The Virus, The Economy, The Market and Me

What a tumultuous and unprecedented time we find ourselves in.

Like most of you, I'm becoming consumed with searching the news and the Internet trying to learn all I can about this Corona Virus or COVID19.  Two days ago I was apt to blame the media for a lot of hype and generating hysteria - but now whole countries have closed their borders, the NBA has suspended its season, and most of the universities in Colorado have sent their students home.  You have my attention COVID 19, and here's what I know to be true:

THE VIRUS
While we're learning more each day, what we know for sure about this virus is that it is highly contagious and can be life threatening to the elderly and those with compromised immune systems or underlying medical conditions.  The worldwide figures currently suggest a mortality rate of 3 - 6%, which is significantly higher than that of  the flu.  However, it is likely that many thousands of people have the virus who have not been tested or diagnosed.  If this is the case, then the mortality rate is actually much lower.

THE ECONOMY
Uncertainty and fear combined with the isolation measures being put into place by world and local governments will have a substantial impact on the economy; we will all feel it in some way.  The global supply chain is interrupted, the travel industry decimated, and the entertainment, service and hospitality industries all negatively impacted.  The stock market is in a tailspin and parents are wondering what they'll do if their kid's schools close...

Is there any good news?  Yes.  The CDC suggests that 86% of those who contract the virus will have little to no symptoms. A hopeful scenario is that as we learn more about the virus, and it begins to be contained and understood, fears will subside, normal business and consumer behavior will resume and the economy will recover.  I acknowledge that there are less hopeful scenarios that could also come to fruition, but I'm sticking with this one for now! 

THE REAL ESTATE MARKET
The disastrous recession of 2008 is still fresh on our minds.  This recession was fueled by poor credit standards, little equity in homes and overbuilding.  Since then, lending standards have changed and the fundamentals of the real estate market are strong.  Many experts believe that the strength of the real estate market could provide a cushion to the U.S. economy during this crisis. Interest rates are low, demand high, home equity robust and unemployment low. All of this means that a fundamental alteration in the market dynamics in the U.S. is unlikely.

The Denver market, in particular, is about as strong as it gets. We are rated in the top 3 places to live and the have one of the top 3 economies in the U.S. To have a balanced market there should be between 18,000 and 22,000 homes available for sale in the Denver area.  As of March 10, 2020 there were only 4,223!  Demand is HIGH! Inventory is LOW!  And, while a U.S. economic recession is likely, interest rates will probably remain low, making affordability attractive for most Buyers.

If you are considering putting your home on the market or refinancing, now is a good time!

ME
As I'm not in a high risk group, I'm not overly concerned about my health or catching the virus.  I am, however, worried about the economic impact of COVID 19 on my family and friends, and tragically, we are down to our last roll of toilet paper in my house!

I believe in our ingenuity and tenacity as a people to come together and beat this. On the other side of this thing, we will be better, stronger and more optimistic than ever.  In the meantime, let's take care of each other, stay calm and take it as it comes.

Acknowledgement -
Much of the research and language used in this article was shared with me by our CEO at Colorado Home Realty. Thank you Matt Hudson.