First and foremost, this is an OPINON piece. I am Alison, owner of Mitten, and this is simply my educated opinion. I do not have a crystal ball. I am sometimes wrong (though that is rare). And I am certainly no economic or pandemic expert. I am most certainly not your financial advisor. So now that we're on the same page, pretty much everyone I know has asked me this question so I figured I'd share my opinion publicly (I know, probably the worst idea I've ever had). Also note, this is based on what I'm seeing in West Michigan.
Since being allowed to show homes again, things have gotten crazy! Buyers are plenty and properties seem to be flying. We already had a shortage of homes for sale pre-pandemic, so now the backlog of buyers and sellers from March and April are out in full force. I fully expect this rush to be temporary. How temporary? I'm not sure, but I would suspect it will be more temporary than many of my counterparts believe.
With the number of bankruptcy's being filed, persons on unemployment, jobs permanently lost, and those who have been using the mortgage forbearance options, it's not economically possible that we won't see a recession. The government can pump all the money they want into our pockets but the simple fact is most people live paycheck to paycheck and do not have emergency funds. This means renters can't pay rent so landlords can't pay their bills. This means homeowners have to choose between feeding their children or paying a mortgage. The mortgage won't come back to bite them for months so it's a risk they take on the false hope they will have a job to return to. I promise I'm not being all doom and gloom, it's called being realistic which allows me to help people to make the best decision they possibly can based on the data and what the most likely future scenario is. I really would love to be wrong, but any economist worth a damn (there's lots that aren't and lots that are politically motivated) will agree me.
What I expect is come mid summer we'll see a very gradual slow down from the current madness. By late summer/fall even more so, and by late fall/winter we'll start seeing prices dropping, short sales becoming a thing again with foreclosures soon to follow. What I suspect may keep the market flowing for longer is a lot of folks will be reevaluating their living situation. Those struggling financially are going to be looking to downsize their mortgage payments and those doing alright have likely figured out they need to make some adjustments to their living situation, especially if working or schooling from home is to be a permanent thing. We're not going to see the impact of all of this right away but in 6-12 months we'll be looking at a very different picture.
All of these thoughts aren't from nowhere, I could offer a 19 page blog post on my sources and why I feel very opposite of what most of my colleagues are saying, however most people reading this know me and trust that I've done my research and this isn't out of nowhere. Honestly, it seems like common sense to me if you are able to look at the big picture and how all of the different parts affect one another.
SO, what does this mean for you? Without knowing your specific situation, I don't know. But I do know that we're only in the beginning of it so it's a good time to really look at your circumstances and start making some decisions on the best course of action. If you can barely afford your house payment and you're unsure of your job stability, don't wait to figure it out. Take action now and start looking at ways to cut back or downsize that payment. Don't just ignore this and keep thinking things will go back to normal. Whatever used to be normal isn't coming back (I'd personally argue that's not a bad thing, but that's a whole other topic).
While it seems there's no way to predict anything at this point, knowledge is power. Being able to use the info we have right now, combined with historical data and critical thinking we can gain some control over our situation. Yes, I would love to be promoting this crazy, hot market in West Michigan, but the reality is, for most people, it's not the best time to be overpaying for a house simply because it's competitive. Each person is unique and we're here to help with the overall plan to reach your real estate goal. If you're concerned about your housing situation or unsure of the best options right now, please reach out. We can walk you through different scenarios and make sure you're set up in the short term and long term.
This also feels like a good time to mention we are NOT a one size fits all brokerage. We offer a ton of different options if you are unable to afford full service Realtor fees. We will work side by side with you in whatever capacity fits your current needs.