Will the COVID-19 Downturn Make Homebuying Easier?
April 6, 2020
Following the financial crisis of 2008, buyers were able to purchase housing at bargain prices. Some Americans, particularly millennials who have been largely priced out of homeownership, anticipate a similar buying opportunity should the economy fall into a recession after the coronavirus outbreak.
Unfortunately, the housing market following the 2008 recession may have been an exception, not the rule. It is important to note that the 2008 recession did not cause the housing market collapse, but was caused by the collapse. During the three recessions prior to 2008, home prices actually increased.
Zillow looked at how the housing market reacted to previous pandemics and found that while the number of transactions fell, prices saw little movement. Of course, previous pandemics were not of the scope and scale that the coronavirus is, so it is hard to tell what will happen. In the weeks before the outbreak, record low inventory and historically low mortgage rates were poised to drive prices higher. It is too soon to tell if the coronavirus will dramatically change the underlying conditions in the market.