MarketNsight State of the Market: COVID-19, Unprecedented Times

MarketNsight offers a state of the Atlanta new home market as we enter unprecedented times due to the COVID-19 (coronavirus) outbreak. Housing and the economy were in a very good place when this crisis started, giving a good indication of where we will be when the coronavirus crisis ends.

“So much of life is just math. People buy homes in a calculus regression line and don’t even know it,” John Hunt, principal with MarketNsight, said. “This pandemic will play out in our country as a standard deviation bell curve. It will sadly go up, reach a peak, and then thankfully come down.”

Hunt highlighted that February 2020 national home building permits were the highest for any February since before the downturn in 2007, and the Atlanta market was up 27% over February the year before.

Unlike the 2008 recession, where every player was over-leveraged, overpriced and had far too many lots and inventory homes, the fundamentals today are sound. Through February 2020, the Atlanta market experienced record job and population growth, household formation, in-migration, extremely low lot and home inventories and moderate price inflation.

According to Hunt, pending sales (the leading indicator) were up an average of 28% year-over-year in February across MarketNsight’s 26-city footprint. March data shows a slowdown in pending sales, but not a complete retreat.

“There was little contract fall-out, and although traffic and sales were off, they were certainly not zero,” Hunt said. “A drop of 15 to 30% from budget was a common theme. Partial March data looks to be 10 to 15% below last March, but that is a 37 to 42% negative swing from February’s 27% year-over-year gain.

Hunt predicts April will be a difficult month for all of us. He suggests taking advantage of stimulus opportunities and that those in a position to do so, should look for deals.

Hunt and Georgia State University’s Chief Economist Dr. Rajeev Dhawan agree that an accurate forecast is impossible at this point. However, the past provides a framework and a general idea of how this will play out. Hunt compares the coronavirus crisis and its influence on home sales to the rising interest rates in 2018; both are outside forces influencing to the market. When the outside influence is taken away, or the event finally ends, housing should bounce back.

MarketNSight is focused on helping home builders and developers make smart decisions related to purchasing land and pricing product. Its groundbreaking Feasibility Matrix® systemizes the decision-making process and creates a one-stop-shop for gauging new home community feasibility including ranking by builder and subdivision and developed lot and raw land sales.

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