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Testing 1, 2, 3?

Posted by John Hathorn on April 17, 2020
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You’ve probably already read that Wuhan emerged from its 76-day lockdown last week, implementing mass testing as one of the most important elements to recovery. Across China, officials are simplifying and speeding up the process to obtain a nucleic acid test, even though questions persist about its accuracy.

So far, I personally know only one person on the Westside that has tested positive for the virus. He is a good friend of mine, in his 60’s and shows no symptoms. He was tested at the drive-up test center in Malibu. He tells me he was passing by, there was no line, he stopped and asked what the requirements were for a test. He was told they had plenty of test kits and to go for it. 3 days later he was surprised to learn he was positive. Of course, there are plenty of false positives and probably an equal number of false negatives, but he is now self-quarantining in a much more stringent fashion than ever before.

Possibly some good news:
Analysts said the threat of a much deeper and prolonged downturn is starting to dissipate as new coronavirus cases decline in major economies and a raft of monetary and fiscal stimulus takes effect globally. Market sentiment was boosted by data showing China’s exports fell only 6.6% in March from a year ago, less than the expected 14% plunge. Imports fell 0.9% compared with expectations for a 9.5% drop. (Reuters)

Meanwhile, according to the Wall Street Journal, about two million homeowners are skipping their monthly mortgage payments. According to industry data released on Monday, this number is forecast to rise further as more Americans lose their jobs as a result of the coronavirus pandemic. Approximately 3.74% of home loans are in forbearance as of April 5th, according to Mortgage Bankers Association data, up from about 2.73% the prior week.

I was on a Zoom call with about 700 other Compass agents yesterday. We were surveyed for our thoughts on what real estate will look like in the near future. The finds, while interesting, don’t come as much of a surprise to me. Here are a few survey results:

Once the shelter in place (SIP) is relaxed, how will home values over $3M perform?
– 45% think they will be off more than 10%.
– 38% think 5%-10%.
– 12% think values will remain about even.
– 5% think home values will be up.

Once the SIP is relaxed, how many people will there be looking to sell their property?
– 46% think there will be more Sellers than normal.
– 33% think there will be about the same.
– 21% think there will be fewer.

Once the SIP is relaxed, how many people will there be looking to buy property?
– 40% think there will be fewer Buyers than normal.
– 33% think there will be about the same.
– 27% think there will be more Buyers.

Compass has done some serious forecasting for the Spring real estate market and are updating their projections based on the containment of Covid-19 and the expected duration of the SIP. The current expectation is that we will see only 37% of the usual housing inventory we normally would have in April. If the SIP is relaxed mid-May, we will see 52% of the May inventory and be up to 80% in June.
Really gazing into the crystal ball, the forecasters believe that 2020 will close out with 7% less market activity than we saw in 2019.

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