If you are a homeowner or a residential property investor then it will be important for you to understand the implications of coronavirus on housing market. Will the market survive or crash?

The impact of coronavirus pandemic is likely to be more severe than the 2008 recession. People are comparing this with the 1930’s depression. With people dying of COVID-19, there are serious concerns on how the real estate market will be affected.

Firstly, if you are hunting for your first home, you can use this situation in your favor. Before the outbreak of COVID-19, the United States of America saw steady increases in prices of homes. The month of January and February were good for the housing industry. With the advent of the Coronavirus, the economy has been hit severely.

The Hand of the Federal Reserve on the Housing Market

The Federal Reserve has reduced the rate of interest twice. So is the case with countries world over. This is an effort to protect the economy from factors like disruption and fear. As a result, mortgage rates will hit historic lows and will continue to remain low some time in foreseeable future.

Coronavirus Housing Market: Effect on Housing Market

In spite of the fact that mortgage rates are significantly low, the housing market will suffer adversely. There are record job losses and over 30 million are expected to claim unemployment and out-of-work benefits. These people may default on their mortgages bringing the housing prices down thereby creating opportunities for investors and home buyers who are fortunate not to lose their jobs.

Will the Market Crash in My Region?

The impact of Coronavirus on housing market in your region depends on many factors. Undeniably, the current situation is extremely complicated. It will depend on where you live. Coronavirus has affected states differently. There are places where the impact has been minimal and economic restrictions in these states will be lifted earlier than others.

The housing price will also depend upon how states view housing. States like Wisconsin and Connecticut, real estate is classified as an essential service. On the other hand, Pennsylvania and New York doesn’t treat real estate as an essential. Then, you have states like California that had to revisit and claim real estate as an essential service because of its strong hand on the economy. In Colorado, real estate appraisers and accountants, along with title companies are marked as critical services.

Problems You are Likely to Face 

It will be difficult for you to find agents who can show you potential properties and close deals. Social distancing is the primary reason behind this. 

Even if real estate agents come out to work, other sectors like mortgage lenders, attorney and inspectors will not be easy to find. For example, in the state of California real estate experts’ question on the safety of professionals who engage strangers. These doubts are valid, amongst companies and individuals who are into the housing market.

Is it Good Time to Sell Your Property?

Will the market crash affect your sale? If you have prepared your home for sale before the virus hit, there are few reasons why you must not back off. You will need to weigh pros and cons and assess your situation and need to sell. Coronavirus may have reduced the competition for your home in the region. This means, you might have a good chance of bagging a good deal. In fact, you may get better price today than wait when default mortgage properties hit the market! With fewer homes on the market, your property may receive all the attention it needs.

Opportunity for Investors and Home Buyers

Likewise, if you are cashed up and in good financial health, this may be a god sent opportunity, mortgage rates and reduced competition will favor you. The Coronavirus housing market is certainly creating volatility that is likely to remain for a considerable amount of time. If your job is stable, and if you have a steady flow of income – now would be a perfect time to buy a new home or invest. Remember great fortunes are made during times of crises.

Tips on Hunting for Properties during COVID-19

Those who are interested in seeing new properties should keep certain things in mind. First of all, get in touch with real estate agent who know how to help you. They can arrange for a virtual tour of the property. You should not rush to view a property. Ask the agent for virtual viewing and 3D images of the property. Inspections should be done with great care. Ensure that you wear gloves and maintain a good amount of social distance from strangers. Also, don’t touch anything inside the property. This way, you will be able to protect yourself from the risks of Coronavirus.

Closing the Deal!

Any purchase will remain incomplete till you close the deal. Unfortunately, COVID-19 can introduce delays in the overall process. You can opt for online methods. For instance, the documents can be signed electronically. This may not work well in all the states. Please check with your agent.

In case of delays you need to extend the loan. For this, you need to talk to you bank or mortgage lender and also explain difficulties to the seller to get an extension to close the deal.

Don’t get discouraged by delays. Try and find solutions.

The Ultimate Bottom Line

During the SARS outbreak, the housing market in Hong Kong fell quite sharply. Yet, the overall value of the properties rose once the threat of virus was over. This theory holds good for COVID-19. Though the number of buyers and sellers may reduce significantly; the market will always bounce back.

Don’t let this opportunity of low prices and mortgage rates pass. This situation may not happen again in the upcoming decade or two! So, make the most from the rock bottom values. Do consider closing your existing debt, and refinancing any mortgage loan. Use the reduced rate of interest to save money. Stay focused and nimble. Do not get frozen by fear but take action. Market always corrects itself especially so real estate.

We may be able to resolve health issues relatively fast in this pandemic but coronavirus financial impact will take several years to settle down. Indeed, this has turned into a situation that no one could ever imagine off. With industries around the world taking a hit, corona has had its impact on the share market too.

It wouldn’t be an exaggeration if someone told you that the share market is pushed to a perfect bearish state, like never before in a decade or more. When compared with the peaks of January, NASDAQ has come down by nearly 30 percent. Experts reveal that the previous crash had caused a decrease of 60% on the overall index.

Hundreds and thousands of investors are truly troubled by the bear market. They ponder over strategies that would help them safeguard their hard-earned money. Above all, they are worried on how big the dip will be this time.

Time after time, the reason behind a stock market crash keeps changing. This bear-bull game doesn’t stay steady. However, the golden rules for surviving the bear market remains consistent. If you follow few steps, and stick to basic financial strategies – you will be able to protect your finances through the Coronavirus financial impact. It might seem challenging, but it is not impossible.

How to handle the Coronavirus financial impact on your stocks? Keep reading to know more about the Do’s and Don’ts.

Do’s of Bear Market Investment

Build a Cushion Around Your Finances

Technically, any situation that causes the bear market will have an impact on the economy. With crippling economies, your finances will be affected. A prolonged bear state will cause negative results on your income too. Delayed pay checks and salary cuts are common side effects of an economic downturn. This is why you should maintain a good, stable buffer.

The buffer should be able to uphold you for at least six months. As a result, you don’t need to touch your retirement funds. Before you pull together this buffer, try to clear all existing debts. This could be your credit card bills, loans or even utility charges.

Evaluate Your Risk Tolerance Margin

A lot of people believe that risk assessment needs to be done on the sunnier days. Well, this is not how it works. On your best days, you will not be able to gauge your actual risk tolerance level. It is during bear markets; an investors haughtiness gets revealed. Untold and unexpected details about your risk appetite will surface. Now would be the best time to analyze your risk tolerance abilities. And, the results can be very interesting:

If the Coronavirus financial impact is making you feel uncomfortable, you might have overestimated your risk tolerance ability.

The data and experience you endure during the bear market should be recorded. Try to keep up with the decisions you choose during these times.

Cold Feet Moments, Getting Ready for Battle!

Many times, people think twice about their investments, even when the stock market bounces back. A fully blown bear market can change your perceptions. But, when the market recovers to the fullest, they realize that their “fortune” just left. As a part of any investment strategy, you should not stick to the side-lines. To play safe and avoid staggered re-entries, pull together a plan now! Most of the time, staggered re-entries into the stock market will be expensive.

If you have money, which can be invested in the stock market – now would be the best time. As a potential investor, try to make use of the opportunity. Experts strongly advise investors to liquefy finances that can be invested in promising stocks. To begin with, you can consider selling debt funds. Use this money on your stocks for the next 6 to 12 months. Once the Coronavirus financial situation comes to an end, you will see steep rises. These are magical moments, which you wouldn’t see often.

Fundamentals Always Help

Even when the current crash is not caused due to our economy, the final impact and outcome will be similar to the previous one. During tough times, only rock-solid businesses will be able to survive. The weak ones will be affected the most. This is why you need to focus on the big brands, and reputed names. Never bet on newbie’s. Instead, educate yourself about businesses that are proven. Remember, only quality and proven companies can survive turbulences. It would be greatly disappointing to become adventurous during these sad, bear days.

A Financial Plan

Stock market investments should not be made on a daily basis. Instead, you need an investment strategy. Don’t play like a typical stock market investor, who doesn’t have a plan behind every dollar accumulated or lost. Without a good strategy, there are high chances of you making emotional decisions. In fact, many people liquidate their retirement and long-term investments for more stocks.

There is no such thing as the best time to create an investment strategy. Even today, you can pull together a plan. Gain more clarity on where you stand financially. If possible, hire an expert to help you with this.

Don’t of Bear Market Investment

Don’t Wait for Market Bottoms

Every stock market investor wants to fish for bottoms! Wouldn’t it be amazing to buy a stock when it hits the bottom, and then rides up? While you wait for the stock bottoms, you may end up burning your fingers. There is no harm in missing the lowest market value for a stock. In fact, you can start positioning yourself when the market starts to move upwards too.

Never invest all your finances on a single stock, in one go. Instead, split your funds over several months. Capturing the swing will be difficult, but you will not lose a heap of money. Rebalancing and asset allocation is much more important than fishing for bottoms.

Stop Fund Reviewing

Do you have the habit of checking your stock portfolio on a daily basis? If yes, you need to stop right away. Seeing your stock move downwards will force you to re-think about your investment. This may result in unwise investment bets. The coronavirus financial impact doesn’t give you a reason to judge your investment. At least for the next few months, you need to stop checking your portfolio.

For instance, your gold fund might be doing great, and your equities could appear horrible. This will trigger you to move cash into the gold fund. Any decision you make should be for asset reallocation. Don’t engage in this move if you are only worried about a drop in the value of your funds. Instead, execute the above move if you believe it would rebalance your finances.

A New Investment Strategy is a Big NO!

If the bear market is making you invest differently, then you are making a bad move. Panic and anxiety can change your investment strategies. Even experts tend to abandon years of training and golden principles during tough times. This diversion will trickle down and have a negative impact on your long-term plans.

Never be Over Defensive!

A bear market can encourage you to succumb and exit. This is mainly due to your panicked state of mind. Always steer clear off rash decisions. Such moves will result in an immature investment experience. A market that has gone down by 25 percent, will not drop by 100 percent in the next four months. This is not how the stock market works.

During tough times, the market always introduces new opportunities. You cannot embrace these chances if your money is hidden in the stars.

Instead of making rash decisions, you can always cushion your profile by investing in multiple companies. There will be a moment, when markets rebound and turn positive.

Stopping all Moves is a Big NO!

Many investors decide not to do anything, especially during times like coronavirus. Playing dead is not a great advice for everyone. Your age, investment and financial need decides if you can stay idle. Someone who has enough money to survive for the next decade or two, can stay calm. Else, you need to re-align and protect your money.

This advice holds good for people who are about to retire, or who need an immediate inflow of cash. After the  coronavirus financial Impact, it can take months (if not years) for the markets to return. During this time, you need money to keep going.

With the pandemic, we are certainly facing a coronavirus crash in all our markets. In the next 12 to 18 months, the world is likely to see a recession. Recently, a survey was conducted to understand how prepared people are for another recession. And, the study revealed that two in every three are not really prepared. A major reason why people need to be prepared is because the economy has been extremely strong in the past few years. Luckily, there are few steps that can increase your chances of surviving the forthcoming recession.

Focus on your Current Role

First things first, you must outperform your current role. This way, you can reduce the chances of being laid off. The best way to handle recession is by holding onto your current job. And, this shouldn’t be a difficult process if your workload and job profile is healthy. Now would be the best time to demonstrate your technical skills. Engage in activities that would turn you into an irreplaceable asset within the company, and help you master the art of how to survive recession.

Focus on Networking

During tough days like a coronavirus crash, the need for networking increases by leaps and bounds. According to industry leaders, you must network to avoid the catastrophic impact of recession in your life. Irrespective of the fact that new jobs are often bagged through known contacts, 50 percent of the current population has networks that are weak and unusable.

Start becoming prepared by talking to your friends and dear ones in industries that interest you. Next, look for online communities built for your favorite jobs. In this modern, socially sound world, there is an online platform for everyone and everything. Whether it is information technology or manufacturing, you will find an online community. These groups encourage professional growth through virtual courses and one-to-one trainings.

To be more precise, maintaining a healthy social network will help you build a stronger and more reliable future.

Focus on a Side Hustle

More than 50 percent of students in Harvard are interested in starting a side gig. Undeniably, everyone wants to enjoy a secondary source of income. This is because “Plan B” will help you stay confident when something goes wrong with your primary source of income. Many digital marketers engage in consultation services after normal working hours. Likewise, people drive in ride sharing ventures to make some extra bucks.

Side gigs will help you handle the basics. Apart from training you on how to survive recession, in the long run these can become extremely lucrative.

Focus on Emergency Funds

Indeed, there will be a time when you need to shun away from luxuries and stick to emergency savings. During tough times like an economic recession, you need to have emergency funds that are worth six months of your income. In the United States, only 27 percent of people have a “perfect” emergency fund.

The best way to build an emergency fund is by cutting down on your shopping spree, avoiding expensive cable channels and steer clear of unnecessary drives. Everything but your essentials should be avoided. The money you save here will pull together a bigger emergency fund.

Focus on Your Resume

What would you do if your current job goes away? When you are laid off, things can become tricky. More than half the percentage of the country is not willing to change their current jobs. Likewise, 21 percent don’t have a resume.

During economic recession, employers are likely to release their non-essential employees. This is when unemployment increases by twofold. To survive a lay-off, and to find a new job, your profile should be updated. Ensure that your LinkedIn profile is updated with both your current role and marketable skills. A well prepared resume will help in find a job, quickly and efficiently.

Focus on Equity

Have you being dreaming of a new car? Will the economic recession caused by corona, you should consider leveraging the benefits of equity. When you stick to equity, you will have the benefit of eliminating a cheaper mortgage. Conversely, you can consider investing the funds elsewhere. The current interest rate on loans in some countries are as high as 6 percent. This clearly means you don’t need to have a hefty cap rate to boost your existing portfolio. Of course, you need to look for the right property. Work on the numbers, but don’t force a property to fit within your requirements.

When you aim for a property, look beyond the topics discussed above.

Focus on Defaults

Defaulting is often identified as a cause and effect process. In the previous crash, and economic recession, people have had to give up their homes. In some cases, the situation turns the other way.

When the economy crashes, you will have the liberty to buy stunning properties for few thousands. The market will return to normal after a certain period of time. And, when it does your property’s actual value will also return. This means you are bound to witness cash inflow.

The key take away here would be the fact that the market will return even after a coronavirus crash. This is how things work!

Focus on Divorces

Now, you might be curious to know what is the bond between divorces and recession. Well, economic recession can bring trouble into marriages, even those that look like they are planned in heaven. When the economy starts to go down, the rate of divorces will increase. Forced lockdown can get couples to get onto each other’s nerves,

The moment couples decide to split, their assets need to be divided. This is when shrewd investors start making a fortune. Divorces and settlements have to happen as quickly as possible. When the court demands for the net worth, something’s cannot be present in the form of liquid cash. Thus, properties need to be put up for sales.

Remember the old adage, one man’s junk is another man’s treasure? During critical moments like a divorce, the real estate industry sees many opportunities. In the upcoming days, more and more properties will be seen in the real estate listings.

Focus on the Fallouts

Funerals are never easy! These events are always loaded with too many emotions. Many a times, heirs are unaware of what to do about the wealth left behind. Should they split, sell or keep the wealth?

Properties dealt with can be old, or the family could be absolutely free and clear. In several cases, the net worth of the property could have increased by 20 to 25 percent. This is very common in housing markets like Brooklyn and Crooks.

Let’s understand this with an example:

A family has three heirs, and properties worth 850,000 USD. When heirs never really valued or owned the property, a payday of 250,000 USD might be at game for each heir. Funerals are never simple or cheap! Likewise, the attorney hired to handle the issues are never free.

Focus on Reduced Rate of Interest

Markets are run by simple theories that focus on the golden rules of supply and demand. For banks to make money, they should lend in the very first place. The moment an economy crashes, the rate of interest plummets down.

The science behind this is very simple. No one will be interested in lending money when they are not convinced that money really exists. In such situations, smart investors tend to see a fortune. With reduced capital, you can strength the debt-to-yield ratio. In addition to this, if you can boost your FICO score and manage a down payment – you are bound to see lucrative deals in the market.