Coronavirus and the real estate market
It’s undeniable. COVID-19 is affecting the real estate market. But it might not be as bad as you think.
The warmer temperatures and sunnier skies of spring usually usher in the spring housing market — the busiest time of the year for home sales across the country. This year, however, looks very different from the past for one simple reason: COVID-19.
But what does all this mean for the real estate industry now and in the future? What does home buying and selling look like? Keep reading to learn more….
How does this downturn compare to the 2008/9 Housing Crisis?
David Stevens, the former head of the Federal Housing Administration and Mortgage Bankers Association, spoke to Compass agents nationwide last week on the state of the housing market. Here are some of his key takeaways regarding the housing market today:
1. The factors that led to this downturn are very different from the underlying causes of the Great Recession of 2009. Unlike 2009 downturn, which was caused by fundamental issues in the mortgage industry, the cause of this downturn is entirely external to the housing industry — a public health crisis. We should not look to 2009 as a model for how real estate will be impacted by this pandemic.
2. Economists expect a W-shaped economic recovery, which involves a decline in key economic factors followed by a rise back upward, followed again by a decline and ending with another rise. We are in the downward trajectory now (Q2) and we expect to see a spike in business in Q3 as people go back to work. We will likely see the greatest impact on real estate in Q2.
3. The real estate industry continues to be healthy due to a variety of factors, including a) low interest rates; b) the generational impact of millennials purchasing their first homes; and, c) an overall reduction in rental housing in favor of homeownership. The Brookings Institute projects that interest rates will remain at record low rates. And by comparison, during the 2009 recession, we actually saw an increase in rentals as homes were foreclosed.
4. Moody’s Analytics is forecasting moderate price adjustments during the recovery — low, single digit declines in home prices nationwide. While it is too early to identify exactly how the DC area will be impacted, the continuing low inventory in the DC market is anticipated to soften this impact to prices.
5. Economists are pretty aligned with this view about the impact to our industry. There may be disagreements about how quickly the economy will rebound, but on the whole, economists are optimistic about recovery.
So what does home buying and selling look like now?
Nationwide, the real estate industry is grappling with the new normal
Open houses are cancelled throughout the District, Maryland, and Virginia. It is just too dangerous to have multiple groups of people walking through a property at the same time.
Closings are still happening. Gone are the days of buyers and sellers sitting across the table during settlement. Now expect all closings to be split, with limitations on the number of attendees. Buyers will still have to sign their documents in person, but sellers may be able to take advantage of e-notary services and avoid coming into the office completely.
Fewer buyers and limited inventory, but transactions continue apace. While some sellers are delaying putting their homes on the market, there are a number of intrepid buyers — including many millennials — taking advantage of the lower interest rates and less competition for homes.
Greater reliance on online tools for selling homes. Videos, 3D tours, virtual staging and photography are going to be more crucial than ever for selling properties. Buyers are likely to spend more time online narrowing down the homes they want to visit, and some are even going under contract without ever seeing the home in person!
Shifts in the most popular home features. The country’s experience during this “Stay at Home”/quarantine period is going to have lasting impacts on the types of homes most popular with consumers. Compass is already seeing a 40% increase in searches for single family homes and a decline in searches for condominiums. Searches for homes with pools, yards, and other outdoor amenities are also up.
How am I available to serve you during this period?
The real estate industry is constantly adapting to ensure clients are able to shop for and list properties, mainly by leaning into digital technologies. Here’s the “menu” of virtual services I’m offering at this time:
First-time homebuyer video calls: I’m hosting one-on-one video presentations for those who are interested in learning more about the buying process and how to get started. Even if you are months or more away from purchasing, use your “quarantine” time to get a jump on the process!
Socially-distanced showings—Some properties are still permitting in-person showings, so I can take you to visit that home you’ve fallen in love with online. To comply with CDC guidelines, there is a recommended maximum of 2 clients and everyone should wear a mask and adhere to social distance practices.
Virtual tours—When in-person showings are not possible, due to seller and/or buyer preference, I’m able to create a video tour of the property. For buyers, I’ll either video chat with you as I walk around the home or pre-record it send you a link to the video. For sellers, I’ll use the listing photography and video footage to create a “virtual tour” for potential buyers.
Consultation services—One of my areas of expertise is in home repair and renovation, and can help you think through which improvements will get you the most re-sale value for your home. If there’s a project you’ve been considering but want some professional advice or project management, I’m happy to help.
Custom searches and Compass “collections”— Love looking at homes online or just daydreaming about your next place? Even if you aren’t in the market for a new home right now, I’m happy to create a create a custom search via Compass’ app that sends you new listings every morning. You can also create a personalized “Collection”—a Pinterest-like tool that allows you to save homes you like, add comments, and invite friends and family to view and comment, too.
DC Property Management services—Don’t forget I’m a licensed Property Manager in the District of Columbia! I can help you find tenants, make upgrades, and manage upkeep and rent collection for your investment property.
If any of this sounds interesting, give me a call! I’m always happy to talk with you about your options and how I might be of service. Meanwhile, stay safe and healthy!