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How the coronavirus will change closings, home prices and what’s on the market – Pierce County Foreshadowing?

April 2, 2020 By Don Doman

No, I’m not talking about Covid-19. What I’m talking about is the fall out from the virus. It really hits home. Or rather housing . . . and housing affects us all.

The fall out of Covid-19 really hits home. Or rather housing . . . and housing affects us all.

Two months ago a house a block away from our home came on the market. Two days later it was sold. Near the first of March a house just a few doors down from us sprouted a “home owner for sale” sign. A week later it changed to a local realty sign. The sign is still up. Our neighborhood is only a few blocks from Point Ruston, but neither of these homes had views. This small change in market may well be a harbinger off a drop in housing values and prices.

For many seniors their big nest egg is the value of their home. With businesses forced to close because of social distancing restrictions and a reduction in local jobs everyone is tightening their belts. As days without work and profits begin to involve weeks and possibly months this creates worries. Add in the financial loss for businesses and corporations then we have stock prices that fall. Add in declining profits and dividends and all of a sudden we could well see a shift in home prices and with it commercial property prices as well.

For many seniors their big nest egg is the value of their home.

I just read an interesting article from the Washington Post: “How the coronavirus will change closings, home prices and what’s on the market” – washingtonpost.com/business/2020/03/30/how-coronavirus-will-change-closings-home-prices-whats-market/

The housing market should be a major concern for home owners who might have to struggle with house payments even with government intervention and stimulus checks. Home owners should feel not alarmed, but a little unsettled.

Those that left assets in what was, until a few short weeks ago, a high-flying stock market, may wind up with a lot less cash to use to buy homes.

Writers Ilyce Glink and Samuel J. Tamkin recognize the issues and see broader problems, “Buyers are plenty nervous, too. Those that left assets in what was, until a few short weeks ago, a high-flying stock market, may wind up with a lot less cash to use to buy homes. While interest rates are now at rock-bottom lows, that may not make up the difference. Sales will slow. Prices will come down, as the economy quickly flips to from a strong seller’s market to a buyer’s market.”

Those who have a monthly income and don’t need to sell can afford to wait. Construction firms caught in the transition might slow down the building of homes and shops, which will also slow the economy. Commercial property appraiser Rick Pinkley, owner of GPA Valuation, says “New home developments usually mean an increase of local consumer needs: groceries, entertainment, auto repair, restaurants, and more. All of these affect both property values and especially commercial property values. I expect we will see demand fall off for homes and investment properties if unemployment remains high and business income is off for an extended period. It can be difficult to find financing when you are out of work.”

“I expect we will see demand fall off for homes and investment properties if unemployment remains high and business income is off for an extended period.”

The runaway housing market is probably going to stumble. Glink and Tamkin agree, “With businesses closed, employees will be laid off, those unemployed will have bills to pay and no income to pay those bills. The government payouts won’t be enough to cover everything.”

The southern migration of Seattle and King County workers has not only pushed up prices, but has resulted in neighborhood improvements as well. While buoying up property values is generally good news, some areas feel resentment toward gentrification. We see this in the Hilltop area of Tacoma as well as the Tillicum area in Lakewood, while the expansion south of Puyallup towards Graham and Eatonville will probably continue. Even if prices in Seattle and King County drop, the ability for workers to purchase more affordable housing in Pierce County should continue, even if abated a little bit. Regardless, we should be aware of changes and prepare the best we can.

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About Don Doman

Don Doman: Professional writer and author. Ideas and Training - Human Resources/business training products for modern business. PublicDoman - Video production, internet video, website construction and online marketing and social media. NW Adventures - Fun places to visit in the Pacific Northwest: Great Restaurants, Lodging, and People. The Doman Directories - Business directory listings for many categories in Tacoma, Pierce County, and Washington State.

Comments

  1. 0_debt says

    April 3, 2020 at 9:25 am

    Interesting article. Just this morning I received a home price estimate update from my Zillow account that showed a 4.5% price increase over the last 30 days. Not sure how that will play out over the next year, but I do like that current trend.

    • Don Doman says

      April 3, 2020 at 5:00 pm

      0_debt,
      Thanks for commenting. I want to see the increase continue. After another thirty days of no work for most people I hope we return to normal, but I am afraid it will take a while for most people to recoup the loses.
      Thanks for sharing.
      Don

    • john says

      April 4, 2020 at 8:19 am

      From an agent I know, Zillow is inaccurate because the data they use is for estimating is dependent on volunteer information of home sales. Redfin has access to actual realtor data so they provide more accurate estimates. Redfin estimate on my last house was VERY close to what I actually sold it for. There is no way I could have gotten was Zillow was estimating it at.

      • Don Doman says

        April 5, 2020 at 2:07 pm

        John,
        Thanks for commenting.
        Estimating prices and value are always a problem. I think mostly value is in the eye of the beholder. I think sellers see a house as what it should be, and buyers see a house for what it could be . . . to them. When we had a number of house rentals and attempted to sell one . . . it he didn’t sell we would raise the price. That always seemed to work. I think everything comes down to perceived value.
        Thanks for sharing.
        Don

  2. John Doe says

    April 3, 2020 at 4:42 pm

    I would caution you to share your opinion to so many and cause more fear. You have a platform to others. Please be factual or just refrain. This doesn’t help any of us and just one more thing the media is doing to destroy our fabric of who we are in America.

    • Don Doman says

      April 3, 2020 at 4:56 pm

      Dear John Doe,
      I’m sorry you disagree. I know no one who is out to destroy the fabric of America.
      Thanks for sharing.
      Don

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