With the emergence of the Covid 19 pandemic in the first quarter of 2020, dramatic impacts on the economy and real estate markets have occurred. Users of real estate valuation services need to feel confident in the firms they choose to appraise their properties. We, at Comprehensive Appraisal Corp., have been valuing properties for 30 years, through booms and busts.
In late 2019 the world first became aware of the emergence of Covid 19. On March 9, 2020 Governor Phil Murphy declared a state of emergency in NJ, and on March 11, 2020, Covid 19 was declared a pandemic by the WHO. Lockdowns, restrictions and remediation policies such as social distancing, and masking were put in place.
Schools were forced to cancel in person classes and children began to attend virtually. Non-essential businesses were mandated to close and their workers required to work from home. Brick and mortar retail businesses, especially restaurants, were initially the hardest hit.
Economic activity collapsed overnight. Unemployment began to soar, as many lost their livelihoods. The drop In economic activity was so pronounced that air pollution was reduced to the point that it could be seen from outer space.
The chart below, by the St. Louis Fed, depicts NJ unemployment rate over the past 30 + years. Note the sharp spike during 2020, when Covid 19 emerged.
Appraisals are intended to mirror the market, but with a virtual halt to economic activity and extreme uncertainty in the minds of market participants, appraising at the beginning of the pandemic was inherently a challenge. It quickly became clear, however, that despite the unprecedented nature of the pandemic, the valuation tools we needed were already in our toolbox. Even if data (ie. market data) is scarce, appraisers must always formulate their opinions based on the best information available.
Our clients have long depended on us to provide well supported valuations through all periods of time.