As home sales slump, expert says ‘worst is yet to come’

GRAND RAPIDS, Mich. (WOOD) — The National Association of Realtors released new figures that showcase the toll the coronavirus pandemic is having on the economy.

The NAR reports that sales of existing homes fell 8.5% in March compared to the month prior.

The numbers for April will be significantly worse, Grand Valley State University economics Professor Paul Isely told News 8 Tuesday.

“The worst is yet to come,” he said. 

March figures largely reflect the closing of home sales that actually took place in January and February, before the coronavirus crisis put a stranglehold on the U.S. economy.

Isely said he expected the numbers would be worse.

“We saw automobile sales in March drop 25%, we saw clothing sales drop 50%,” Isely said. “So dropping 8.5% says that a lot of those deals were already in process.”

Those still considering selling a home in the current market should lower their expectations, Isely said.

“You’re going to have to know your market,” he said. “You’re going to have to be willing to take a lower price than you would’ve taken two months ago.”

Isely said how quickly home sales recover from the slump is difficult to forecast without knowing how long the coronavirus shutdowns will continue. He said the longer the shutdown, the more difficult it will be fore sales to return to where they were.

“Over two weeks, the economy went from going pretty strong to almost a dead stop and we’ve never seen that before — ever,” Isely said. “We need to restart. We need to restart as quickly as we can but it needs to be safe enough that we don’t rekindle the virus.”

Isely cautioned against the notion of rushing  to reopen businesses for the sake of the economy.

“The worst-case scenario right now is that we start to restart in May and then the virus starts to come back in waves,” Isely said. “We need to make sure that we can come back and not have to do this again… If we had to do it a second time, it’s going to be really hard to claw out of it.”

Gov. Gretchen Whitmer’s current emergency order is set to expire at the end of the month. She said she hopes to relax some restrictions May 1 but whether and to what extent that happens depends on the status of COVID-19 in the state.

When the comeback begins, Isely said he believes West Michigan is poised to over perform in home sales.

“They’re going to come back faster here in West Michigan than other parts of the economy,” Isely said. “And the reason they’re going to come back faster is because of the amount of young people we have in West Michigan.”

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