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Covid-19 and Real Estate. Taking the good with the bad
Dated: March 13 2020
The Covid-19 pandemic is definately effecting the current stock market. But we don't exactly know what the extent of that will be. However, previous virus scares have had negative effects as well. Take a look at the infographic below! The Zika scare yielded a -12.9% change in the S&P 500.
In an economic downturn, investors take money out of the stock market, and they put it into US Treasuries because US Treasuries are a very safe investment. This increased Demand for Treasurie bonds allow them to offer a lower return on that particular Treasury bond. There is a direct correlation between the Treasury yield and the 30-year mortgage rate. Take a look at how they track together on the graphic below. Currently, 30-year mortgage rates are hovering just over 3 percent. Some Real Estate Economists are projecting we might see sub-3 percent on a 30-year mortgage. Now that’s the silver lining to all this uncertainty!
We will also likely see home sales slow for a short period of time, leaving some sellers in a more motivated position. What this all means, is that real estate is on sale for a short period of time. Investors and smart buyers, this is your brief opportunity to take advantage of this market while you can. When this scare blows over, and it will, the market will likely heat up quickly, and interest rates will rise again.
Let us know if we can help you in any way! It never hurts to make an offer to motivated sellers.
Derek Taylor Realty Group, founded in 2008, is a full service real estate group, focusing on all areas of Fort Worth Real Estate including luxury homes, commercial properties and investment properties....
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