The covid effect on real estate this January is slowing things down. While this is bad news for home buyers, it’s an exceptional opportunity for homeowners.
We are bombarded with Omicron news every day. Covid is everywhere. Hospitals have record number of admissions. Omicron is so contagious that you must have a 95 level mask and pray you don’t get it. Numbers are rising. You can’t find enough workers because they’re all out sick. Get ready because we’re all going to get it. Stay inside away from everyone for the next 3 weeks.
I’m not trying to minimize how serious this is and I hope you’re fully vaccinated with a booster. However, while it’s essential to know what’s going on, we also don’t need hysteria about Covid.
Where We Are Right Now
We began the year with 605 house on the market for sale. This is now 713. What should we have on January 20th? Close to 2,000 units if not a full 2,000. Deduct 5-6% for homes that have accepted offers. 5-6% is my guess on this. This leaves us with roughly 675 homes for sale.
There are 282 homes for sale from $500,000 to $1 million. This is always around half of the market. As a result, most buyers out there are competing for less than 300 homes.
Interest rates have gone up but not by a lot. Mortgage rates are around 1/4 percent higher. They’ve risen for most buyers to 3.5% from 3.25% Because they haven’t risen dramatically, buyers remain in a good position regarding financing.
Omicron fear is real. It is legitimate. It’s closing industries down. Just look at movie theaters. So many are closing because they can’t take another losing year. Ticket sales nationally were over $3 billion pre-pandemic. Last year it was $1.1 billion and this year ticket sales are even worse so far.
My girlfriend went to the Closter Diner in Closter, NJ, for brunch with another friend. She told me that they were the only 2 people there. The Closter Diner is an institution here and it’s quite good too. It’s Omicron fear for sure.
The only good news is that this variant is supposed to come down quickly. I’m hoping we turn this corner very soon.
The Covid Effect on Real Estate This January
The Covid Effect on Real Estate This January is just as real, in my opinion, as it is everywhere else. Why would it be any different? As a result, homeowners and some buyers are holding off. This is the reason, I believe, why the lack of inventory is so extraordinary.
It’s like a bad winter. We had weekly snow storms a few years about for nearly 2 months. The snow storms weren’t little. Accumulations were several inches to many inches with every storm. Because weather was so rough, the market really began at the beginning of March. I think this year will follow a similar pattern.
We keep hearing that the next few weeks will be the worst. Assuming this is true, I’m expecting a flurry of homes coming on the market in about 5 weeks.
The bottom line is that if you’re thinking of selling your home this year, get it on the market ASAP. This is unlike any time before. I can tell you that a lot of buyers are out there and they are serious. Buyers know rates are going up so they don’t want to miss the boat on this. Buyers also know that the true cost of house is the rate on their mortgage. It’s a long term investment. While you own your home, prices go up and down but not on your fixed rate mortgage.