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Have Health Concerns Affected The Real Estate Market?

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There are too many unknowns to predict exactly how the housing market will emerge from the COVID-19 pandemic, but previous virus outbreaks in the 21st century may shed some light.

Have Health Concerns Affected The Real Estate Market?

A month and a half into a national emergency that has shuttered the economy as the U.S. battles with the coronavirus pandemic, the real estate market is already bearing the impacts of the health crisis.

Local policies that ban in-person home showings, inspections, appraisals, and document signings aside, both homebuyers and sellers have instinctively pulled away from the market ahead of what would typically be a busy spring season.

According to the National Association of Realtors, existing-home sales dipped 8.5% from February to March, although year-over-year, they remained in positive territory with a slim increase of 0.8%. But these figures reflect the closing of transactions that had been initiated at least a month prior. Because of the data lag that exists in the real estate industry, the true current effects of COVID-19 may not begin to emerge in statistics until early summer.

“What we're going through right now is an induced recession,” says Skylar Olsen, senior principal economist for real estate information company Zillow. “We made this, right? We had to make it because the coronavirus was a very serious public health risk.”

While divergent from the last recession, which began with an overheated housing segment, the current circumstances – namely, the impacts of health scares on real estate – do have precedent, which could offer insights into what may lie ahead.

With its deadly toll, the coronavirus pandemic is now eclipsing past outbreaks, which did not prompt the lockdowns that are currently gripping the U.S. as well as a slew of other countries around the globe. Here is how the COVID-19-induced fallout in today’s housing market compares to the effects of the swine flu of 2009 and the SARS outbreak in 2003, which charted the first pandemic in the new millennium.

COVID-19 vs. Swine Flu

In the spring of 2009, the U.S. was the first to detect a new type of influenza virus, H1N1, which came to be known as swine flu. The Centers for Disease Control and Prevention estimates that in the first year after the initial outbreak, 60.8 million Americans got infected, nearly 300,000 were hospitalized and about 12,500 died.

As of April 29, 2020, over just a couple of months, there are more than 1 million positive COVID-19 cases in the U.S. and nearly 58,000 deaths.

“Back in 2009, the effects (of H1N1) seem to be fairly localized,” with sporadic temporary social distancing, says Javier Vivas, director of economic research at “It was more localized in the south. Whereas in today's situation, you really see it in almost every major city.”

The swine flu, to an extent, slowed the housing market’s recovery following the Great Recession, which ended in June 2009. In a post on, Vivas writes that nine months after the H1N1 infection peak, existing home sales plunged double digits, a slump that lasted for five months. At the same time, inventory grew, pushing prices down.

Only about two months into the spread of the coronavirus in the U.S., home sales have dipped, but for now, prices retain their strength as sellers are taking their homes off the market – at first, to avoid inviting potentially sick strangers in.

“One of the items that are interesting is how this virus today is nearly shifting the traditional dynamics, even within the near term,” Vivas says. “Typically, in land , you see sellers react after buyers react. So, sellers wait for buyers to make the move. What's different today is that (sellers) had to pull back on the listings. The fact that sellers actually are reacting before buyers make this a really odd time of the year.”

A decade ago, the economic consequences of the swine flu compounded with the end of the homebuyer tax credit, enacted in 2008 to spur housing activity and make properties more affordable to first-time homebuyers. Moreover, it slammed the country during its still nascent Great Recession recovery, when some indicators had just begun to rebound.

This year, the coronavirus has already purportedly halted the longest economic expansionary period in American history. While some economists had predicted a recession in late 2020 or early 2021, the pandemic has triggered the onset of what is a mandated downturn (leading to 26 million jobless claims in a month), whose length could dictate how fast the housing market bounces back.

“The recession (we were expecting) even before the virus hit, we knew it was going to be closer to what we would call a normal recession where you see a gradual deceleration in indicators,” Vivas says. “Then you see the housing market somewhat buffered, but not completely unimpacted."

He comprehends As it relates to (the coronavirus), the degree of the sterile situation is a lot more prominent. Yet, financially, you could see a lot quicker recuperation on the grounds that the essentials were in a superior spot before the infection hit contrasted with 10 years prior." 

COVID-19 versus SARS 

At the speed with which the pandemic has unfurled, COVID-19 incited a monetary droop that takes after the quick downturn that happened in Hong Kong during the four-month SARS episode in the spring and late-spring of 2003. 

Brought about by a coronavirus and first announced in Asia, SARS contaminated in excess of 8,000 around the world, causing almost 800 passings before its control, as per the World Health Organization. While the size of SARS fails to measure up to COVID-19, the social measures and their effect on the Hong Kong lodging market fairly track the course of the present pandemic. 

Like the American economy preceding COVID-19, Hong Kong's economy in mid-2003 delighted in an extension with dropping joblessness rates – before SARS prodded a downturn. Zillow reports that during SARS-like what's going on in the U.S. today – home costs in Hong Kong opposed a decrease, while exchanges fell altogether as inhabitants rehearsed "evasion conduct" by evading travel, eateries and open social events. 

In spite of the fact that COVID-19 and SARS incomprehensibly contrast in their intensity, "I think the expectation is in the exercise that, from at any rate the Hong Kong SARS pestilence, the downturn was a prompted downturn," Olsen says. It was a 'tick', it happened fast and along these lines the recovery was snappy as well. 

A dash of hopefulness in the U.S. lodging business sector may as of now be developing. As indicated by Zillow, pending home deals decelerated in the second 50% of March and remain generously lower contrasted with February, yet in the week finishing on April 19, they were 6.2% higher than the earlier week. Also, while the stock has gone down, home estimations stay consistent at almost $250,000 in March, posting a 4.1% year-over-year development.

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Kenitchou kamel eddine is a real estate blogger and editor. Email your real estate news ideas at [email protected] facebook twitter pinterest tumblr