The coronavirus has stalled the US housing market.
In order to reduce the spread of COVID-19, potential buyers decided to postpone their home purchases. "We will have a halt in the housing market because people are not seeing homes, and also because the overall economic activity is declining in almost all sectors of the economy," Tendayi Kapfidze, chief economist of Lending Tree, said.
Over the past week, major brokerage companies have canceled their display of real estate.
"People are mostly not going to go and watch at home instead... You don't want to be around people you don't know, for example. And, more importantly, people who have homes for sale don't want people who are going to see their homes to touch everything," Kapfidze said.
According to Kapfidze, the uncertainty is likely to cause buyers to suspend their search for housing despite the record-low mortgage rates.
"I think we are guaranteed a downturn at this point," he said.
Moreover, according to Kapfidze, the government should expand credit lines for lenders so that they can provide assistance to homeowners who can't pay their mortgages. As of March 23, the US government announced a moratorium on Federal-backed mortgages. Banks such as the Bank of America, Capital One, JP Morgan Chase, Goldman Sachs, TD Bank, Wells Fargo and others are also offering mortgage payment relief, but there is currently no full nationwide pause on mortgage payments.
According to Kapfidze, "for many people, the cost of their housing is the biggest expense they face on a monthly basis... By introducing this mortgage freeze, you are helping many people who are experiencing interruptions in their income flow..."
Despite the suspension in the housing market, homes and other properties are likely to retain their value compared to stocks and other invisible assets, Kaprize said, adding that the value of illiquid assets is safer than the value of liquid assets.
"House prices, I think, will just freeze. And then, when the public health crisis is over, the housing market can restart," he noted.
