Talk of a Covid Vaccine and What it Could Mean for Real Estate
To date, 2020 has been a year that was beyond imagination or (any normal person’s) prediction. Covid struck a blow early in the year and still (at the time of this post) continues to beat down major components of the United States and global economies. Contradictory to this, is the real estate market. Homebuyers and sellers have watched home values escalate at a dizzying rate. While home prices may cool a little during the holiday season, the home buying appetite has barely shrunk.
News of a Vaccine
Putting aside the politics and finger pointing, the news of a vaccine (Pfizer’s announcement a few days ago) that is 90% effective created a massive amount of discussion. Speaking only to the economic discussion, the news put the stock market into a rally on traditional stocks such as travel, movie theaters and venues (e.g. concerts and conventions). Surprisingly, AirBnB announced that it is going to go public. The collective reaction that pharmaceutical companies are honing in on a counter-measure to Covid was met with a mix of happiness and hesitation (who gets it, when and how).
What Vaccine Could Mean for Real Estate
Analysts from various real estate companies are all jumping in front of this one. Thought leaders from various companies believe that a vaccine could drive interest rates back up from the historic lows we’ve experienced. While the federal government pledged to keep rates at these unbelievable lows, consumer confidence may push the rate up. As consumers gain access to traditional venues, shopping access, food and beverage, etc., the economy will gain further traction. As unemployment continues to shrink (October jobs report was amazingly good), money will start to flow and the Fed may feel less pressure to keep rates low. Even a small increase in the interest rate is still well below rates from even a year ago.
During the pandemic period, particularly here in New England, we are watching an exodus from New York city and Boston into Connecticut. Governor Ned Lamont was heard in a video segment about the “tens of thousands moving to Connecticut”. There is no doubt that Connecticut’s real estate market has benefited from this massive shift from New York and Massachusetts. But some analysts believe that a vaccine will slow down the migration. None think the migration is going to stop. It may slow down. You could even see a small group return to parts of New York, but these are likely to be where values have come down (due to people leaving) and there’s an opportunity to purchase at somewhat of a discounted rate.
Overall, the vaccine should only support homebuyer demands. Which means we will likely see home pricing continue to stay strong even through the winter market.
What if You Want to Sell Your House
This has been a key topic for us since March. Selling your home in this market could be a massive gain. Especially if you have a house that is ready for the retail market and meets buyer’s demand. Not all homes do, and this is why we still see a lot of stagnant sales. That said, just look at the Connecticut “DOM” (Days on Market) rate. There is no slowdown occurring. DOM for this time of year is normally well above 45 days on average. As of the MLS reporting for October, it was 33.3 DOM.
What does “retail ready” mean? Your house does not need any work. It has been very well maintained and has updates to kitchen, bathroom(s), exterior finish, doors, windows, roof, etc., all within that last 5-10 years. These are homes that have a higher buyer appeal and are viewed as move-in ready. So, if your house is ready for retail buyers, go for it. Especially if you have owned the house for 7+ years as you will see gains in your equity.
Not a Retail-Ready House?
Yes, of course you can still sell your home. And at a fair market value. No, you won’t see the same that the neighbor with the retail-ready house down the street sold for, but you don’t have to take a punishing discount. If your property needs improvements or even major repairs – well, then it is not worth as much (in the retail buyer’s mind) and as such, either sell it “as-is” on the MLS or sell it direct to a cash buyer.
If you have questions, reach out. We’re always here to help and if you want to sell your house – no matter what condition it is – we’ll show you how.