While it’s still early to tell how much of an adverse impact the coronavirus will have on the U.S. economy, the financial losses will undoubtedly be staggering. Over the course of just five days last month the stock market erased over $6 trillion in wealth. Large and small businesses across the country are taking huge losses for canceled conferences and events. The International Air Transport Association reports that the potential loss for airline revenue could be as much as $113 billion.
A decline in the stock market, however, can have a positive impact on the housing market. When stocks are volatile like they are now, they are usually sold in favor of purchasing less-risky bonds. As the demand for buying bonds drives their prices higher, they produce a lower interest payment or yield. When bond yields drop, so do mortgage rates. And after the Fed cut rates last week to stimulate the struggling economy, mortgage rates fell even more to record lows. According to Freddie Mac, the average fixed-rate mortgage is at the lowest level in its nearly 50-year history. So is now the time to buy?
Based on housing data from multiple cities across the U.S., this will be a very competitive spring housing market. According to a 2020 realtor.com report, the nation's inventory of available homes for sale fell 14% in January, to the lowest level since 2012. The low rates will drive activity, but the reduced inventory and high demand could limit home sales. But if the coronavirus lasts long enough to create even a minor recession, it could have a chilling effect on purchasing and dampen demand, which could be welcome for buyers in competitive markets.
Lock into these historically low rates now and ask a NASB expert how you can get an edge in a competitive housing market. Give us a call at 855-465-0753.