Home Sales Set To Plummet 60% As Part of COVID-19 Backlash

EDITOR NOTES: If you thought that investing in real estate could be a good idea during these uncertain times, you may want to rethink your strategy.  Although there could be some positive news for investors as real estate website Zillow mentions that “The U.S. median listing price increased 0.6% year-over-year to $320,000 — about 3.2% less than March's median listing price increase of 3.8%,” it actually could be a tough time to get into the real estate industry.  The same site estimates that home sales could plummet by 60%.  If you thought about buying properties to rent them out, this is just not the best time to get that done.

With the massive amounts of jobs being lost, it is getting impossible for landlords to collect the rent.  This could see you taking way more time than expected to get a proper return on your investment.  If you are keen on investing it may be a better idea to look into an asset that is way more stable, such as precious metals, that won’t leave you waiting for the rent money! 

New home listings dropped 44.1% in April, one of the busiest months in the real estate industry, according to data from Realtor.com.

The decrease in home listings highlights seller decisions to halt sales and see how market conditions play out as coronavirus stay-at-home orders have led 30 million Americans to lose their jobs, crippling the U.S. economy.

"The good momentum we saw at the start of the year has helped to somewhat insulate the housing market from the coronavirus' negative impact on buyer and seller confidence across the U.S.," Reator.com Chief Economist Danielle Hale said in a statement. "Although we saw sharp drops in new listings, an increase in the time it takes to sell a home and a flattening of prices in April, May is likely to see some of these metrics worsen."

She added that the impact on the housing market "will depend on how effective the country is at containing the virus and how the economy responds."

If the economy experiences a positive reboot, sellers "could see buyers returning to the market aggressively this summer to make up for the spring they lost," Hale said.

The U.S. median listing price increased 0.6% year-over-year to $320,000 — about 3.2% less than March's median listing price increase of 3.8%, the website said.

Economists from real estate search website Zillow said in a Monday forecast that home sales could plummet by 60% in the spring, and prices will drop by about 3% by the end of 2020. Home sales should increase by roughly 10% per month through 2021, the economists said.

The total number of home sales dropped 15.3% year-over-year, and none of the country's 50 largest metro areas saw an increase in inventory year-over-year. Inventory declined by 16% overall, according to Realtor.com.

Metro areas that saw the largest declines in inventory include Milwaukee-Waukesha-West Allis, Wis. (-46.1%); Philadelphia-Camden-Wilmington, Pa.-N.J.-Del.-Md. (-38.7%); and Providence-Warwick, R.I.-Mass. (-29.3%), the website reported.

A sold sign is posted on a real estate sign outside a home in Derry, N.H.(AP Photo/Charles Krupa, File)

Pre-crisis, the spring was expected to be the "hottest shopping season" in years, powered by record-low interest rates, higher-buyer demand and an increasing share of millennials entering prime first-time homebuyer age.

The good news is that those underlying dynamics still exist to help fuel the housing market's recovery from the virus outbreak. The industry has also adapted to the era with new tech tools that enable social distancing. Already, new listings and pending sales have grown.

The overall effect on prices will be modest compared to the 2008 financial crisis, when sales plunged by 25 percent and took five years to recover.

Originally posted on Fox Business