MAKING SENSE OF THE SENATE’S CORONAVIRUS STIMULUS BILL
A recent article from Inman suggests, “the bill puts homeowners in a better position to weather the storm than they were during the last downturn”, in 2008. In fact, during the Housing Bubble, or 2008 recession, many Americans had little-to-no home equity and could not afford to pay their mortgage. This happened because mortgages underwriting guidelines were more lax, allowing for more risky loans to borrowers who weren’t in the best financial wellbeing to support pay back of their loans. A flood of supply in the housing market occurred as people began to foreclose on their homes in 2008. This influx of supply nationally, when paired with sluggish demand, led to a dramatic drop in home prices. Many Newyorkers who bought in 2008, got a “deal”, yet today dramatic price drops are not expected to happen.
“In contrast, home equity today is at an all-time record, the housing market started the year off strong, and homeowners have much higher credit scores than before, meaning they’re less likely to default on payments,”_Taylor Marr from Inaman. “Additionally, the government has instituted a moratorium on foreclosures and is weighing a stimulus package that could help homeowners cover their mortgages.”
The bill has been passed by the U.S. House of Representatives and signed by President Donald Trump, is called the CARE ACT. An approved the $2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act which will help millions of people in this critical time through government funding for those who are newly laid off and grants for small businesses to reopen their doors again. This is the largest financial rescue plan in US History!
What this means for real estate:
Supply and Demand Forecast this Spring 2020
Typically, we see an uptick in inventory now [mid-March — mid-April] as sellers list their homes for the spring market.
Due to the COVID-19 crisis, inventory coming to market is well below historical averages. In fact, inventory is declining as some sellers take their apartments off the market. [Watch More]
Buyer activity was increasing pre-virus, as contracts signed in February grew 13% year-over-year. However, March’s numbers reflect the impact, as 25% fewer contracts have been signed month-to-date compared to March 2019. [Source: UrbanDigs]
In the short-term, supply is decreasing at a faster rate than the drop in buyer demand. This dynamic is shifting some leverage to sellers, as less inventory is available. Understandably many buyers will be cautious, but motivated buyers could find attractive deals in the coming weeks.
Contracts and Closings:
Attorneys are beginning to introduce Coronavirus-related force majeure clauses into real estate contracts. If you are currently in contract, or soon will be, speak with your attorney to ensure that such a clause or amendment exists in your contract. [Read More]
NYC real estate closings are starting to shift to “escrow” or “virtual” closings, something already common in much of the country. [Read More]
Buyers and sellers are granting Power of Attorney to legal counsel so closings can involve the least number of people.
Co-op closings that involve transfer agents are, in many cases, being postponed.
Governor Cuomo signed an executive order allowing virtual notarizations from March 20 through April 18, 2020. This order helps facilitate remote closings but the details are still being worked out. [Read More]
Many landlords are offering to extend leases expiring in the coming weeks. If you have a lease that is set to expire this spring, contact your landlord now to discuss options. [Read More]
We’re living through a unique time and are confronted with unique challenges, but I am convinced New York will emerge from this crisis stronger than ever. As a millennial, I lived through the 911 attacks, the 2008 Great Recession, and now 2020’s Coronavirus Pandemic. I feel fearless, cautious, and prepared for anything. Allow me to strategize your finances and buying potential this year so you too can make sense of your next Smart Move. Please feel free to contact me directly to ask any questions you may have, or reach out if I can help you in any way during this time. I will keep you updated as things progress.
F.A.Q. on Stimulus Checks, Unemployment and the Coronavirus Plan from the NY Times.
