How the COVID-19 Will

Impact Real Estate

Stock Market Reaction to Previous Viruses
Trading
Virus Date Range Days S&P 500 % Change
SARS Jan. 2003-March 2003 38 -12.8%  

Avian
Influenza
Jan. 2004-Aug. 2004 141 -6.9%
 

MERS Sept. 2012 – Nov. 2012 43 -7.3%

 

Ebola Dec. 2013 – Feb. 2014 23 -5.8%

 

Zika Nov. 2015 – Feb. 2016 66 -12.9%  

CNBC
Recession DOES NOT
Equal Housing Crisis
Goldman Sachs GDP Forecast

12% 10%

Quarter 1 Quarter 2
Quar... Quar...
-6%

-24%

on 3/24/2020
“Historical analysis showed us that
pandemics are usually V-shaped (sharp
recessions that recover quickly enough
to provide little damage to home prices),
and some very cutting-edge search engine
analysis by our Information Management
team showed the current slowdown
is playing out similarly thus far.”

John Burns Consulting

 If COVID-19 were to end today, how long
would you estimate it would take for your
company to get back to business as usual?

66% 90%

Less than a month 1 to 3 months

PWC.com
Housing & Mortgage Crash
2007 2008 2009

S&P 500 -4.6% -4.1%

Correction -10.0%
Annual Home Price DEPRECIATION
10/2007 to
3/2009

-51.0%
Black Knight & S&P 500
“What 9/11 has in common with what is happening
today is that this shock has also generated fear, angst
and anxiety among the general public. People avoided
crowds then as they believed another terrorist attack
was coming and are acting the same today to avoid
getting sick. The same parts of the economy are
under pressure ─ airlines, leisure, hospitality,
restaurants, entertainment ─ consumer discretionary
services in general.”

David Rosenberg
Gluskin Sheff + Associates Inc.’s Chief Economist
 Dot.com & 9/11 Crash
8.6% 6.6% 8.5%

2000 2001 2002

S&P 500 Annual Home Price APPRECIATION

Correction
9/2000 to
10/2002

-45.0%
Black Knight & S&P 500
6.1% 6.6%
3.5%
1991 2008

-1.9%

HOME PRICE CHANGE

During Last 5 Recessions
-19.7%

CoreLogic National Home Price Index

Annual Home Price Appreciation
12.5%
11.4%

8.6% 8.5% 8.7%

6.5% 6.4%
5.2% 5.5%
4.8% 4.7%
4.4%
The 6 years leading up
The last 6 years
to the housing crash

200 200 200 200 200 200 201 201 201 201 201 201

Black Knight
900

800
Housing

Historic Data for

Bubble
700

600 the MORTGAGE

500
CREDIT
AVAILABILITY
400
INDEX
300 (a report from the Mortgage Bankers
Association)
Today
200

100

0June June June June June June June June June June June June June June June June Today
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
MBA
Months Inventory of Homes for Sale

8.2 3.1

2007 Today
NAR
Percent of the median income needed
to purchase the median-priced home

25.4%

14.8%

2006 TODAY
Zillow & NAR
 Total Home Equity Cashed Out
by Refinance in Billions
Then… Now…
Year Dollars Year Dollars
2005 $263B 2017 $71B
2006 $321B 2018 $87B
2007 $240B 2019 $74B*
Total $824B Total $232B
*Using the first 3 quarter estimates from Freddie Mac and estimating $20B for the 4th quarter

Freddie Mac
“My results do suggest that, in the
absence of the panic, the declines in
employment, consumption and
output in the early stages of the
Great Recession would have been
significantly less severe.”

Ben Bernanke
“In a crisis, the only asset
you have is your credibility.
The non-crisis time is the
period when you must
establish that credibility.”

Paul Volker
“During tough times, people look to their leaders for
reassurance and guidance. At a national level, a state
level, all the way down to their local neighborhoods.
Leadership is necessary during the best of times, and
absolutely crucial during tough times.
Many agents have become leaders
in their communities, whether they
realized it was happening or not.”

Dustin Brohm
HousingWire columnist