Sports leagues have suspended their seasons. Casinos have closed their doors, and organizers have canceled conferences in Las Vegas.
The coronavirus is starting to inflict economic damage as Las Vegas resident hunker down to stop its spread.
So far, though, home-buying demand – spurred by low mortgage rates – has held up in Southern Nevada.
That could change if the economy shuts down for a prolonged period.
Low mortgage rates don’t matter if people don’t have jobs to pay their mortgage.
Crystal Rose Schulz is a loan officer with Pinnacle Lending Group. She said the impact of the outbreak has not been felt - yet.
“Last week, pretty much every escrow company I talked to had year-over-year increases, week-over-week on escrows being opened. So, last week didn’t really affect the market too much. So, weekend openings were up over last year, over 2019, and over the previous week,” she said, “My concern is coming in the next few weeks when people realize the job loss, the economic loss, loss of paychecks.”
She said she is starting to get "fear-driven" phone calls from people in the gaming industry.
“When we’re having people working in the industry and they’ve been laid off, they’re calling us and telling us, ‘hey, we’re worried,’ or ‘we’re on pause for shopping.’ If they’re in contract, they’re saying, ‘can we close this week?’ ‘Can we use this paystub?’ Or if they’re realizing, ‘oh no! We’re not going to be able to afford it,’ they’re canceling contracts.”
While the Federal Reserve slashed interests to zero, Schulz said mortgage rates aren't tied directly to the fed fund rate. There are other factors that go into mortgage rates.
People who think it is time to refinance their mortgage may be surprised to find a jump in rates because so many people already refinanced that financial institutions had to pull back on lending and raise rates, Schulz explained.
The big question is whether all of this uncertainty will lead to the kind of crash in prices that the country experienced during the Great Recession.
Schulz is hopeful the situation will be temporary and we won't see the kind bottoming out that we saw in 2008.
Crystal Rose Schulz, loan officer, Pinnacle Lending Group.
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