The Pause Button
The Pause Button. A great thing when you’re consuming media. Whether watching a movie, listening to a podcast, or simply jamming out with the volume at 11 in your car, the Pause Button can bring it all to a sudden halt. But a pause button is not the STOP button. When we hit STOP, we have other intentions. We are intending to shut things down for a longer period of time.
According to Lawrence Yun, the Chief Economist for the National Association of Realtors (NAR), “In 2020, we hit the pause button for two months.” I heard this quote earlier this week and it stuck with me. Yes, I do understand that some of us are ready to open things immediately. Others want to wait it out, and the rest of us are somewhere in the middle. But I think the one thing we can ALL agree on, is that this is a PAUSE, not a STOP. But how do we pick ourselves up, dust ourselves off, and get back to ‘reality’, even if it’s in the ‘new normal’? The answer to that lies in your belief (or disbelief) in where we really are, where the numbers are, and how we feel the future is going to unfold.
“In 2020, we hit the Pause Button for Two Months”
-Lawrence Yun, NAR Chief Economist
In a recent spot survey of close to 100,000 individuals, there were some very telling opinions in the survey of how quickly many people think our recovery will be. According to the survey, conducted by NAR:
74% of those surveyed have seen no reduction in their listing prices, and sellers have been remaining calm with no panic selling.
71% of Sellers Have STOPPED Open Houses. This is either due to their choice, or governed by their local governments. Nevada has not had Open Houses for the last 2 months or so, and are starting to see those guidelines ease, with extra precautions.
55% of Sellers say they intend to still sell, but have simply delayed their process a couple months
44% of Buyers have also stated they are intending to buy, but simply have delayed the process a couple months as well.
The fact remains, whether you believe it or not, that we have a Housing Shortage, both locally in Las Vegas, as well as throughout the country. Las Vegas currently is sitting at roughly 2.7 months of inventory for Single Family homes, and the US is currently about 3.4 Months. No matter how you look at numbers, historically, this represents a HOUSING SHORTAGE! Nationally, 6 months is considered the equilibrium point, and I have stated in prior blog posts that I feel Las Vegas’ equilibrium is closer to 4-5 Months (read that blog here.)
Other stats presented that show hope for some housing stability, and skewed positively towards buyers are here:
The % of First Time Buyers now represent 34% of the market, up from 32%, which is a 6.25% increase. Not a bad increase for only the last 2.5 months or so!
At the same time, we’ve seen the % of Investors drop from 17% to 13%, representing a decline of 24%!
Simply stated, first time, and owner occupants are now a larger piece of the home purchase pie. This is providing more opportunities for our buyers out there, which is great news. Combine this with a lack of inventory, it really is a good market for both Buyers and Sellers. Sellers are still getting very close to asking price (about 98.5% of List per our local statistics), and Buyers are getting in with VERY low interest rates! A win-win situation.
Speaking of Interest Rates and Mortgages. I’ve written on these topics a ton lately (here and here), but always say, for the nitty-gritty details, speak with a local lender that can give you better and deeper insight. However, one statistic and point I want to drive home is the overall affordability of mortgages and home payments right now. We currently have rates (depending on your situation of course) of roughly 3.5%. That’s HISTORICALLY low. In fact, the AVERAGE mortgage rate from 1972 - 2020 is 8%! Stop focusing on home price, and focus on what your payment is. We don’t live in the price of the home, we live in the monthly payment!!!!!!!
I’m not trying to ignore the last 75 days or so. They have been very, very difficult, and many people have a bleak outlook on things, and I try to show empathy towards this. We are ALL living in different situations. In fact, Brian Buffini, renowned Business Coach, has stated that “We’re all in the same storm, but we’re not all in the same boat.” How true is this? Yes, we’re all dealing with the same COVID, but our stories are all different. Our situations are all different. We need to realize we’re all in this together, but doing so separately.
“We’re all in the same storm, but we’re not all in the same boat.”
-Brian Buffini - Real Estate Coach and Entrepreneur
Unemployment numbers have been staggering (and not in a good way). Prior to this Pandemic, the largest, single week unemployment filing number was 625,000 people. For the last 5-6 weeks, we have been AVERAGING more than 5 million people, PER WEEK! Let that sink in. During the Great Depression, 90 years ago, we hit about 25% unemployment, which I’ve discussed recently here. That took roughly 7 years to get into the deepest part of unemployment and we had a W Shaped recovery, which no one likes (Economy Recovery Types here). We are in for a massive hit to our Economy, in terms of GDP as well, and we know this. There is no way around it. Some are calling for a 30-40% drop in GDP for Quarter 2, which I probably agree with. However, where as the old adage says, ‘April Showers bring May Flowers’ and hope shall prevail. Both the Fed Chairman and Larry Kudlow, a respected TV personality and market expert, expect Rebounds in Quarter 3. And Guess What? Quarter 3 technically starts in about 45 days!
So, let’s talk recovery, and what to expect in the months to come… on part 2 of this blog! Link to Part tow is here.
***Like most of my posts, I try to provide ample statistics, numbers, etc. Usually they swing in the positive manner. These are not MY stats… they are pulled from (usually) reliable sources. So if you disagree, I always welcome dissent, it helps build conversation. So if you have differing opinions, I would love comments below.