Friday The 13th. It sure feels like it. During this intense time we are here providing a clear head for you. We will be working around the clock monitoring the housing markets, stock markets, and everything in between.
In Case You Missed It:
European markets: Stocks had their worst one-day drop in history yesterday. That comes despite an emergency E.U. stimulus package.
U.S. markets: The Dow suffered its worst one-day drop since the crash in 1987, and Wall Street’s circuit breaker kicked in for the second time this week.
Housing: Proving a safe haven with international investors flocking to buy U.S. real estate.
We’ve been thinking a lot about how the digital economy can actually sustain a global economy. I guess we’re about to see. With countries across Europe and North America locking down public life, we will get the ultimate test of the virtual economy and non-paper assets.
Workers are being asked to work from home, students are being asked to study from home, public events are being shut down, and grocery stores and restaurants will have to limit capacity. Markets have been cleaned out of durable goods and inexplicably toilet paper. So how does the global economy survive this?
Let’s get physical
We are about to see the impact of the physical economy vs the digital one. How much do we all rely on restaurants, shopping centers, sporting events, and conferences? How much do those things contribute to an economy? And how can we support those of us who cannot work virtually?
People will lose their jobs. That has happened already. People who work for themselves will suffer because their children are home from school, curbing their productivity. Inevitably, every person in the western world will be effected by this.
The government can only do so much and, as usual, American politicians are arguing over payroll tax cuts vs stimulus for medical care. Mortgage rates are on a roller coaster of up and down and the Fed will do whatever their calculation models tell them to do. But what do the rest of us do?
Well here is what we don’t do: Don’t sit at home and do nothing. Do your part to contain the virus but stimulate the economy where you can. Hoarding your assets will get us nowhere. Find prudent uses of your money for strong investments such as real estate. Educate yourself on how to do it better while you’re locked in with your children. And if you can support some kind of local establishment safely, do it!
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While there is no federal agency that can force landlords to issue reprieve for rent, city governments can help this along by not enforcing evictions. That seems to be just what is happening in local governments around the country as the coronavirus fallout hits every corner of the economy.
If tenants are hit by a down economy, either because they are sick or cannot work with school and business closures, they obviously cannot pay rent. Landlords are being encouraged to work with these tenants but if they refuse, cities will make it harder on them to evict tenants as a result.
Miami-Dade County in Florida has temporarily suspended evictions. The city of San Jose, California is looking to do the same. This comes just days after the federal government has asked banks to give mortgage-holders a break as a result of the fall-out.
We tend to think of New York City real estate as recession proof but clearly it is not. A New York real estate brokerage reported that 54 of its open houses had no traffic whatsoever last weekend.
Sellers are reluctant to list their homes in the midst of this economic downturn. They don’t want the house to sit untouched on the market for too long, indicating undesirability. So sellers are holding back and buyers and staying home. If this trend continues as the weather hints of spring, we will really know how far reaching the effects are because everyone knows that the spring is when the real estate market heats up. But nothing is for sure this year.
Home prices were on the rise in 2019 and now homeowners have on average $7,300 more in equity in their homes this year than they did at the same time last year.
This comes from a study by property analytics provider CoreLogic. This increase in equity is a 5.4% increase from the same quarter in 2018. This can be attributed to a shortage of homes on the market and an increase in home prices by 4%.
Homes with negative equity, where the mortgage was higher than the home value, also fell by 4.8% in the same time period. Of course, all of these happy numbers came out before the global pandemic that was coronavirus. If these numbers hold throughout the year, we will be very surprised indeed.
News By The Numbers
2 Months. It’s been two months that China has been dealing with the coronavirus epidemic. Despite that they’ve somehow managed to keep their supermarkets stocked full of food and supplies even in the hardest hit city of Wuhan.
50%. New York wants its restaurants to reduce capacity by 50%. When you take away 50% of the seats you take away 50% of the profits. But you don’t take away 50% of the rent they’ll need to pay landlords.
$93.5 billion. That’s how much value crypto currencies lost in 24 hours. Bitcoin plunged 48%.
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