Real Estate Market Update September 4 2020
Hi, everyone. It's Brad Rozansky, and it's our August 2020 real estate update. It's been quite a summer. It's a summer that none of us will forget for the rest of our lives. We thought we'd tell everyone what we've learned about COVID and real estate over the last six months. In putting this video together, we came up with five points we want to share with our clients.
The first point, quite frankly, is the most important and the most serious. We're not aware of one buyer or one seller getting sick from their home being on the market or looking at homes to buy during this pandemic.
Number two is what we call finessing offers. We've had the experience now where people have shown that they're going to pay cash for a new home. The problem is a lot of that cash is coming from the stock market. As we're all going to remember, the market took a dive earlier this year down to about 20,000. I know settlement attorneys who lost four and five deals because those buyers didn't cash in their stocks. Then when it came to settle, they were short of funds.
We recently did a transaction on a house on River Road where the buyer was also getting some of her assets from the stock market. What we did, which we thought was quite ingenious, we demanded a 10 day settlement, and the buyer agreed to that, which made her sell her assets immediately. She allowed the seller to rent back for two months. It worked out great for everybody.
How long can the sellers market continue? It's been a record. It's been going on for years. What events may stop the sellers market? Number one is interest rates. If you've been following the market, you know you can get a 30 year loan right now below 3%. It's just really quite remarkable. If interest rates go up like they did earlier this year by 2% or 3% and they stay high, the market could come to a grinding halt.
The stock market. If the market adjusts down again and doesn't go back up, people aren't going to feel good. You need to feel good about a discretionary move. Also, lenders. It's becoming harder and harder to qualify for a loan. If a lender feels that you have a job that may not be secure, you may not qualify for that loan you're looking to get.
(Point number three) Lastly, let's hope and pray we get a cure for this virus. What that could do is all of a sudden put a big influx of inventory on the market because now people can move ahead with their plans. If all of the sudden we have 50 houses for sale in 20817, that's going to affect values and the market would probably slow down.
Point number four, a term we call COVID appreciation. You ask, "What is that?" If you live in Potomac, COVID has helped the price of your property go up. Where we have seen values in Potomac generally depreciate, especially in the larger homes, because of the virus and people wanting to have their kids and their parents move in and maybe their grandkids, all of a sudden, the large homes have become in vogue again, and especially those on bigger pieces of property that may have a swimming pool and/or tennis court. If you live in Potomac or a large home and you were contemplating moving, take advantage of this opportunity that hopefully will never happen again.
(Point number five) Our last point is, should I sell now or should I wait? The reality is that's a personal decision, but we know sometimes this process takes years and years. This window that we have right now may not be around next year. Quite frankly, we all hope that it won't. With this window of low interest rates and no inventory in your home that may or may not be perfect, there's no better opportunity to move ahead with those plans than today.
Lastly, if you'd like to set up a confidential interview to talk about your home, we can do it safely. I arrive in a mask, but you can recognize me how I look today by my beautiful eyes. Please reach out to me at 301-656-7700. I'll look forward to catching up with you. Be safe.