Windermere Chief Economist Matthew Gardner Explains How COVID-19 Impacts our Housing Market
Once a month, Windermere’s own Matthew Gardner visits KIRO Radio’s Seattle’s Morning News show with Dave Ross to discuss local economic and housing market news.
This month’s conversation focused on the impacts of the coronavirus pandemic. Gardner answered tough questions from Ross about the ways COVID-19 will impact our economy and, in turn, our real estate market once the governor’s Stay Home, Stay Healthy order is lifted.
The key takeaways: it’s still too soon to tell, and there’s no need to panic. While the outcome and full weight of the pandemic’s impact won’t truly be felt until we can collectively get back to work and reopen the parts of society that are currently shut down, Gardner told Ross that the outlook remains positive for an economic recovery before the end of the year.
Gardner predicted that layoffs and job loss are going to hit the rental market hardest. As for the market for resale and new construction homes, Gardner anticipates some slowing to the escalating home prices that were the norm pre-COVID-19. “It would not surprise me to see home price growth for the year as a whole be slower than my initial forecast I put out in January,” he told Ross. This might be welcome news for buyers, though, as home prices were trending up in both February and March, even as the coronavirus was beginning to take hold in Western Washington.
Looking at where gross domestic product (GDP) is heading, Gardner predicted that the second and third quarter of this year will fall into negative territory. “We could see a contraction annualized anywhere between 25 and 32 percent,” he told Ross. “It really is a massive drop. I’m going to say extraordinary.”
Those two negative quarters of GDP translate into a recession, but one Gardner hopes will be short-lived. Gardner joined other economists in predicting that economic growth will be positive again in the fourth quarter, with growth of around 4 percent. To get there, however, the country has to restart soon, Gardner told Ross. “If we shelter in place through the summer, then all bets are off,” he said.
Listen to the complete interview on KIRO Radio here. For even more economic analysis from Matthew Gardner on the impacts of the coronavirus, follow Windermere’s new weekly series, “Mondays with Matthew,” on the Windermere blog.