Every industry, and now all of our daily lives, are being impacted by the coronavirus. Not only has it been eliciting fear to people due to its health threat, it’s also creating panic in terms of economic instability.
This puts real estate in limbo due to its uncertainty and the challenges with the restructuring happening from the coronavirus pandemic. It’s not just the high-level market that’s changing, but also the buy-and-sell practices that are happening on the ground level.
A New York Times article presented different ways real estate agents can change their current approach to showing and selling property. In these times of heightened caution and limited movement, agents now have to be very careful while being forced to clean pre and post showings. It’s also advised to not touch much in the home while restricting contact with fixtures, furniture, appliances, countertops and more. Since the sellers are also forced to stay inside their home, it makes showing homes increasingly difficult for agents everywhere.
Sometimes, prospective buyers are led to online pre-registration forms so real estate brokers can assess their eagerness to buy and ensure they are healthy prior to coming by for a showing. The concept of “open” open houses has diminished since sellers have stayed in their homes causing real estate professionals issues setting up and showing listings. The drastic decline in showings is only adding fuel to the fire for agents.
As cited in the New York Times, and with data collected by Halstead Property, a New York metro area company with 5,500-6,000 regular showings, have now dropped to 3,900 scheduled showings for the weekend of March 14th. Some agents are now using pre-filmed walkthrough videos and FaceTime tours as alternatives. However, there are a few drawbacks to doing this. “Obviously, being able to go see the property is the best way to see the property,” Kathy Braddock, managing director of William Raveis NYC, explained.
Apart from the complex logistic issues faced in the time of the pandemic, the real estate scene has been playing with mixed signals from buyers and sellers as the recession scare grows apparent. New York, despite being identified as a coronavirus epicenter, Olshan Realty found out that over the March 15th weekend, 21 Manhattan apartments priced beyond $4 million, were sold. This is a significant boost from the average of 19, for the first few weeks of 2020. The value dollar for each of these transactions was a cumulative amount of $128.5 million. This is a massive decline from the previous week’s amount at $216.7 million. This data shows the behavioral shifts in buyers and sellers, as investigated in a flash survey of around 700,000 National Association of Realtors resident members, conducted March 9th and 10th. The majority of them stated there were no shifts in buyer and seller behavior at this point, and 9% revealed there was an increase in sellers due to reasonable borrowing rates people can benefit from when they sell their home quickly.
Even with the optimism of the real estate professionals, buyers seem fearful. 13% of all NAR members have reported declining buyer interest in their market. Such a decline is also more apparent in states like Washington suffering from a 16% decrease, California with a 3-5% decrease and some Texas areas with a 2.7% decrease. This is as expected since these two are the more prominent US epicenters for COVID-19 at the time when the survey was conducted. The data is indicating that this economic climate can establish a favorable market for buyers, but it is still too early to call where the real estate market is heading at this time.
Media and PR companies have reported that several big commercial players in the real estate scene have obliged to cease acquisitions for now due to the lack of clarity of the situation. One of these, according to Crain’s Chicago Business, is Origin Investments, which “indefinitely postponed” around $241 million-worth apartment building deals as they may be paying a lot more for a falling market. While some are ceasing acquisitions, companies like SquareFoot, a commercial real estate listings platform, are pushing forward with unique options by remaining flexible in these uncertain times.
Given the volatility of the government’s responses with respect to the scope of the Coronavirus pandemic, which is virtually changing by the minute, it is becoming more difficult to predict and evaluate the situation in the real estate market. Fannie Mae, HUD, and Freddie Mac have announced a moratorium for all foreclosures and evictions up to April 31st. It is possible everything will become more stable before anything this significant will occur. In these times, be prepared to expect the unexpected.