'Beyond a catch-up': Real estate mogul Barbara Corcoran lays out the 'best case scenario' for the US housing market after the pandemic
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- The high-end housing market is already feeling the effects of the coronavirus pandemic.
- New York City, one of the most expensive housing markets in the world, saw just two contracts signed for properties over $4 million from March 23 to March 29.
- Real estate mogul Barbara Corcoran told Zack Guzman of Yahoo Finance that "more than anything else," the unemployment rate and the rollout of the government's stimulus plan will determine the future health of the nation's housing market.
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As the nation grapples with the impacts of the coronavirus pandemic, the real estate industry is also wondering how bad the impact will be - and how bad it might get.
Real estate mogul Barbara Corcoran, founder of The Corcoran Group, told Zack Guzman of Yahoo Finance on March 31 that the US housing market is "very lopsided" right now, and the luxury sector is hurting.
"The high-end market is suffering already. The middle end of the market is clicking on like there's nothing wrong with it, and the lower end of the market has actually gotten stronger, surprisingly," she told Guzman.
Corcoran told Guzman there are two key factors that will help determine, more than anything else, how the nation's housing market will weather the pandemic storm: how high the unemployment rate gets, and how well the government can roll out its $2.2 trillion stimulus plan.
Based on those two big ifs, Corcoran said, the housing market could catch up to where it was headed before the outbreak, and fast.
If everything turns out right, the market could explode in number of sales and rising prices, but that's a big question.
Corcoran said New York City, one of the most expensive housing markets in the world, should be contrasted with more moderately priced markets that managed to do record business in March, mentioning Louisville and Dallas-Fort Worth.
But New York listings were "way down," she said, noting that she had "never heard of anything" like just four sales in a week happening there. The city's high-end market was hit hard, with just two contracts signed for properties over $4 million from March 23 t0 March 29. According to a report by Yahoo Finance's Amanda Fung, the last time only two contracts were signed in that market was August 2009. On the other hand, the Louisville Courier Journal reported on March 26 that historically low interest rates and a short supply of available homes had played large parts in the market's endurance.
According to Corcoran, the housing market has the potential to shoot back up at the end of all this if the unemployment rate doesn't continue to go through the roof and if the incentive package proves effective. The best-case scenario, she explained, is that the combination of cheap mortgage rates, constrained inventory, help from the stimulus package, and a fall market that converges with the "spring market we never experienced" could lead to a quick recovery, maybe even an increase in prices.
"If that all hits together, you have a possibility that the market will explode in terms of number of sales and rising prices," she told Guzman. "It could be a catch up, and beyond a catch up."
But you have to keep unemployment low and "get cash into people's hands" from the stimulus, she added. "That's the $1 million question."
The Corcoran Group did not immediately respond to requests for comment.
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