Fears over the coronavirus have struck fear into investors and rattled financial markets across the world. And with 103 confirmed cases in the U.S. as of Tuesday, there are worries that the near-pandemic will likely impact housing markets too.
So far, coronavirus fears have already resulted in mortgage rates falling, as investors are pulling money from stocks and putting it into safer U.S. Treasury bonds. And when bonds perform well, mortgage rates traditionally fall, realtor.com noted.
National
Association of Realtors Chief Economist Lawrence Yun told realtor.com
that while the coronavirus might affect sales in some markets, the
low mortgage rates are likely to entice more buyers and sellers.
“Mortgage
rates likely will fall to an all-time low, and buyers will want to
lock in, even with growing economic concerns,” Yun said. “But
expect far fewer international buyers because of travel concerns.”
However,
others said the situation with the stock market is a concern.
“People
don’t make big decisions in a vacuum, and buying a home is a big
one,” said Danielle Hale, realtor.com’s chief economist. “If
the stock market is flashing a sign that an economic slowdown is on
the way, that’s when Main Street will feel it. And it could lead to
a slowdown in home sales.”
The
most vulnerable segment of the market could be the luxury home
sector, as wealthier buyers tend to have more money invested in
stocks. And if they’re feeling less wealthy, that makes them less
likely to splurge on a new home, Hale said.
Still,
the shortfall of wealthy and foreign buyers could be made up by those
who’re enticed by the lower mortgage rates. Last week, the NAR
reported that contract signings in January were up 5.2% compared to
the month before, and up 5.7% from a year ago. The 30-year fixed-rate
mortgage fell to 3.45% last Thursday, Freddie Mac reported.
“Buyers
right now are trying to juggle whether or not they should jump in
when mortgage rates are this low,” said Ali Wolf, director of
economic research at Meyers Research. “What looks like a home
that’s out of reach may actually be very affordable on a monthly
payment schedule.”
Low
mortgage rates could cause a boost in home sales in the short term,
Hale said, but it depends on how much the virus continues to spread
in the U.S.
“At
the very least, the coronavirus could cause some people to put home
sales on hold,” Hale said.
Source: realtybiznews.com