We are right now in a unique situation not seen before. I thought it prudent to research how Coronavirus is affecting the economy and Bozeman real estate market
Our lives have changed drastically in the past week; kids are home from school, trips have been cancelled, gathering places closed. We also have anxiety about what is going on out there; not only do we have anxiety about being ill, or perhaps carrying the virus to someone who may be at risk for serious complications from the virus, but we also have anxiety about the fact that our financial world has been turned upside down. This perhaps brings back bad memories of the 2008 crash and the recession that followed.
So let’s try and address some of these anxieties caused by the Coronavirus outbreak:
First of all, you are doing everything right if you are following the steps recommended by the CDC. https://www.cdc.gov/coronavirus/2019-ncov/index.html These steps are in your control and should keep you and your household healthy. Do them and feel good about it!
At Windermere, we are fortunate enough to be backed up by a strong company with many resources. Some of our financial and economic experts have reached out to us to explain how they see the economic impact of this and the effect on local housing market.
Following is a summary of likely effects of the Coronavirus to the US economy as a whole.
These were communicated by Matthew Gardner, Chief Economist for Windermere.
- The Economy will contract. With the disruption to life, travel etc., we are all spending less money.
- The Stock market has lost value as a result of the uncertainty of the situation and how long it will continue.
- Home inventory on market will probably decrease in the next few months as people will not want others in their homes.
- Buyers will want to take advantage of low interest rates but buying will probably decrease as well as people are uncertain about economy and some may need to wait for stock market to come back up.
- Economists believe that towards Q3 and Q4, economy and stock market will pick back up.
- Mortgage interest rates will stay low however.
- Housing as a sector is well positioned to come out of this positively.
- Banking rules that were put into place after 2008 have protected housing and made sure that the upside down equity positions held by people then do not exist anymore.
- Inventory will be tight as households are being created but not enough housing being built overall in US.
An analytical look at Coronavirus and Bozeman real estate:
- Our area is positioned well to weather this kind of storm. We will see some impacts as noted above but we will also rise out quicker than other areas of the country.
- Why? Our fundamentals are strong.
- Bozeman area is noted as #1 in economic strength for micropolitan areas in US. https://www.prnewswire.com/news-releases/policoms-2018-economic-strength-rankings-for-933-communities-announced-300585848.html
- We have had increased demand and not enough supply of homes for many years. This has meant that our median price of a single family home has gone from $329,000 in March of 2015 to $520,000 in February of 2020 and our months of supply has gone from 4.3 months in March of 2015 to 2.2 in February of 2020.
- Our unemployment rate is very strong most recently being at 2.4% down even from a year ago when it was 3.%. The highest is has been since 2015 is 3.4%. The interesting thing here is that US Federal Reserve puts natural unemployment at 2.5-3.5% as people move around, change jobs etc.
- Bozeman is a unique place to live as we all know and why it attracts so many new residents each year. Our quality of life, access to the outdoor activity, ability to earn a living make it truly distinctive. This will not change.
In the immediate future, what will happen?
- We will have at least two weeks of social distancing to help prevent the spread of this virus.
- Diagnosed cases will rise because of increased testing.
- The strategies that the CDC and government have recommended to prevent spread will work.
- There will be positive news about a vaccine for the future.
- Discomfort and anxiety will continue in our lives and in the financial markets until things become certain and we have started to see decreasing cases.
- There is a massive fiscal stimulus coming that is pointed at people and industries most affected by this.
- Recovery will happen relatively quick as our US economy fundamentals are strong.
I will continue to update my blog MoveMeToMontana.com with more information and analysis as I get it.
A disclaimer – I am not an economist but am culling information from economist’s opinions and presenting factual statistics about Montana. However, one should read this article about how Coronavirus is affecting the economy and Bozeman real estate market as my opinion. I have curated the information and summarized it in this piece.
Stay healthy and please do what you can to help local businesses! Shop online with them, order take out, buy gift cards. They really need our help right now.