When you see the stock market booming and real estate as hot as it’s ever been in the middle of a global pandemic, it doesn’t seem to make much sense at first. How could that square with rising unemployment amidst this dizzying ‘new normal’? 

Though I won’t speak on the stock market, I will shed some light on why our real estate market is on fire at the moment. Think back to the last recession we had—the Great Recession. The bursting of a housing bubble inflated by subprime mortgages sent ripples throughout every other facet of the economy; in a sense, the housing market is what triggered it all. In our current situation, our economic downturn is tied to a pandemic, meaning that our housing market isn’t doomed to be dragged down by default. 

Shelter is something everyone needs, so even though our day-to-day lives have been completely disrupted, people still need a roof over their heads. People still need to buy and sell. Granted, when everything initially shut down due to COVID, the real estate market paused as well. What we’re experiencing now is the pent-up activity from spring coming full circle. 

I think this current boom will be short-lived, and things will stabilize as summer draws to a close. The immediate aftermath of our 2020 election is a big ingredient that has yet to be added to mix, so we’ll see what happens. 

Basically, right now we’re seeing a delayed spring season. Historically low interest rates are adding fuel to the fire, which has given buyers more capital to work with in the market. Not so long ago, plenty of buyers were being priced out of certain marketplaces. Now, the cost of borrowing money is so cheap that these once blockaded buyers are finding a clear path to homeownership. 

The other issue at hand: We have a chronic lack of inventory. Buyers are flooding into the market to take advantage of low rates and they’re finding that there’s just not enough homes to choose from, which in turn drives home values up. 

On a macro level, it may seem counterintuitive that our market is thriving in these difficult times, but when put under a microscope, it all starts to make a little more sense. So, if you’ve been confused by what you’ve been hearing in the news, hopefully this explanation cleared things up. 

If you have additional questions on this or any other real estate-related topic, please feel free to reach out to me via phone or email. I’ve been having some wonderful conversations regarding investments and the benefits of having real estate holdings in a time like this; I’d be more than happy to talk to you anytime.