Economists have been predicting a global economic slowdown in part to the spreading of CoronaVirus within China’s borders over the last two months. China produces 30% of the world’s total manufacturing capacity. Plagued with a highly contagious illness, China has been forced to slow and even stop production altogether to contain the spread of the disease. This halt in manufacturing has a daisy chain effect to the rest of the world who relies on goods from China to operate their business. Friday’s massive drop in the stock markets was a reflection of investors heightened concern for the future economic impact with the virus spreading more broadly. 

Ok I got that, but how does all this impact my decision to buy or sell a house in Arizona? 

A short term drop in the stock market doesn’t immediately correlate to a decline in the housing market, but it does negatively impact anyone who might need to sell stock in order to fund a downpayment. On the positive side, as a result of an unstable stock market, the Federal Reserve dropped interest rates in an effort to stave off a potential recession. For homebuyers, a lower rate increases purchasing power (i.e. you can buy a more expensive house for the same monthly payment). For homeowners, it presents an opportunity to refinance to save money on monthly payments. 

If we circle back to the client I mentioned earlier, he actually didn’t have much invested in stocks so it had very little impact on his immediate financial outlook. However, he was considering a cash purchase but determined with the historic low mortgage rates that financing would be a better option. I’m happy to say that this client is now under contract and thus the CoronaVirus didn’t contaminate this home purchase (pun intended). 

The big unknown in all of this is how far the virus will spread and how long will it take to contain. A country of people afraid to leave their house and conduct business as usual for a long period of time could slow the economy enough to impact both the job and housing market. In the midst of all of the fear of what’s to come, some facts remain the same here in Arizona: The population is growing, housing inventory is low, prices are going up, interest rates are at historic lows, and I’m still your trusted real estate advisor.

Lindsay Fricks, Helping you, your family and friends Live & Love in Arizona