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.
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.
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.
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.”
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.