During this period of a pandemic, there is a lot of anxiety and for good reason. People are getting sick and dying at a rapid rate. We are all vulnerable. In addition, the economy is taking a big hit. In relation to the real estate market locally and nationally, real estate activity has been evaporating. For whatever reason, Buyers are on hold and Sellers are postponing their marketing plans. There is too much uncertainty regarding the virus control and the economic recovery. How will this impact the real estate market going forward?
There are two graphs below. The data comes from the South Lake Tahoe Association of Realtors MLS. One graph shows the number of pending sales. It’s an interactive graph. So if you run your mouse on the graph line, it will show the number of sales each month. If you go to the end of the graph, you will see that the number of pending sales drop from 39 in February to 28 in March. Most of the March sales occurred before the “Shelter in Place” was activated in California. Otherwise it was on trajectory to surpass February sales.
The next graph shows the “Months Supply”. If you run your mouse along the line, you will see the months supply for each month. The month supply is calculated by dividing the number of active homes for sale by the rate at which they are selling. For the month of March it shows 2.7 months supply. This means that given the rate at which homes are selling, all of the available homes will be sold within 2.7 months. The widely accepted definition of a “Seller’s Market” is a month’s supply that is below 2 months. By definition, March may be considered more of a seller’s market.
Although we know that this doesn’t tell the whole story. Due to the lack of market activity, it’s hard to determine the path that it is on. Between the virus and the economy, there are just too many unknown variables. In my opinion, I believe that the economy will rebound but that is dependant upon the control of the virus. How will that affect the supply and demand in the months to come? All we can do is speculate.
I would be interested in hearing about your thoughts! How do you feel about the real estate market and where do you think it will go?