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How Did Past Health Scares Affect the Real Estate Market?

A month and a half into a national emergency that has shuttered the economy as the U.S. battles with the coronavirus pandemic, the real estate market is already bearing the impacts of the health crisis.

Local policies that ban in-person home showings, inspections, appraisals and document signings aside, both homebuyers and sellers have instinctively pulled away from the market ahead of what would typically be a busy spring season.

According to the National Association of Realtors, existing home sales dipped 8.5% from February to March, although year-over-year, they remained in positive territory with a slim increase of 0.8%. But these figures reflect the closing of transactions that had been initiated at least a month prior. Because of the data lag that exists in the real estate industry, the true current effects of COVID-19 may not begin to emerge in statistics until early summer.

“What we’re going through right now is an induced recession,” says Skylar Olsen, senior principal economist for real estate information company Zillow. “We made this, right? We had to make it because the coronavirus was a very serious public health risk.”

While divergent from the last recession, which began with an overheated housing segment, the current circumstances – namely, the impacts of health scares on real estate – do have precedent, which could offer insights into what may lie ahead.

With its deadly toll, the coronavirus pandemic is now eclipsing past outbreaks, which did not prompt the lockdowns that are currently gripping the U.S. as well as a slew of other countries around the globe. Here is how the COVID-19-induced fallout in today’s housing market compares to the effects of the swine flu of 2009 and the SARS outbreak in 2003, which charted the first pandemic in the new millennium.

COVID-19 vs. Swine Flu

In the spring of 2009, the U.S. was the first to detect a new type of influenza virus, H1N1, which came to be known as swine flu. The Centers for Disease Control and Prevention estimates that in the first year after the initial outbreak, 60.8 million Americans got infected, nearly 300,000 were hospitalized and about 12,500 died.

As of April 29, 2020, over just a couple of months, there are more than 1 million positive COVID-19 cases in the U.S. and nearly 58,000 deaths.

“Back in 2009, the effects (of H1N1) seem to be fairly localized,” with sporadic temporary social distancing, says Javier Vivas, director of economic research at “It was more localized in the south. Whereas in today’s situation, you really see it in almost every major city.”

The swine flu, to an extent, slowed the housing market’s recovery following the Great Recession, which ended in June 2009. In a post on, Vivas writes that nine months after the H1N1 infection peak, existing home sales plunged double digits, a slump that lasted for five months. At the same time, inventory grew, pushing prices down.

Only about two months into the spread of the coronavirus in the U.S., home sales have dipped, but for now, prices retain their strength as sellers are taking their homes off the market – at first, to avoid inviting potentially sick strangers in.

“One of the things that is interesting is how this virus today is almost shifting the normal dynamics, even in the near term,” Vivas says. “Typically, in real estate, you see sellers react after buyers react. So, sellers wait for buyers to make the move. What’s different today is that (sellers) had to pull back on the listings. The fact that sellers actually are reacting before buyers makes this a very odd time of the year.”

A decade ago, the economic consequences of the swine flu compounded with the end of the homebuyer tax credit, enacted in 2008 to spur housing activity and make properties more affordable to first-time homebuyers. Moreover, it slammed the country during its still nascent Great Recession recovery, when some indicators had just begun to rebound.

This year, the coronavirus has already purportedly halted the longest economic expansionary period in American history. While some economists had predicted a recession in late 2020 or early 2021, the pandemic has triggered the onset of what is a mandated downturn (leading to 26 million jobless claims in a month), whose length could dictate how fast the housing market bounces back.

“The recession (we were expecting) even before the virus hit, we knew it was going to be closer to what we would call a normal recession where you see a gradual deceleration in indicators,” Vivas says. “Then you see the housing market somewhat buffered, but not completely unimpacted.”

He adds: “As it relates to (the coronavirus), the magnitude of the sanitary situation is much larger. But economically speaking, you could see a much faster recovery just because the fundamentals were in a better place before the virus hit compared to 10 years ago.”


At the speed with which the pandemic has unfolded, COVID-19 prompted an economic slump that resembles the fast downturn that occurred in Hong Kong during the four-month SARS outbreak in the spring and early summer of 2003.

Caused by a coronavirus and first reported in Asia, SARS infected more than 8,000 worldwide, causing nearly 800 deaths before its containment, according to the World Health Organization. While the scale of SARS pales in comparison to COVID-19, the social measures and their impact on the Hong Kong housing market somewhat track the course of the current pandemic.

Similar to the American economy prior to COVID-19, Hong Kong’s economy in early 2003 enjoyed an expansion with dropping unemployment rates – before SARS spurred a recession. Zillow reports that during SARS – similar to what is happening in the U.S. today – home prices in Hong Kong resisted a decline, while transactions fell significantly as residents practiced “avoidance behavior” by shunning travel, restaurants and public gatherings.

Though COVID-19 and SARS vastly differ in their potency, “I think the hope is in the lesson that, from at least the Hong Kong SARS epidemic, the recession was an induced recession,” Olsen says. “It was a ‘click’, it happened fast and the recovery was fast as well.”

A streak of optimism in the U.S. housing market might already be emerging. According to Zillow, pending home sales decelerated in the second half of March and remain substantially lower compared to February, but in the week ending on April 19, they were 6.2% higher than the previous week. Moreover, while inventory has gone down, home values remain steady at nearly $250,000 in March, posting a 4.1% year-over-year growth.



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