LEXINGTON, Ky. (LEX 18) — A global pandemic that had originally wiped 10,000 points in gains off the stock market, while leaving more than 30,000,000 people (and counting) unemployed may have met its match: The real estate market. Devon Ramage with The Brokerage of Lexington cites a few reasons for a recent spike in home values.
“Low inventory. That puts the seller in the driver’s seat when it comes to negotiations,” he said. “They know the buyer demand is out there with the interest rates being low,” he added as another reason the seller’s market remains robust during the COVID-19 crisis.
“When a house hits the market, it’s usually gone within a day, or two with multiple offers,” Ramage said.
Okay, so what then has created this inventory shortage, even as we’re well into the “realtor spring season?”
“I think people are nervous about having people coming through their homes. Realtors coming in, maybe not wearing gloves and touching door knobs, and flipping switches,” he said. “Also, I’ve talked to lenders who are doing a ton of refinances.”
Ramage said the refi market is hot, because the rates are so low. People who may have been motivated to sell previously are now locking in lower rates, and sticking around to build more equity in the home they currently own. It’s worth sitting on an asset, whose equity could be converted to cash if needed.
And while the this year’s spring market has been strong thus far, Ramage sees better things coming this fall.
“As we’re phasing back into some sense of normalcy, it’s just going to shift that to the fall,” he said. Ramage also doesn’t seem concerned about a repeat of 2008, when a recession caused home values to tank, and loan to value ratios left home owners “under water,” or owing more than their homes were worth.
“I think we’re good. I don’t think we’re going to see those ’08 numbers,” he said.
If true, it means your most valuable asset might be “pandemic resistant,” even as the foundation everything else has been built on has collapsed around us.