Coronavirus is Impacting Global Markets… And South Florida Real Estate?
Thu Feb 6, 2020 by Oppenheim Law on Florida Real Estate & Real Estate
The recent onset of the dreaded Coronavirus which has caused a global health emergency reminiscent of the deadly SARS virus eighteen years ago. As of writing this, there are unfortunately 563 people that have died mostly in China where the outbreak originated, and many others have been quarantined on a Southeast Asian cruise ship as well as at other facilities.
Coronavirus Pandemic is Affecting Markets
Although it is difficult to even consider the effects of the Coronavirus on the U.S. markets since our utmost concern is for people’s health and well- being. However, although we hope for the best, some economists have begun discussing the potential fallout of this horrific outbreak. Mark Zandi, Chief economist of Moody’s Analytics, has recently said in an interview that “This is another hit to the U.S. economy…it is just a question of how big.”, not only has this medical pandemic caused anxiety throughout the world but also there are questions as to the effects of this pandemic to the economy. That is, global investors are pouring money into the United States bond markets, which will likely result in lower mortgage rates.
Question is…. how will real estate in South Florida and in general be affected? When investors become concerned about the overall health of the economy, they typically send money to the U.S. bond market, as they believe that bonds are a safe investment, which, in turn, increases competition among bonds which then result in lower yields. Simply put, this means that there are cheaper mortgage rates for consumers.
Currently the average US rate for a 30-year fixed mortgage last week dropped to 3.51%–the second lowest level in three years. Thus, there will be yet another decrease in home loan rates as long as this dreadful virus continues.
Many economists are concerned that if the economy slowdown becomes so substantial due to this virus, then it will weaken the job market and then the issue will become the economic impact of potential unemployment. Hopefully, an antidote will be found to combat Coronavirus so that the economic impact that this virus may and could cause will not occur.
Interestingly, reports indicate that the Coronavirus may be similar to that of influenza and SARS. In that case, this virus will start to decrease by May when the weather is warmer in China and in the United States. That said, since our Southeast Florida climate is relatively warm year-round, our real estate market may bring more buyers, especially during the winter months and especially with lowered mortgage rates. Oddly enough, the South Florida real estate market may see an uptick due to this horrific virus.
From the trenches,
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