The country is much better positioned to rebound from the current recession than in the Great Recession, where subprime loans and an overabundance of housing stock across the nation made the real estate recovery more difficult, according to Lawrence Yun, chief economist for the National Association of Realtors.
Yun recently spoke with Jennifer Pino, president of the Atlanta Realtors Association, in a Facebook Live conversation.
“The facts are we don’t have subprime loans or overbuilding, so once the economy opens, we are in a much different situation,” he said, noting that historically low interest rates will attract buyers once the nationwide lockdown is lifted.
Georgia is particularly well situated to weather the storm because of the influx of new residents to the state, Yun said. The job growth rate in the metro Atlanta area is higher than the national average, and that is expected to continue, he added.
In Atlanta, as well as other parts of the country, some who have been sheltering in place for months might likely be considering a new home, possibly something larger and with office space. Increasingly challenging traffic in Atlanta might also cause buyers to seek new homes outside the city, he said.
The housing shortage in Georgia is likely to help keep prices at pre-pandemic levels, he added. “We had a housing shortage pre-pandemic — when we come out of this, I think we will still have a housing shortage and, therefore, the home prices expectation is nothing like 10 years ago with prices collapsing 30%,” he said. “Home prices will remain stable, and one thing Realtors may want to do with their past clients is say, ‘Aren’t you glad you have a home where you are building equity, unlike the stock market with huge volatility …’”
One big concern about post-pandemic home sales is if the lending industry follows the lead of JPMorgan, which increased the credit score requirement to 700. Along with a minimum down payment of 20%, some buyers might wait for the economy to even out.
Yun said it is a bad decision on the part of lenders, who he believes are increasing credit score requirements because of the influx of refinance applications. I think they should just hire more people to work through this process,” he said.