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Welcome everyone to another episode of
the Selling Greenville podcast I am your
host Stan McCune realtor right here in
Greenville South Carolina and today we
are going to be doing a special episode
I didn't an original Ally planned to do
this but I was like you know what what
the heck we're going to do a special
episode on the Corona virus otherwise
known as
covid-19 I guess that's how people are
calling it but how the Corona virus
is potentially going to affect the real
estate market this is a question that
that I've been getting from some people
something that I've been thinking about
I've actually been following this virus
for a while I've been following it since
it's been in China
it looked like it was pretty bad over
there we had all this footage of Chinese
government officials spraying down the
Interiors of of buildings and I have
friends over there in China that I was
talking to trying to get the inside
scoop they were quarantined in their
house for what seemed like forever
and so I've been thinking about this for
a little while and now here we are
Spartanburg has its first confirmed
case of the Corona virus so it's coming
it is is coming to Greenville I'm sad
to say that we have all these
events coming up here in the spring
artist feere and pretty soon there's
going to be you know St Patrick's Day
parades and whatnot I'm scared that
we're going to start seeing some of
these events some of these events start
to get cancelled due to people being
concerned about the Corona virus and
wanting to make sure they don't
contract this
virus but how is it going to affect the
real estate market I think that there is
a very real possibility that it could at
least in the short term have a major
effect in fact we are already seeing it
having a major effect believe it or not
the low interest rates and I'm not going
to get into all the specifics on on why
this is the case but the mortgage
interest rates right now are at historic
lows we have not seen mortgage interest
rates this low in almost 10
years and this is directly related to
the Corona virus it's directly related
to what the Federal Reserve is doing in
response to fears over the Corona virus
we are seeing mortgage rates lower than
honestly than we than I ever have at
least as as long as I have been in this
business I have not seen rates this low
I didn't think we would ever see rates
this low when I when I bought my first
house interest rates were almost double
what they are right now for for
someone that has a really good credit
score and it's just crazy I mean it
you can get a 30y year conventional loan
in the low 3% range that's like almost
free money
3% I mean like that is as close to
zero as you can expect for someone to
you know just lend you several
hundred, and so we're already seeing
that impact that and that's great for
buyers it it's been a sellers
market for a
while and it's been that way with
interest rates being pretty low but but
they're going even lower and the
question now is is it going to stay a
sellers Market this is the the part of
the
virus and the impact that the virus
that could have that we just aren't sure
this is what is is a real question
and and let me just say we might not
even be at the bottom of interest rates
I mean some of the things that I'm
reading we might see mortgage rates go
even lower I can't imagine that rates on
a 30-year low on a 30-year loan on
a house could go down into the 2% range
but listen right now all bets are off
for the next few months and I think it's
going to go down a little bit before it
goes back up it looks like the impacts
from this virus will be probably at
least for a couple of months before
things start shifting back now I did
read today in a newsletter from I
believe it was John's
Hopkins that almost all new cases that
are being reported of the virus are
outside of China 99% of new cases are
outside of China now of course there's a
question of whether or not the Chinese
government is reporting everything
accurately whether they're being
completely honest I have to assume for
the sake of of my sanity and for the
sake of this podcast that people are
being honest because honest
I if if I'm going to be honest every
government has reasons to fudge the
numbers so you know China might be
fudging numbers but so might the US so
might Italy I mean we have no idea who's
fudging numbers if we base everything
off of the assumption that all the
governments are lying then where are we
going to end up so I'm going to assume
that everyone is being honest that the
numbers that are coming out are honest
and that China has seen the worst of it
that things are getting better so that's
good news it was in China for a couple
of months that's what US officials
here are assuming is that it's going to
be it's going to really impact us for a
couple of months and then hopefully
it'll start to get better so that means
a few different things right if this
does impact the housing market beyond
what it already has it'll probably
continue for a few months and unless it
plunges us into a broader recession then
things will probably go back to normal
mortgage rates will probably revert back
to where they were which that you know
they were they were kind of in the the
high 3s low fours kind of area for for a
while there that's probably what we can
expect to happen you know later on this
summer is kind of what I'm
expecting that said
there is certainly the possibility that
what's happening now could result in
a broader recession I mean we're
starting to see the Corona virus impact
some other markets all over the news
right now is that the price of oil is
going down well listen me as a consumer
of oil rather than an investor of oil I
love that that is great we're about to
see the price of gas go down down I mean
heck we might see it go down into the
the 180 170 range I mean maybe even
lower than that now I am all for that
a big part of my job is is driving
around as a realtor and when gas prices
go down that's great for for me
personally now it negatively impacts a
lot of other people and there are Ripple
effects of that so the the question is
will the ripple effect result in a
broader recession my personal opinion is
that this is all going to kind of level
off in the summer that things are going
to return back to normal the the
fluctuations that we're seeing in the
stock market indicate to me that other
people also believe the same thing
that that as people are selling there
are other people out there buying
because the people that are are not
selling believe that this is just a
short-term type of Correction so I I
suspect that that's going to be the same
with the housing market but that said we
are entering one of the hotter what is
typically seasonally one of the
hotter seasons of the housing market the
spring and so what happens if we end up
seeing kind of like a mini recession in
the housing market specifically during
the Spring right when things typically
start getting hot well that could be
very interesting and here is how I see
it potentially getting
interesting
what we could end up seeing so it's
been a seller's market for a while right
we we measure that based on what we
call inventory which in in the
housing World inventorying simply means
well it's just like inventory at a
grocery store you go to a grocery store
and you say wow they have low inventory
of
bread that means that they don't have
very much bread on the on the shelves
well in the housing market if we have
low inventory that means there's not a
lot of houses for
sale and there are all kinds of ways
that that can be measured we tend to
measure that by in terms of of the
number of homes that are available on
the market compared to the number of
homes that are being
sold by the number of months of
inventory in other words if people keep
buying houses at the rate that they're
buying how many months would it be if we
had no more houses come on the market
how many months would it be until we
sold out of
houses we typically think of a half year
as kind of a fair flat Market a half
Year's worth of
inventory so if you have six months of
houses on the market that's kind of
neither a bu buyers Market nor is it a
sellers Market it is a fair market it's
kind of in
between being a buyer market and a
sellers Market if you get less than six
months it's a sellers Market if you get
more than six months this is what we
experienced you know during what became
known as the Great Recession you
start getting nine months 10 months well
now that's squarely a buyer Market the
these are homes now that are sitting for
almost a year
that's a buyer Market we have for
quite some time here in the upstate in
Greenville South Carolina
Spartanburg surrounding areas have
been hovering around three and a half
months of inventory for quite some time
now and that is squarely a sellers
market now there has been
some indications that maybe that number
might go to four maybe five months I
mean we don't know but it hasn't
happened as of
yet the Greenville Association Realtors
has published
statistics that has made it seem like
like for instance in February they
published statistics that said that
January went up to 3.9 months of
inventory but but last year there
were a few months that they reported
inventory levels up in the high 3es or I
believe even maybe the low fours and
then in future months they corrected
that number so I'm not exactly sure I I
feel like we need to wait to see when
they publish February's numbers to see
if they if they adjust January down from
3.9 to to a lower number we I would
expect it to be more like three and a
half three and a half months and then
that would keep us where where we've
been but maybe the Corona virus causes
people to to stop buying
for some reason and now the inventory
levels go up homes sit for longer than
what they've been sitting for and all of
the sudden we get this possibly
temporary possibly longer period of
time where it shifts from a complete
sellers Market to maybe only a little
bit of a sellers Market maybe a you know
kind of a flat Market or a fair market
or I mean
possibly it could shift all the way to a
buyer Market at least for a few months
we we don't know exactly what's going to
happen because here's the thing what
happens if
Realtors start getting this virus and
they end up getting quarantined in their
home for several weeks and now Realtors
can't show homes for their buyer clients
now I have I'm I'm on a team and
and we have we help each other out so
that if one person can't show a house
someone else on the team will show it
for them and and we do different things
to to help each other out and and to
to make sure that our clients are always
taken care of but most Realtors don't
have that most Realtors actually if they
can't show a house to to their client
they just tell their client hey you're
just going to have to wait until I'm
available well if that happened like
majorly across our Market you're seeing
potential Major Market slowdown in the
real estate
world what if people what if buyers are
quarantined what if buyers are maybe not
even quarantined maybe they're just
scared to to get out of their house to
leave their house I mean we've got a lot
of people around here in in this
Greenville area that are really scared
of getting sick let me tell you I've run
into this a lot of time where you know
people if if they hear that someone has
the sniffles they won't go by them if
they hear that a few people at church
have gotten sick lately they'll just
not attend you know worship services for
several weeks just to ensure that they
don't get whatever is going around well
this Corona virus may have a higher
mortality rate than than most of the
other normal sicknesses that we we all
get like flu and whatnot and if that's
the case I could see people really
freaking out and just saying you know
what our little family we're just going
to stay here at home and you know we're
gonna we're going to have our groceries
delivered to to our door so that we
don't have to to go to the grocery store
to Walmart or Publix or whatever it may
be we'll get a subscription to
shipped or or you know who knows what
other subscription Services there are
out there and and we're just going to
stay home and just ride this thing out
well what if that happens and and you
know a huge percentage of the buyers
that are out there stop looking at homes
we could absolutely see a scenario in
which homes start sitting for for
several months and and then the question
is do sellers start getting antsy right
do
sellers start saying well
okay this is probably a temporary thing
so I'm just GNA kind of Ride This Out I
I could see some sellers deciding you
know I'm just going to take my home off
the
market and just wait until things kind
of self-correct and then I'll I'll put
my home back on the market and we'll try
again I could see that
happening I I could see scenarios in
which you know people list their home
because they really need to move like
they got job transferred them
somewhere and now all of the sudden
they're not getting any showings it's a
home that should should be selling
should be getting
showings and they need to move they need
to to sell this home so now what are
they going to do are they going to start
dropping the price are they going to
start getting more
aggressive with
you know trying to make sure that that
the home can can can sell can move I
think that that that's a real
possibility as well there's there's a
lot of Ripple effects that we could see
from from this Corona
virus and we're going into the spring so
so here's what typically happens in the
Greenville area in the spring typically
we
have a
significantly larger amount of homes
start to get listed in the spring and
particularly come April May we start
seeing a lot more homes come on the
market but then even more buyers come on
the market than homes that come on the
market so you know our inventory
levels in
2019 the lowest inventory levels were
in February and
March of last
year but April and May were 3.3 months
in 3.4 months and then it jumped up in
June actually during the summer
inventory levels seemed to be a little
bit higher typically I think that's
because people are going on vacation and
whatnot they're traveling a little bit
they're not out there looking at
homes as much well that all could end
up getting shifted there's a real
possibility that that that we could see
some of that getting getting shifted so
that the the buyers in the Spring end up
becoming summer
buyers and inventory ends up going a
little bit up in the spring shifting a
little bit more in the buyer Direction
and then in the summer ends up that we
have this this big selloff all these
buyers coming into the market now all of
a sudden the the demand overwhelms
the supply we get a bunch of bidding
wars and things just go crazy now I'm
not suggesting that if you're looking to
sell your house that you wait until the
summer because we we don't know I mean
listen I've already said this virus
could have a ripple effect of of
plunging us into a worse recession
not just a a little temporary downturn
but maybe something that's that's worse
that's more of a you know a longer thing
something that lasts a year year that
lasts two years whatever we we don't
know so my personal take is if you need
to sell your
home go about the process like you
normally would don't react to something
that you can't control do what you can
control which is to get your house ready
to sell right and then get with your
realtor go ahead and list the house do
all the calculations look at the comps
look at the homes that are for sale in
the area do all the things that you
normally would
to go ahead and sell the
house but there's a possibility that
we could see the market really shift in
terms of the seasonality of it that the
that the normal seasonality that we see
going into the spring normally it
it ends up really the the springtime
even though more people sell even more
people buy we could end up in a
scenario in which more people are
selling but not as many people are
buying and if that happened it would
be kind of crazy now You might be
thinking well
man are are we at risk for for
something like what happened in like
2008 2009 where we went into the Great
Recession you know I know I I entered
the job the job force in 2008 that
was when I graduated college great time
to graduate college let me tell you
the company that I joined right out of
college was they thought they were
expanding and within the first few
months that I was there they had already
laid off
40% of the company I I happened to to
manage to stay with them because I took
the night shift they needed someone
to work nights and and so I
volunteered to do that in order to keep
my job but are we at risk for for
2008 coming back and for those of you
that that made it through that the
housing market was really really bad I
mean it was and by bad we mean it was a
major buyers market like there's a
there's a point at which it's not a bad
thing for it to be somewhat of a
buyer Market but if it's too much of a
buyer's market that's really bad right
because that means that sellers aren't
selling their home and what ends up
happening when sellers don't sell their
homes is a lot of them won't even
list their homes you know people that
would potentially be considering moving
if they're like well my home hasn't gone
up in value or it's lost value they
won't even list their home and so then
we we have the homes that are on the
market tend to not be good homes they're
homes that nobody wants and they're just
languishing on the market and that was
how I ended up buying my first home it
was my my wife and I we were having a
hard time finding a home during the the
recession it was it was not an ideal
time to to
buy and we had tried to purchase a
few homes Believe It or Not There were
still multiple offer type of situations
happening why because when the good home
would finally come on the market for the
right price there was a there was pent
up demand and so then we found ourselves
I think we put in offers on like 10 or
11 different homes and got out bid on
all of them this is during the
recession and what ended up happening
is that there was a home that was it was
in an area that we really liked and it
was just it was on HUD it was being sold
by Hud and it has just been sitting
there you know that they started the
price at like
150 and then you know they had dropped
the price to
130 and my wife and I we looked at it
and we're just like man this needs a lot
of work
we we don't want a a project like this
but I mean nothing else is working out I
guess you know given the location if we
could just get this like really cheap
and then do our own work to it that
would be fine so we just we put in an
offer for 80,000 and with the with
seller with with the government HUD HUD
was the seller
paying I think 3% 2400 in closing
costs and lo they accepted it it was
listed at 130 and they accepted an offer
for 80 less 2400 in in closing
costs and and that ended up being our
first home and and so that that was a
very weird Market to to buy or to sell
in are we at risk for that I don't
think we're quite at that type of a risk
obviously I I don't want to eat crow
here if we do plunge into a really
bad recession but part of what made that
recession so bad for the housing market
was that it was directly tied to the
housing market they were all you again
I'm no expert in this and I'm not going
to get into the weeds but it was
connected to mortgage back Securities
and all kinds of things like that that
were directly tied to homes so it there
was kind of like a cyclical effect as
homes started losing value then people
started foreclosing and
and it kind of was the the
recession kind of fed itself in terms of
in in terms of homes losing value and
then people not being able to afford
them and then foreclosures happening and
and then the housing market ended up
going down and it and it just kept
feeding and feeding and feeding on
itself at the moment I'm not
immensely concerned about the Corona
virus somehow
causing that direct of an impact to the
housing market to real estate certainly
it could happen and and we have no idea
you know that our economy now is so
complex there's there's gazillion things
that that could happen as a result of of
this but I I don't think that it even
in the worst case scenario that it will
end up being as bad for Real Estate as
what we saw in in 2008 2009 2010 you
know it really it continued on until
really 2011 then we started locally here
in South Carolina started to see things
really start picking back up in
2012 so I personally am am not
concerned about that I am personally
operating under the assumption that we
will see a little bit of a Slowdown but
that we will see a
recovery in two to three months and
so I think that that is a realistic way
to approach
it I I think that that is the non
alarmist way to approach it and if
you're a buyer right
now man listen you need to take
advantage of the fact that we are in we
have a unique window here where mortgage
rates are really low like you can buy a
house a $200,000 house now for less than
what you'll buy a 200,000 house $200,000
house for in six months why because your
interest rate right now is lower than
it'll probably be in six months so
literally your monthly payment on the
same house at the same price will be
less so if you're a buyer right now
get out there if you're thinking about
buying get out there and start looking
at houses like now is the time to buy
now if you're a
seller here's what I would say to
you I I've already alluded to this but
but you still need to proceed under the
assumption that you're going to
sell if you list your house and
immediately the upstate just goes under
quarantine
you don't need to freak out and here's
why everyone is going to be experiencing
the same thing and and so here's what
usually happens right when a home
sits on the market for a while that
really hurts the value of the home
because people are seeing that sitting
on the market and they're saying well
they're probably going to accept a a a
lower price because obviously it's
sitting on the market it's overpriced
it's just sitting on the market it's
languishing and so then you start
getting the people that come in that try
to lowball you and try to try to get the
price down
if we had a scenario in which
everyone or or a large percentage of the
people in our area were basically
quarantined and we had like a month or
two where just nobody is looking at or
buying
houses then the entire Market is
experiencing that and everyone knows
that it's probably going to rebound just
keep your home your home out there
don't don't pull it from the
market those buyers that are out
there are going to be probably very
serious buyers so you you don't want to
miss out on one of
them but I would not be concerned
that your your home is losing value by
staying out there because everyone is
going to be in the same boat we're all
going to have listings that are just
kind of sitting out there that aren't
selling and if if you're not in a
desperate
situation then let your listing agent
know that tell your listing agent Hey
listen I'm not in a desperate situation
here let's ride this out and let's
see if the economy rebounds and then
when the economy rebounds everyone
should see should see an impact from
that and like I said if the economy
rebounds here's what's likely to
happen so let's say that you and a bunch
of other people list their homes like
normal here in the next few weeks and
then almost right away the market
collapses due to coron virus fears and
so
homes basically stop selling like at
least in the capacity that they're that
they were people that were thinking
about listing their homes a lot of them
aren't going to take the advice that I'm
giving on the show they will say well
hold on I'm gonna wait and see how this
plays out first because I don't want to
take the risk of listing my home and
then and then my home not selling so
then we're going to see excuse me we're
going to see all the sudden a lot fewer
homes coming on the market because a lot
fewer homes are being
bought what happens when the economy
does Rebound all of the sudden a bunch
of buyers are going to flood the market
and the homes that are out
there odds are will not be enough there
will not be enough inventory there will
not be enough Supply to support the
demand of all of those buyers flooding
the market at once and so those homes
that have been on the market for a while
they're going to be the first ones to
get snatched up and then all the sudden
you're going to see an influx of all
those sellers hitting the market and
trying to sell their house just you
know all at once and those that waited
and that list their house after the
market has already
rebounded
they that strategy might work but 's a
risk to it there's a risk to it that
they are going to list their house at
the same time as a bunch of other people
and then they will end up with their
house languishing on the market so I
always think about this from the
standpoint of what would I do right if I
were a seller right now and of course
I'm always buying and selling homes just
as part of of the real estate
Investments that I do I don't have any
that right at this moment I'm trying to
sell but there there's probably going
to be a few transactions I do here in
the next in the next few
months listen I'm I am ignoring this
Corona virus from the standpoint of of
whether I decide to buy or sell I I am
operating under the assumption for my
own personal purposes that it will not
have a long-term
effect and I I mean like I said it may
have a long-term effect and if you're
in a situation where you're just kind of
like I might want to buy I might want
to sell I'm not really sure maybe
it's best if if you kind of have that
wishy-washy perspective maybe it's best
that you wait and just kind of see how
it all plays out but for the average
buyer or seller who is really ready to
take that next step to list their house
to start to start looking at houses I
think you you should move forward
understand that anything that happens in
the market it's not just happening to
you it's happening to everyone and
everyone is going to realize that and
people aren't going to be in my opinion
deducting value from homes that sit
on the market simply because we had a
really unusual pandemic that that hit us
that caused for for a few weeks of
the real estate market to to to shut
down and what if it is a longer term
recession I mean again if you need to
sell you need to sell regardless of what
the economy is doing so there's no point
in in trying to to wait and time the
market just right if it's going to be a
longer term recession you're still going
to have to to deal with that and you're
still not going to know exactly when the
economy is going to rebound and
sometimes it looks like the economy is
rebounding and it doesn't you know
sometimes all the sudden the stock
market has a really good day and then
the next day it looks like it's going to
completely collapse it's not a good
idea to try generally speaking to try to
time the market when you're buying or
selling there are even though it's a
sellers market right now there are good
opportunities to be found as a
buyer just because it's a seller's
market I'm not going to wait until it
flips back to being a buyer Market again
before I ever buy another home that
would be silly and I think we need to
take the same approach when it comes to
something like a pandemic like a a
potential disrupting Force like the
Corona virus covid-19 or whatever it is
that that you want to call it and
what I hope is that it doesn't really
disrupt our Market but I think it's good
to assume ass that it will impact us at
least in a small way and and if it
does you will be ready now because you
have listened to this podcast and you
will be in a position where you can take
full advantage of the market
fluctuations and take full advantage of
the record low interest rates and do
what you need to do to buy and sell the
properties that you need to buy and sell
and that's it that's all I have for
you today so I hope that that's helpful
and I hope that you don't get the Corona
virus because I've heard that it's it's
not fun you know you're just coughing a
lot and and I don't wish that on on
anyone so stay healthy stay in the
market if you need someone to help you
as a buyer agent as a listing agent in
the Greenville Spartanburg even
Anderson or or or Pickins County
areas I'm your guy can find my contact
information in the show notes I'd be
more than happy to talk to you about
your real estate needs but in the
meantime hope you guys have a good one
like I said stay healthy
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