  A lot of it was in the past few months.  I wonder if they caught wind of the rumor that I have a moat?  (That's only a rumor.)

[libertybele]

Zillow says the Zestimate for my Castle went up 10% in the year since I bought it.  A lot of it was in the past few months.  I wonder if they caught wind of the rumor that I have a moat?  (That's only a rumor.)

How many laps can you swim in that moat?

[Cyber Liberty]

How many laps can you swim in that moat?

Moats aren't for swimming, they're for dodging gators.  Rumor has it...

[IsailedawayfromFR]

Factored in, in the sense, the equity is significantly oversold..  much like airlines are right now. And how oil companies were 3 weeks ago.  When you can get companies at below hard value market cap.....  The risk is significantly minimized, and return cash wise ,maybe less than pre-crash timeframe, but still significant,and maybe greater on a return percentage basis. IF you buy at depressed prices.

If you are assuming that life never returns to normal. than , I'd shy away from speculative investments.  Myself?...  I think there are some great opportunities out there on the dip.

So it appears you are only talking about REITs, not the entire Corporate Real Estate world.

There are many items to still be factored in when it comes to corporate real estate.

I have a friend who runs a private corporate real estate business in Houston and he is ready to throw himself off a balcony if he could get high enough to do some real damage.  Another who is in the office construction business and he says he is facing a period of limited activity for his services.

[catfish1957]

So it appears you are only talking about REITs, not the entire Corporate Real Estate world.

There are many items to still be factored in when it comes to corporate real estate.

I have a friend who runs a private corporate real estate business in Houston and he is ready to throw himself off a balcony if he could get high enough to do some real damage.  Another who is in the office construction business and he says he is facing a period of limited activity for his services.

Oh yes, only REIT's.  I wouldn't have the stomach or be able to take enough BP pills to take handle the risk of individual RE assests.
In fact, I really feel sorry for anyone right now who has to extract rent for anything. Def. not an investment for the faiint of heart. 

[jmyrlefuller]

If this pandemic/crisis/whatever you want to call it has long-lasting implications, it will likely be that the currently high-priced urban areas and lower-priced rural areas will come closer to each other in price. Why? A couple of reasons: with telework becoming more feasible/popular, location won't be as crucial, and fear of the next wave could discourage people from living in areas of high density.

Will that translate into an overall increase or decrease? That, no one knows for sure.

[Cyber Liberty]

@libertybele

Semi amusing story from yesterday...we had to go down to out Insurance Agent's office to sign some papers.  The nice gal who handled the paperwork looked at us when we sat down and said, "While I was waiting I looked up your house on Google Streets.  You really do live in a Castle!"

"That's why we call it, 'Castillo del Cyber!"

That's when I decided to look at Zillow to see what they think it's worth now, and the price had gone up $50K since we bought it last year, much of that gain in the last two months.