Looking to the Future: What the Experts Are Saying

Looking to the Future: What the Experts Are Saying | MyKCM

As our lives, our businesses, and the world we live in change day by day, we’re all left wondering how long this will last. How long will we feel the effects of the coronavirus? How deep will the impact go? The human toll may forever change families, but the economic impact will rebound with a cycle of downturn followed by economic expansion like we’ve seen play out in the U.S. economy many times over.

Here’s a look at what leading experts and current research indicate about the economic impact we’ll likely see as a result of the coronavirus. It starts with a forecast of U.S. Gross Domestic Product (GDP).

According to Investopedia:

“Gross Domestic Product (GDP) is the total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period. As a broad measure of overall domestic production, it functions as a comprehensive scorecard of the country’s economic health.”

When looking at GDP (the measure of our country’s economic health), a survey of three leading financial institutions shows a projected sharp decline followed by a steep rebound in the second half of this year:Looking to the Future: What the Experts Are Saying | MyKCMA recent study from John Burns Consulting also notes that past pandemics have also created V-Shaped Economic Recoveries like the ones noted above, and they had minimal impact on housing prices. This certainly gives hope and optimism for what is to come as the crisis passes.

With this historical analysis in mind, many business owners are also optimistic for a bright economic return. A recent PricewaterhouseCoopers survey shows this confidence, noting 66% of surveyed business owners feel their companies will return to normal business rhythms within a month of the pandemic passing, and 90% feel they should be back to normal operation 1 to 3 months after:Looking to the Future: What the Experts Are Saying | MyKCMFrom expert financial institutions to business leaders across the country, we can clearly see that the anticipation of a quick return to normal once the current crisis subsides is not too far away. In essence, this won’t last forever, and we will get back to growth-mode. We’ve got this.

Bottom Line

Lives and businesses are being impacted by the coronavirus, but experts do see a light at the end of the tunnel. As the economy slows down due to the health crisis, we can take guidance and advice from experts that this too will pass.

To your health, Dani

COVID-19’s Effect on the Michigan Real Estate Market

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During these unprecedented times, I have received a lot of questions regarding the home buying/selling process and how it is being affected by the government order to “stay in place”.  Here are the major take-aways:

  • Real estate brokers and salespersons are not “critical infrastructure workers”and therefore may not leave their homes for work.  The only narrow exception to the order is the instance where work is absolutely necessary to assist those with a genuine and emergent need, such as an immediate lack of shelter.   Real estate services, like the showing of homes and other property, open houses, and other client contact should be considered to be non-critical and travel to do so is prohibited through April 13, 2020.
  • Mortgage Lenders and Title Companies fall under the “critical infrastructure workers” category and will continue working. Lenders are working remotely, so you can still get a pre-approval, apply for a mortgage, re-finance a mortgage, and receive funds to close on a home. Title companies are offering “drive up” closing; they overnight the closing package to the buyer & seller for signatures, then you drive to the office where an employee will collect the closing documents and payments. If the buyer/seller requests to close in the building, the real estate agent will not be allowed to attend. Real estate brokerages have the ability to participate in closings via conference calls or other video conferencing methods to comply with the Governor’s order.
  • Home inspectors do not fall into the “critical infrastructure workers” category. If you have an accepted offer during the “stay in place” order, have your real estate agent include an addendum for a delayed inspection.
  • Michigan Realtors® have provided real estate agents an “Addendum to Purchase Agreement COVID-19 Condition Extension”. This addendum states that if COVID-19 causes a shutdown or work stoppage of a governmental entity or settlement service provider makes it temporarily impossible for either party to perform as required under a Purchase Agreement, or in the event Purchaser or Seller becomes the subject of a medically required quarantine, then all outstanding contract deadlines may be extended for as long as these conditions continue, but in no event longer than thirty calendar days.

If you are planning to make a move this year, this is a good time to plan. Talk to a lender to find out how much you can afford to pay each month, what amount you will need for a down payment and how much you will need to save for closing cost. Use the links above to search homes for sale, this will give you an idea of what is available in your price range. If you have a home to sell, use the link above to get an idea of your current market value.

In closing, I am always available to answer questions and provide recommendations for local lenders and service providers. You can reach me via phone, text, email or visit me on social media.

Wishing you good health, Dani

 

Are We About to See a New Wave of Foreclosures?

Are We About to See a New Wave of Foreclosures? | MyKCM

With all of the havoc being caused by COVID-19, many are concerned we may see a new wave of foreclosures. Restaurants, airlines, hotels, and many other industries are furloughing workers or dramatically cutting their hours. Without a job, many homeowners are wondering how they’ll be able to afford their mortgage payments.

In spite of this, there are actually many reasons we won’t see a surge in the number of foreclosures like we did during the housing crash over ten years ago. Here are just a few of those reasons:

The Government Learned its Lesson the Last Time

During the previous housing crash, the government was slow to recognize the challenges homeowners were having and waited too long to grant relief. Today, action is being taken swiftly. Just this week:

  • The Federal Housing Administration indicated it is enacting an “immediate foreclosure and eviction moratorium for single family homeowners with FHA-insured mortgages” for the next 60 days.
  • The Federal Housing Finance Agency announced it is directing Fannie Mae and Freddie Mac to suspend foreclosures and evictions for “at least 60 days.”

Homeowners Learned their Lesson the Last Time

When the housing market was going strong in the early 2000s, homeowners gained a tremendous amount of equity in their homes. Many began to tap into that equity. Some started to use their homes as ATM machines to purchase luxury items like cars, jet-skis, and lavish vacations. When prices dipped, many found themselves in a negative equity situation (where the mortgage was greater than the value of their homes). Some just walked away, leaving the banks with no other option but to foreclose on their properties.

Today, the home equity situation in America is vastly different. From 2005-2007, homeowners cashed out $824 billion worth of home equity by refinancing. In the last three years, they cashed out only $232 billion, less than one-third of that amount. That has led to:

  • 37% of homes in America having no mortgage at all
  • Of the remaining 63%, more than 1 in 4 having over 50% equity

Even if prices dip (and most experts are not predicting that they will), most homeowners will still have vast amounts of value in their homes and will not walk away from that money.

There Will Be Help Available to Individuals and Small Businesses

The government is aware of the financial pain this virus has caused and will continue to cause. Yesterday, the Associated Press reported:

“In a memorandum, Treasury proposed two $250 billion cash infusions to individuals: A first set of checks issued starting April 6, with a second wave in mid-May. The amounts would depend on income and family size.”

The plan also recommends $300 billion for small businesses.

Bottom Line

These are not going to be easy times. However, the lessons learned from the last crisis have Americans better prepared to weather the financial storm. For those who can’t, help is on the way.

If you have real estate related questions, please reach out to me anytime. I’m just a phone call away!  (734) 623-9442

Dani