Forces at work in the Ocala real estate market:
Should you list your Ocala home for sale today? We are living in an environment of fear and uncertainly. However, calmly examining our economy and your financial situation will enable you to answer this question in a way that is best for you and your family.
Clearly, the key force at work in today’s Ocala real estate market is the pandemic. All fifty states are in one stage or another of reopening their economies. But a majority have ignored many of the five basic CDC guidelines designed to test whether they are ready. Only three states have complied with four of the five, while seventeen have complied with two or fewer.
To date, national infection rates have hovered between 20,000 and 25,000 new cases per day. Furthermore, the total number of active infections is increasing daily. Therefore, there is evidence of a leveling off or flattening of the curve. But there is no data to suggest a downward trend in infection rates. Additionally, dangers loom because many people are disregarding social distancing and other safety recommendations. In Ocala, I have noticed that most people have discarded their masks and many are ignoring other CDC advice as well. When coupled with the prospect that most states have chosen to open too soon and too broadly, ignoring safety in this way poses a significant risk of new outbreaks of the infection.
Encouraging news on the medical front:
On the positive side, there is encouraging news with respect to the development of a COVID-19 vaccine. Labs in New England and Great Britain’s Oxford University are reporting significant progress. Oxford has conducted clinical studies which hold particular interest. The university has completed phase I clinical trials with very positive results. Therefore, its scientists are combining phases II and III into a single step to accelerate the development of their vaccine. Further, they report that a stable and effective vaccine may be available sometime next year. Our government has even pledged to buy $1.5 billion of the vaccine should it pass clinical trials. But we must recognize that encouraging early results are not a guaranty of ultimate success.
The impact of stimulus legislation:
Congress has enacted legislation designed to minimize the economic effect of the COVID-19 pandemic. The impact of this legislation falls into three categories.
The first is a direct cash infusion into our economy. The intent is no put cash in the hands of those who would spend it. Of course, the expectation is that demand will be reinforced and this will help economy to stabilized. There is no doubt that this action was imperative. But the crisis has engendered fear and therefore people are saving at higher rates than normal. As a result, the cash infusion has created somewhat more muted results than hoped for.
The second category is a stimulus designed to re-arm the Fed and allow it to actively mitigate the economic effects of this calamity. As it did during the subprime debacle, the Federal Reserve has been buying up bonds at a rapid rate. This is expected to have a stabilizing effect on money markets, which should prove very beneficial. But we must not overlook the fact that the Fed now has the ability to put $4 trillion into play. Clearly, it has just begun to act.
The impact of forbearance on listing an Ocala home for sale:
The third category is the forbearance provision in the Care Act. This allows mortgagees whose loans are guarantied by federal entities to forgo mortgage payments for up to a year. The hope is that this will allow most homeowners to hold on to their homes. In turn, it may shield the real estate market from facing a flood of foreclosures and short sales. Our legislators have clearly learned a valuable lesson from the subprime recession. Of course, if you have decided not to list your Ocala home for sale, you would be wise to consider the benefits of this opportunity.
However, unemployment threatens to overpower the impact of forbearance. During the subprime period, unemployment claims in a single week peaked at near 700,000. However, in our current crisis claims peaked at 6.6 million in a week, or nearly ten times the record set during the subprime crisis. Additionally, the unemployed have already filed over thirty eight million claims and there is risk of job losses becoming permanent. In fact, some economists are projecting that as many as 42% of the unemployed will not recover their jobs. If this comes to pass, even forbearance may not be enough to prevent distressed properties from dominating the market.
Is this the right time to list an Ocala home for sale?
Currently, the stock market is pricing in a V shaped recovery. But economists, real estate pundits and government officials are trending towards expecting a slower, U shaped recovery with significant risks of a worse outcome. Forces negatively impacting the real estate market include the lack of clarity as to the direction our economy will take and the lack of medical tools needed to defeat COVID-19. As scientists rush to find solutions, we face a threat of future outbreaks and uncertainty as to when or if vaccines and therapies will become available.
On the other hand, forces which bode well for our market include financial stimuli, the power of the Federal Reserve and the forbearance provision, all discussed earlier.
Financial strength gives you options.
No-one has a crystal ball, so in a situation like this, it is wise to weigh risks instead of trying to prognosticate. Therefore, consider the following recommendations.
If you are in a financially stable situation, your source of income is secure and you have sufficient reserves, you are in control. Therefore, if you want to make a change, you may decide to list your Ocala home for sale now. You will benefit from record low interest rates and avoid the risk that your home’s value will tumble and the market for it will shrink, should economic trends point south.
On the other hand, if you are happy where you are, take heart in the knowledge that any future loss of value to your home will be merely a paper loss if you take a long term view. Therefore, you may find refinancing at today’s record low interest rates a beneficial course of action.
Under financial stress? You may be wise to list your Ocala home for sale.
If you are in financial difficulty, or envision difficult times ahead despite forbearance, you may be wise to list your Ocala home for sale now. By doing so, you will be benefiting from extremely low mortgage interest rates which will allow more buyers to qualify. Of course, you will also lower the risk of loss of value to your home should economic forces weaken demand. Additionally, you will be taking advantage of the current low inventory of listed homes and minimizing the risk that your home will have to compete with a flood of distressed properties sometime if the future.
When in doubt, consult your financial advisor for guidance to help you make the right decision for yourself and your family.
Do your analysis and seek advice. You may find this to be a good time to list you home.
Andy Kruglanski, Broker