Real Estate: iBuyer Zillow Freezes Home Buying; Expert Warns of Housing Market Shutdown
LendingTree economist says the virus will bring the U.S. housing market to a halt.
Zillow Group (NASDAQ: ZG) announced Monday it will pause home buying in all 24 markets where ts Zillow Offers unit currently operates. The action was in response to local public health orders related to COVID-19. This has implications for the U.S. housing market. (PYMNTS.com)
Open houses also on hold
“Given the concerns for public safety and rapid developments by governments that restrict local real estate activities, we determined it was prudent to pause our home buying to preserve our capital,” said Zillow Group CEO and co-founder Rich Barton.
Zillow also halted open houses for its homes in all markets last week. It cited emergency orders requiring people to stay home and the stoppage of all non-essential business activities, including some real-estate related activities.
Meanwhile, Tendai Kapfidze, chief economist at LendingTree, had a grim prognosis for the U.S. housing market.
Housing market to shut down?
Kapfidze said country-wide cancellations of open houses, as well as a contraction in economic activity due to the coronavirus, would lead to a shutdown in the housing market. The economic uncertainly would lead to homebuyers putting home purchase plans on hold, he said.
Open houses in New York during the weekend of March 15 were down 28% compared to the weekend of March 8, said a report in Yahoo Finance.
“The people who have homes to sell, they don’t want people walking through their houses touching everything,” said Kapfidze, in the context of the highly contagious coronavirus which spreads primarily through touch and on surfaces.
Google search trends are ominous
According to data from Google, the coronavirus may soon trigger a housing market crash. Search trends show an alarming rise in searches linked to rising unemployment.
Searches for the terms “unemployment benefits” and “can’t pay rent” have skyrocketed over the last two weeks.
That has ominous implications for homeowners and the housing market. Note that in 2019, tenants paid more than $500 billion in rent to homeowners. If this rental income stream is disrupted, homeowners, in turn, would default on their mortgages.
That would make things ugly for the residential housing market.
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