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Real Estate Flipping Houses The Impact of COVID-19 on the Housing Market in...

The Impact of COVID-19 on the Housing Market in Nevada

Everyday things are changing. A new article by Forbes is forecasting Nevada as a major state about to be impacted by COVID-19. But what is the impact of COVID-19 on the housing market?

Showings are dramatically decreasing since the Governor ordered non-essential businesses to close and it will get worse. As a real estate investor dealing with this daily, I have put together some thoughts on what we are seeing. 

Impact of COVID-19 on the Housing Market

20% of Our Workforce Do Not Have a Job

Multiple realtors have told me they have deals falling out of escrow because the buyer either lost their job or the lender is putting a freeze on loans.

This is becoming a major issue since 20% of our workforce works in either a casino, ski resort, restaurant, or other non-essential business.

The buyer pool for these properties is shrinking every day as more and more people file for unemployment. And the Government is failing to provide solutions on how we are going to move forward with this pandemic which is why you are seeing panic.

Economics of the Shutdown

Normally, when businesses start to decline in revenue to a point they have to close their doors, it’s about two full quarters or 6-months before they close the doors. This is such a unique situation since the Government is forcing people to close AND pay their employees for work not done. 

If there is no revenue in the business, they cannot pay their employees. We watched companies over the last two weeks lay people off before the mandate to avoid paying employees since there is no cash flow to do so. 

We have personal relationships with casino employees who were all laid off with zero pay and they were even told prior to leaving, they were not being hired back. There is a huge storm coming that no one could have predicted. 

How Does This Impact Real Estate

We are going to see days on market grow, less and less showings, and price reductions.

People still buy and sell during recessions so don’t let this scare you. The famous Warren Buffett quote is about to become very real, “Be fearful when others are greedy and greedy when others are fearful.”

The market WILL go down and I have been preaching this for over a year. We were in desperate need for a price correction, but I don’t think anyone knew this would happen.

I personally feel we will see a major hit to our local economy as more and more data comes out. If you look at my previous post on are we in a recession now? You will notice one of the key indicators is the labor force.

April data is going to be scary. Goldman Sachs and JP Morgan are forecasting 30% increases in people filing for unemployment benefits which will shove our economy into recession.

What Should We Do As Real Estate Investors?

Continue buying, but start offering $15,000-$20,000 lower than you would have in February. This is really if you flip houses. Flipping is a very unique business because in these crazy times, it is all about speed. 

The faster you can close and rehab the place, the faster you can get top dollar. Just to move the property, list it at 95% of market value so you can make sure your property is sold before anyone else. 

This isn’t a time to push the market, meaning if the property is worth $200k you start the listing at $210k.

I will be doing the opposite, if it’s worth $200k I will list at $190k. This guarantees realtors will show the property first and I will sell it faster. 

Now, if you are a buy and hold investor, I would wait this out until summer. Prices haven’t really gone down yet for me to say it is a good time to hold. But don’t fear! It is right around the corner. 

We will see a major shock to the system in ways we just don’t know yet. This shock will impact prices and in turn, it will be a great time to buy! 

Save every penny for rentals. It is the best way to create wealth for your families. 

We will get through this and be better on the other side of it. Real estate has always been the best way to grow your wealth and in times of recession, the best way to increase your income and provide stability for your family. 

Should You Sell Your House?

Different circumstances, call for different measures. But if you need to sell your house fast to get money in your pocket, give me a call.

What will the impact of COVID-19 on the housing marketing in your area be?

Leave a comment on what you’re seeing in the local markets! I know some of my readers are in different states, share your thoughts!


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