• Jen Bedard

Predictions Are A Fool's Game in a Time of Crisis. HOWEVER...

Before we begin, we need to preface this article with a few important points.

One: This article is in no way intended to diminish the profound impact that all the cited events may have, or potentially will cause, on us as a community (local or global).

Two: We are a real estate brokerage. So, any opinions expressed here simply reflect our take on how past events have impacted the Niagara real estate market.

Three: No one can predict the future of real estate; All we can do is review the past and make note of any trends. It is with these past events in mind that we offer our own perspective.

Let’s get started.

If there’s one bet you can feel confident making, it’s that the world is always changing and that the real estate market (macro or micro) will change with it. As the market moved into 2020, we were still running historic "highs" for the Niagara real estate market. The market was producing double-digit price increases, and sales volume was unlike anything we had witnessed, and new housing developments were cropping up every day.

And now? We’re approaching the end of March amid a virtual shutdown due to the COVID-19 virus. With governing bodies at every level encouraging, or even mandating, self-isolation, most markets (aside from the supermarket variety) are going to slow down.

Where do we go from here?

No one can tell anyone with certainty. We’ve lost our sense of confidence in a concrete future.  It’s as foolish to predict future events as it is to believe everything you hear. So, in order to provide some guided insight into how we might possibly recover from the effects of this pandemic, let’s take a look at a few global events that we have lived through, and consider what we might learn.

September 11, 2001.

In 2001, the real estate market was moving along well. With over 500 sales per month, the devastating reality of the 9/11 attacks instantly stagnated the market. Sales pulled back below 400 in 3 out of the next 4 months and did not climb back to 500 again until March 2002. Pricing was largely flat until the spring of 2002 but, because the average sale price in Niagara was between $135 – 155,000 for those 12 – 14 months, a 5% change didn’t look as significant as it does today.

Here is a graph showing the monthly # of sales and the average sale price for June 2001 to June 2002 in the Niagara Association of Realtors according to the MLS® data:

The abrupt nature of the 9/11 attacks was as catastrophic for the United States’ economy as it was for its citizens. There was no slow-simmering concern that built up momentum like it had during the 2008 recession or the COVID-19 pandemic: September 10th, 2001 was a pretty non-descript day. In fact, most of us can probably recall where we were on the morning of the following day. The housing market, along with the economy, descended into chaos as we humans tried to make sense of the madness of the day.

Although the effects of 9/11 are still evident even today, the initial shock did wear off and life returned to its new “normal.” And as thepeople recovered, so too did the real estate market, which saw solid growth leading to double-digit percentage gains in the 2005 and 2006 markets.