Housing Market to General Public: The Sky is Not Falling

There have been numerous reports that the housing market will take a hit as a result of the Coronavirus, yet these reports appear to be misguided. Should the housing market truly slow down, it would be the result of a self-fulfilling prophecy. Objectively speaking, there is very little reason to believe that the Coronavirus will impact the housing market in a meaningful way. 
To be sure, the global economy is on very shaky grounds while supply chains and production are interrupted. Ostensibly, this slowdown leads people to believe they need to buckle down and prepare for the inevitable storm. If we have learned anything over the last 100 years or so, it’s that the market is a fickle beast – subject to massive oscillation of investor confidence. Thus, the market itself is subject to self-fulfilling prophecies as well. 
However, mortgage rates are at all-time lows, which largely mitigates the impact of any short term economic shake-up. A 30-year mortgage, with a record low rate, will still be a solid investment whenever the economy stabilizes (I don’t think anyone is suggesting the market won’t stabilize once we have a better grasp on the Coronavirus). Moreover, empirical evidence suggests the housing market is doing just fine, notwithstanding the border-line panic seen in most publications (to be clear, we are not saying the Coronavirus isn’t a big deal, we are saying that fear of the housing market is misguided and being blown out of proportion). 
While some agents have seen a slight decrease in attendance at open houses, that decrease was both insignificant and unrelated to fears of the virus. In fact, because the 1st hour of an open house was slow and the 2nd hour was busy, one agent opined that the slowdown may have been caused by daylight savings time. This is a good time to note that if you’re looking for something, you’re going to find it. Thus, someone who thinks the housing market is going to go into a freefall might see that the 1st hour of an open house was slow and observe that as proof-positive that the Coronavirus is destroying the housing market – this is called confirmation bias and is a wildly illogical way of thinking.
On the other hand, the National Association of Realtors (“NAR”) noted that 11% of realtors polled by NAR stated that there were less buyers, and 7% reported there were less sellers (it is unclear how much less, and the methodology leaves a bit to be desired).  Regardless of whether these numbers paint a picture of the Coronavirus impacting the housing market, it is clear that this is not the case in Los Angeles. 
A 3-bedroom home in Glendale, asking for $1M saw 90 people at their open house, while a 4-bedroom home in North Hollywood asking for $800k saw 103 people in attendance. 
The bottom line is that when the market is shaky, it’s wise to make stable investments. With mortgage rates at record lows, and property value steadily increasing, property in Los Angeles is exactly that type of investment. Homes in Studio City, Tarzana, Encino, and Sherman Oaks will continue to appreciate in value, but the mortgage rates won’t stay this low forever; the rates are low because the global economy is unstable. At the end of the day, we can’t forget the most markets are driven by consumer confidence, and are therefore subject to self-fulfilling prophecies. The prudent investor sees the market shake-up for what it is – panic. Armed with that information, the prudent investor can truly maximize their gains while everyone else runs around like chickens with their heads cut off. Be that prudent investor.
At the Chernov Team we understand that knowledge is power, and knowledge of how the market is behaving is powerful knowledge indeed. At the Chernov Team we know that whoever comes to the table most prepared leaves with the most, and the Chernov Team always leaves the table with the most.