Danielle Hale, Realtor.com Chief Economist, joins Yahoo Finance’s Alexis Christoforous and Brian Sozzi to discuss how the housing market is weathering the coronavirus outbreak.

Video Transcript

BRIAN SOZZI: Now, the coronavirus shutdown is hitting the housing market pretty hard. Housing start data, this morning, collapsed 22.3% in March. And the latest data does show fewer listings and fewer people have been out shopping for homes. Let's talk about it with Danielle Hale, chief economist at Realtor.com. Danielle, good to see you as always. The housing starts this morning, just not good. And as you assess the housing market, do you think there just won't be a spring buying season?

DANIELLE HALE: I think the spring buying season is going to look unlike any other we've seen. So as far as, you know, the timing of all these shutdowns, it's really not ideal from a housing market perspective. Normally we see transactions really start to ramp up as buyers get out in the market in March and get ready to complete sales in April, may, June time frame. So you know, as far as timing goes, we are not looking at a normal spring buying season. And it's not just the buyers and sellers that are affected. It's the builders, as well, as you saw in the housing starts data today.

So it's definitely going to be a different year for the housing market. After a really strong start, this spring looked like it was going to be good. But that has changed.

ALEXIS CHRISTOFOROUS: Yeah, I'd say. Danielle, when you look at mortgage rates, though, they continue to be a bright spot. Because they continue to be quite low. I think the 30 year is around 3-1/2%. And the 15 year, which is popular for people looking to refinance, is a little over 3%. Do you think that when we come back on the other side there will be this pent up demand and we're going to see a spike in home sales? Because people who really wanted to go out and buy are going to go do that. People who want to go out and sell are going to finally be able to have a chance to show their homes.

DANIELLE HALE: . Yeah I think that is certainly a possibility. And the shorter the shut downs are required, the easier it will be for the economy to snap back, or for those folks who are, you know, waiting on the sidelines to get back in and keep that momentum of their previous search. The longer things are shut down, the more broad the economic damage from job losses and loss of confidence on the consumer side and the business side, the harder it's going to be to restart. When you look at the demographics, you know, there are certainly some positive fundamentals there.

Lots of young people getting to an age where they typically form a household and get out into the housing market. So there are a lot of positives as long as we can keep the economy roughly on track to bounce back after this. I think the housing market will do well.

ALEXIS CHRISTOFOROUS: What's happening, though, right now on the ground, Danielle? Are homes being sold? Are deals happening? And what is that looking like? And what are the parameters in which they're happening if people have to social distance?

DANIELLE HALE: Yes. And there are a lot of variations state to state. So in some states, real estate is classified as an essential service. In other states, a lot of the pieces of transaction are more restricted. But you know, the industry is getting creative. There's lots of movement around virtual tours, you can walk through a house with an agent, lots of technology available to see different aspects of the transaction. And then, of course, e-signature technology makes possible the closing, even if there is not an in-person transaction.

And that said, it's not as easy to complete a home transaction. And a lot of people don't necessarily feel comfortable buying a house sight unseen. Though some-- some do, especially on the younger side. But it's certainly made the process more difficult. But transactions are still happening, just at a much lower rate than we would normally see.

BRIAN SOZZI: Danielle, JP Morgan got some flak-- or has gotten some flak recently. They're requiring 20% down payments on homes and requiring that you have a 700 FICO score. How does that action, and I'm sure other actions like that from the big banks, how would that hinder the housing market recovery?

DANIELLE HALE: Yeah, so Alexis mentioned low mortgage rates. That's great if you can get them. But lenders are pulling back on the amount of credit that they're comfortable issuing given the fact that we've seen pretty substantial job losses. Lenders are in a position where they may be on the hook for principal and interest payments to investors in mortgage backed securities. So they're thinking about their books, making sure that they are able to meet their obligations. And that's really led to a bit of a cash crunch. The Fed has stepped in to make lending facilities available. That should help open up credit.

But obviously it's going to take some time to adjust to this period and for banks to get comfortable lending again. So that is going to create a hurdle, especially for buyers who are looking to finance.

ALEXIS CHRISTOFOROUS: Now, Danielle, we know that some lenders are trying to help their customers. There have been some moratoriums on mortgage payments. But are you seeing early signs of a spike in foreclosures? Is that happening? Do you expect that-- there to be a big wave of that? I mean, certainly during the 2008 and 2009 downturn, which was really precipitated by the housing market, foreclosures were going through the roof. What do you expect to see in terms of that this time around?

DANIELLE HALE: So we don't expect to see that this time around. In part, you know, the government stepped in and required lenders to work with borrowers to get them onto payment plans and other sorts of mortgage forbearance. So that should avoid the onslaught that we saw in the 2008, 2009 timeframe. That said, you know, the longer that we are in this period where millions of folks are out of work, the harder it is going to be for borrowers to stay solvent and to continue to make those payments. It's something that we could see if shutdowns last for much longer than they're currently anticipated.

But at least right now the system is really adapting and being creative. And instead of debating who is at fault for the crisis that we're in, they're really coming up with constructive ways to deal with it. It doesn't mean that, you know, it's without hiccups. But I think it's a much more constructive way to deal with it than it was during the financial crisis.

BRIAN SOZZI: Danielle Hale, Realtor.com chief economist. Always appreciate the insights. Please do stay safe out there.

DANIELLE HALE: Thanks. You, too.