Can the coronavirus tank the U.S. real estate market? Find out today.
Will the coronavirus have an impact on our housing market here in the U.S.?
There has been a very serious downturn in China, which had 70,000 confirmed cases of coronavirus with 1,800 deaths. Here in the U.S., meanwhile, (as of the recording of this video) we’ve had at least 67 cases of coronavirus and 11 deaths.
Despite the fact that it’s not as bad here as it is in China, the real estate market is an international business, and the Chinese have had to take extraordinary steps to try to contain the disease. For example, in Wuhan City where the virus originated, the 11 million people who live there are basically on lockdown, meaning that there’s no buying, shopping, selling, or much production happening there and in other smaller cities and regions around the country. That has disrupted the supply chain for the U.S. and dampened demand.
These factors, in turn, have lowered corporate profits. When Goldman Sachs said that profit growth for 2020 going forward was going to be 0%, the stock market tanked again. For the whole last week (as of the recording of this video), the stock market was down 1,100 points.
What happens if corporate profits stay low for long enough? That’s right—layoffs. Layoffs are the transmission mechanism from Wall Street to Main Street. If people are laid off, they’re not going to be buying houses. Unemployment doesn’t have to increase by a lot to have an impact; it only has to increase from 0.3% to 0.4% to change buyer behavior and disrupt consumer confidence.
By my best guess, we’ve got four to seven months for this to play itself out, which is a lot of time for doctors, hospitals, health organizations, and governments to perfect the quarantining process to slow the spread of the disease. That means that the market isn’t necessarily doomed to tank in the wake of the coronavirus; we could figure out a way to get a handle on the disease down the road, leading to a rise in profits and economic upturn.
If you have any further questions about the coronavirus’s impact on the economy and real estate, don’t hesitate to reach out to us. We’d be glad to address your concerns.
-statistics stated were true as of the recording of this video-