This time is different!
Well, here we are in the midst of another crisis. This one not of anyone’s making, but a result of an illness that spread from Bats to Humans and is now ravaging the world. We are all on lock down, sheltering in place and exercising Social Distancing. It is hard to do and it is hitting the economy hard.
I have seen a number of articles, news reports, and social media posts talking about the layoffs, businesses closing their doors, and the crazy lines at the Supermarkets. Naturally fear steps in, fanned by the media sensationalism, and that raises concerns about what is going to happen to the Real Estate market. Will we see another foreclosure crisis; will people let their homes go because they feel they can’t keep them when their paychecks stop? Certainly it is a possibility, but I don’t think so, at least not on the scale of great recession.
First of all, few people are in situations where they are upside down on their homes. Most learned from the first downturn not to capitalize on the equity in their homes by taking out HELOCs and spending foolishly. Second, even if the market does take a bit of a tumble, with the price acceleration in the past several years, most will still have a good deal of equity and can afford to lose a bit of it without being upside down. Many refinanced at historically low rates and have very affordable payments too. Third, while this downturn may last a while, it is unlikely to last for years the way the great recession did. Stocks are a mess right now and while I am not expert on the stock market, it is likely that when things begin to settle down, stocks will stabilize and begin to gain again.
As soon as this illness fades and companies can get back to work, they are going to be hiring quickly and calling back furloughed employees as fast as they can. They will need to catch up from everything they were not able to do during the shut downs. People will be so tired of sheltering in their homes that they will be eager to get out and do things. Activity will increase quickly and businesses will find themselves hopping. In addition, the government is stepping up from the start to help ease the burden on families and small businesses, before they get in real financial trouble. Fannie and Freddie have already put a hiatus on any foreclosure proceedings for at least 60 days. Tax deadlines have been extended so people can safely shelter in place and not panic about the deadlines for filing. Actions are being taken on all levels to slow the spread and hopefully bring this crisis to an end as quickly as possible.
The point is to encourage us all to not compare today to what happened in 2007 & 2008. Lots of things are different now than they were then, and while we are going to hit a rough patch for a while, things should improve quickly once the crisis passes. Real Estate may slow for a while and frankly if I were thinking of selling or buying, I would probably put my plans on hold for a while too. After all, we are supposed to be staying away from other people and having people going through a home or in a car on a showing tour is probably not the best practice right now. I think it will get back on track once this is behind us.
For those who are laid off, don’t give up. Retailers, particularly grocery stores, are begging for help right now. It may not be the kind of work you are used to and it may only be temporary, but if it keeps the wolf from the door why not give it a shot? Everyone needs to eat! They don’t need 400 rolls of TP but then, people react strangely in a crisis. The media has done their best to stir the pot to create panic and fear. Let’s all look beyond the noise and do what we can to get through this for ourselves, our family and friends, our neighbors and those in need. Let us all work together to put this behind us and look forward to better times.
Thanks for reading, until next time…
Sandra Paulow, Associate Broker, GRI, REALTOR®
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