The COVID-19 pandemic is by far the most significant factor affecting the housing market, which is why we are putting effort into tracking the statistics produced by the various health authorities, consolidated and published by Johns Hopkins University.
Just as all housing markets are local, the pandemic data varies dramatically from location to location. At present the end of day April 23 data for the USA as a whole is dominated by 2 states:
New York - 268,581 confirmed cases with 20,861 deaths
New Jersey - 100,025 confirmed cases with 5,428 deaths
These 2 states represent only 8.5% of the population of the USA but 42% of the total COVID-19 cases and 52% of the deaths. In New York we are seeing strong evidence that the peak new infection rate has passed. The weekly peak was 68,882, recorded on April 10 and the rate over the past 7 days has declined to 42,383. This is still a lot of new cases but fewer new cases per week relieves the extreme pressure on health services in New York and it is safe to say New York has seen the worst, at least for its first wave.
In New Jersey the situation is more nuanced and the evidence that the state has peaked is weaker. So far the peak week ended on April 7 and saw 25,720 new cases. Since then the new case number has dropped to a low of 23,269 on April 18 but has been increasing since then and it looks possible that a new and higher peak will be posted over the next few weeks.
It would be a grave mistake to assume that because New York has seen the worst, that the rest of the USA has too. The majority of states have yet to record their peak in new weekly infections and many of them are showing accelerating growth rates for new cases of COVID-19.
A false sense of security can be generated by a growth rate that slows, an apparent defeat for the virus, only for it to turn out to be a lull. Over the past 2 weeks this has famously occurred in Singapore which now has the second highest growth rate for new infections in the world. A similar effect has also taken place in a large number of the US states over the last 7 days. However the data has been ignored by most of the media because the numbers still look small next to New York and New Jersey.
It is important to remember that defeating a virus like this is not a sprint, it is a marathon. Mixing my sport metaphors, we are no more than 2 innings into a 9 innings game and we should not be celebrating a win just because we managed to level the score at the end of the first inning. The nearest relevant parallel for the current pandemic is the Spanish Flu of 1918-1920. Although this was an influenza virus not a corona virus, the symptoms were similar and the main cause of death was very similar - acute & severe pneumonia.
The Spanish Flu lasted for 21 months and had 3 phases:
The spring of 1918, affecting much but not all of the world and the least deadly phase. The first case in the USA was reported on March 11, 1918 in Fort Riley, Kansas.
The summer and fall of 1918, widely spread by soldiers returning from World War I and much more deadly than the first wave
The winter and spring of 1919, not as severe as the second wave and petering out by the fall of 1919.
Many additional deaths were caused by people taking inadvisable cures - overdoses of Aspirin were common - being recommended by many people including the US Surgeon General at the time. In Spain, the disease was referred to as the French Flu, of course. The disease did not originate in Spain, but because Spain was not involved in World War 1 it had no restrictions on reporting bad news that could affect troop morale. Thus the first media reports were from Spain.
We had no vaccine for the Spanish Flu and we have never created a successful vaccine for any corona virus including the 4 previously identified corona viruses that cause the common cold. We have no vaccine for SARS or for MERS either, both corona viruses, but less contagious than the novel virus that causes COVID-19. So we are in a similar position to where we were in May 2018. There is always a chance that the virus may peter out by this summer, but that is not at all likely. As humans we have a tendency to believe what makes us feel good rather than what is most likely to be true. There is a much higher chance that we will be able to create a successful vaccine for COVID-19, but it is unlikely to be available in volume before the middle of 2021. In the meantime, because it is so contagious, the only known mechanism for the virus to fade is for us to achieve herd immunity. That requires some 50% to 70% of the entire population to be infected and for any resulting immunity to be conferred for a reasonably long time, such as 3 to 5 years. Our base assumption at the Cromford Report is that COVID-19 will be a significant factor for the housing market during the whole of 2020 and most of 2021.
Going back to the data reported by states over the past week, the following have seen increases in their rates of new infection:
Arizona +2.9% - new high on April 23 (Arizona briefly went negative between April 13 and 18, but has since changed course for the worse)
Arkansas +10.7% - new high on April 23
California +3.2% - new high on April 23
Connecticut +2.4% - new high on April 23
Delaware +4.2% - new high on April 23
District of Columbia +3.5% - new high on April 21
Georgia +1.0% - new high on April 13
Iowa +9.4% - new high on April 23
Illinois +2.2% - new high on April 23
Indiana +1.8% - new high on April 21
Kansas +9.1% - new high on April 23
Kentucky +1.4% - new high on April 22
Massachusetts +0.7% - new high on April 23
Maryland +1.2% - last high on April 14, new wave emerging with higher peak likely
Minnesota +6.1% - new high on April 23
Mississippi +1.5% - new high on April 21
Nebraska +12.2% - new high on April 23
New Hampshire +3.3% - new high on April 23
New Mexico +3.2% - new high on April 23
North Carolina +2.7% - new high on April 23
North Dakota +11.1% - new high on April 23
Ohio +10.0% - new high on April 23
Rhode Island +2.2% - new high on April 23
Tennessee +2.1% - new high on April 23
Utah +3.7% - new high on April 23
Virginia +4.9% - new high on April 23
Wisconsin +2.6% - last high on April 7, new wave emerging with higher peak likely
West Virginia +0.4% - new high on April 23
The percentages are the daily increase in the weekly rate of new infections. These 28 states represent more than half the US population where a peak infection rate has not yet been clearly achieved. The only reason the USA as a whole has achieved a peak is because New York has achieved a peak, though at a huge cost. New York is the most heavily infected area in the world, far in excess of Italy, Spain or China. New York is into its second inning. The rest of the USA is still in its first inning.
Louisiana is in a similar position to New York having hit a peak on April 7. Michigan too (April 7 peak) and also Washington (April 8). However all 3 states are much further from herd immunity than New York. In New York 1 person in 72 is known to be infected and there are probably 10 untested or asymptomatic cases for every proven case. That means the number of people with antibodies in New York could be as high as 1 in 7. This is higher than anywhere in the world except for the microstate of San Marino. To achieve herd immunity New York would need to exceed 1 in every 2 people. This means 3.5 times as many people as we have seen infected so far.
The following more fortunate states have their outbreak relatively under control and their first peak is well behind them
There will no doubt be many reading this observation who prefer not to believe it. You have every right to make up your own mind but I suggest that you should analyze the numbers reported directly from the counties before you do. These have not been interpreted by any third party or media. We do not have an agenda. You subscribe because we provide impartial information about the true state of the housing market and its likely direction from here. To survive and prosper, you should prepare for the world as it is, not as you would like it to be. We take care with the data in order to be credible. Sometimes this means we have bad news.
The good news is that the housing industry is holding up very well considering the scale of the impact of the virus. Sales volumes are inevitably going to be depressed for many months to come but we have still not reached a point where a drop in home values is looking likely. If that changes we will of course let you know immediately. We hope you will believe us, even if you prefer it were not true.