CLARK COUNTY HOUSING
MARKET
MARKET STABILIZES AS COVID SETS IN.
You won’t read this in the paper.
August 19, 2020 Monthly Report
WHAT WE CAN EXPECT THROUGH DEC 2020 (and beyond)
The market is controlled by supply and demand, econ 101, as we all know. No surprises there, right?
The factors controlling supply and demand are the forces and motivations that cause buyers and sellers to do what they do. When the reality of Covid hit us last January, market activity changed dramatically. How the market changed could not easily be predicted.
We quickly discovered that Covid caused sellers to delay their plans to sell while motivating buyers to relocate or at least continue with their plans to move. The net effect of Covid on our housing market since January has been a dramatic decrease in the number of homes for sale and a steady increase in the number of buyers.
So again, what can we expect from the market through the end of the year?
The buyers:
The number of buyers looking for homes was increasing quickly from January to June as shown on the lockbox chart below. However, since early June buyer activity has leveled out. From June on over the past 8 weeks, buyer activity has remained relatively steady. Minor ups and downs sure but no big swings suggesting a major market correction in any direction.
I do not expect to see further increases in buyer activity. So, from the demand side of the equation we should not see any further tightening of the housing market. How about from the seller side of the equation?
The sellers:
The information above on buyers is based on data that is about 10 days old. It is current. The data below on sellers is based on data that is 30-45 days old. It is important to keep this in mind.
The 3rd chart below shows an unusual surge in new listings. Back in April, new listings were almost half of normal for 2018 and 2019. But since April, new listings have been rising steadily and are now at the peak of new listings for this time of year for the last two years. It looks like sellers are making up for lost time by putting their homes back on the market.
Looking more closely at the supply side, there were 1161 listings in July. There were almost 1200 new listings. So, new listings make up a large part of the total listings and can significantly affect the supply side of the equation. It is not hard to appreciate how new listings can easily and quickly affect the supply side of the equation. Since April new listings have nearly doubled, growing from about 650 to almost 1200 in August. After a surge lasting 3 straight months it seems likely we will see another increase for August. If this is correct and since these stats are 30-45 days old, this change is already happening and we will not know it until our next stats come out mid September.
CONCLUSION
Buyer activity has plateaued and seller activity (new listings) is showing new signs of life. It is likely we were at the peak of our sellers market in July. I suspect we will begin a gradual easing toward a more neutral market. I do not expect this transition to happen quickly and will likely still be underway by the end of the year. If my prediction is correct then we are at the peak of the seller’s market now and will begin easing into a more neutral market through the rest of the year. Buyers will soon see less pressure with offers and negotiations but I do not think we will see major price reductions in 2020.
Now, the fun part. After the election…….(extreme speculation. Please forgive me.)
If a democrat wins office this November then our housing market could get crazy again.
By this I mean:
There would likely be a national effort to control the virus which could mean a nationwide partial shut down. I would expect his effort to be successful as it has been in so many other countries that have done this. This could be tough on our economy in the short run yet there would likely also be stimulus checks going out to support the economy and minimize the damage. It could look very much like June and July did at best. But the long game will be a steady move to our normal housing market once we slowly begin to open up again.
If Trump wins in November then we will see more of the same, a continuation of the last 6 months. We will NOT see a swift control of the Covid and our economy will continue to struggle for an extended period. How this would drive the supply and demand equation is unknown but I do not necessarily think it would continue as it has.
OK, I spilled my guts here. These are my thoughts and admittedly complete guesses.
I would love to know your thoughts. I am sure I missed something here.
Kelsey Family Farm item
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A Comment on Covid
I have used all the recommended protections to stay safe. Yet, I have not had anyone in my immediate life get sick. I must admit, I feel at times like I am under the illusion that I am safe and even mysteriously protected. Without my own personal experience with someone close to me getting sick, I do not fully appreciate the dangers. At least that was the case until just last Sunday when I learned both my Kansas and Hawaii contingencies have been exposed and are awaiting test results. Two of them have been confirmed with Covid and are in the early stages of the illness. They are young and will likely do just fine. Our fingers are crossed. We are especially nervous about our 93 year old mother who is still waiting for her test results. Oh my.
Want to sell but are afraid of Covid?
I totally understand your concerns. While there are no 100% perfect ways to eliminate the risk, there are measures one can take to provide substantial protections.
Give me a call and we can talk about these controls.
360-921-2203