How Coronavirus is Affecting the Tampa Bay Real Estate Market
I’ve been a real estate agent since the beginning of 2006, and I saw the market go from Boom to Bust pretty darn quickly. I adjusted, became a short sale queen and worked with investors who wanted to buy up short sales and foreclosures. Many agents got out of the business because it was not so easy to get a deal anymore, in fact, it was a lot of work.
Alas, that’s not what we are back to now. Yet. And I hope and believe that we are not going to go back there anytime soon. Real estate agents that haven’t ever been through a downturn or recession are losing their minds. We are starting to see “Short sale your home!” posts on Facebook. Whoa, let’s calm down for a minute. You don’t have to be a genius to recognize a few things. First of all, there is a listing SHORTAGE in Tampa Bay. There has been for years now – and simple supply and demand tell us that when supply is low, and demand is high, prices don’t drop much, but rather increase. I am still having listings getting multiple offers over asking price as we speak.
Second, most homeowners today have equity due to the stability of the real estate market the last decade or more (as opposed to people who were upside down in equity by 50% during the last recession). I am seeing some price reductions in the market as people get a little jumpy, but I am also seeing homes selling and still selling at high prices. People who have equity have options, as many did not in 2008. You could even refinance to lock in today’s lower interest rates if you still have employment and lower your monthly payment.
Third, even if the market restricts due to Coronavirus, homes will still sell. There are people who have leases ending, and people who are already under contract to sell their existing homes that are still moving. Will we see vacation and luxury home sales stall? Maybe. But from what we are seeing on the ground – real estate is still selling. Especially under the $1,000,000 mark.
What I’m Seeing on the Ground
Things I am concerned about amid Coronavirus
Mortgage Forbearance Programs: People who’ve been living paycheck to paycheck without any savings who’ve had a job loss are going to be hit the hardest. If this whole thing has taught us nothing else – it is imperative to have savings, at least 6 months worth. Dave Ramsey is about to get a whole bunch of new fans.
While the government says landlords can’t evict, and that foreclosures will cease – that’s not what I’ve seen on the ground nor what I saw when they did this during Hurricane Irma. I am hoping that this government does things differently and that lenders are forced to offer 12 month forbearances for people with job losses that put the missed payments at the end of the loan. 46% of mortgages are owned by Fannie Mae and Freddie Mac and the government is encouraging them to do forbearance programs. If you don’t know if Fannie or Freddie owns your loan, click here to look up this information.
However – it’s very important for consumers to read the fine print on any kind of “program” like that they sign up for with their lender or landlord and ask what happens with the missed payments. During Irma, a friend took advantage of a mortgage forbearance program and he thought that the payments were deferred to the end of the loan term. In fact they were not – they deferred 3 payments for 3 months, and those 3 payments were due immediately thereafter. He did not have the money and nearly went into foreclosure because he could not pay the current month’s payment plus the few months that had been “deferred”. A little money in his 401K ended up saving him, thankfully, but for people living paycheck to paycheck, that could put you in a worse position. If you are still receiving paychecks and working from home, my advice is the last thing you should try to go late on is your mortgage or take a forbearance. Absolute last resort. And READ EVERYTHING before you sign it. Don’t assume that just because the talking heads on TV are saying the payments go to the end of the loan that that is what your servicer is doing. Make 100% sure.
Landlords Ceasing Evictions: Just because the government puts these programs into place doesn’t mean every slumlord is going to abide by the rules – again read fine print and have a plan. For people who have leases ending and landlords already have a new tenant set up to move in at the end of the lease, these people are going to be in a bad position right now and I’m not sure how the government’s program to cease evictions comes into play in that scenario. Although we all know we are supposed to be staying at home, Realtors are facing clients who’ll be homeless if we don’t find them something – either virtually or in person. Also people who’ve had their home under contract to sell prior to this, they are still contractually obligated to close and have to have a place to move so it’s proving difficult for agents who are trying to social distance but also know the position their clients are in.
Opportunities: Billionaires like Warren Buffett buy when everyone else is selling. It’s true in the stock market and it’s true in real estate – i.e. think back to those hedge funds. Interest rates are in the low 3’s right now providing a fantastic opportunity to lock in a great rate and potentially find a well priced home. I made an offer for a client yesterday and was able to negotiate $15,000 off the asking price and my client got a 3.375% interest rate. Her mortgage payment will be lower than her current rental payment. Can’t beat that! In the market I’m in, it’s been tons of offers over asking price up until now in the last few years, so to get $15,000 off was great for my client. Does this indicate the market is cooling off? Sure, it might a little while people let fear get the best of them, and as some people who’s money is tied up in stocks take to the sidelines. But is it going to crash and see properties at 50% off? Um, no. Sorry you missed 2008. People still need somewhere to live and demand remains high. I do think we may see the luxury market and vacation home market stall a bit more as they are more discretionary purchases, and you may find some deeper discounts on those moving forward. Time will tell.
What Does it All Mean? Well if you are a buyer or a seller, you may thinking, ” Is now a good time?” The answer is still yes on both fronts. Home prices are still close to the highest we’ve seen in a decade, and even if things cool a tad, you’ll still be getting a great price for your home if you sell now. If you’re a buyer – hello 3.375% interest rate! Lock that in, and you too may be able to take advantage of slightly more negotiating power than we’ve seen before.