The Coronavirus, also known as COVID-19, is a pandemic that is currently affecting the world. It is changing and evolving daily. As of right now in the United States professional, collegiate, high school, and all lower level school sports have been suspended.
Many schools are closing, park districts are closing and other public entertainment venues are closing. Large events are being canceled or postponed. Churches are canceling services. People are being laid off, furloughed or asked to work from home. There’s word of restaurants starting to close.
People are stocking up on items like toilet paper, hand sanitizer, bleach, and other cleaning supplies. In some places, people are having a hard time finding food. Brick and mortar stores and online stores are running out of everyday essentials. It is already affecting the economy, stock market, and real estate industry.
If you are a real estate agent, homebuyer or home seller, what should you expect in the weeks and months to come?
How It’s Affecting the Real Estate Industry
Real estate has always been a safe long-term investment. Of course, it has its cycles of ups and downs. With the massive fluctuations in the stock market, real estate is looking even more like a strategically safe, long term investment. The Spring 2020 real estate market started out strong in February. We do expect to see a relatively short period of disruption in real estate sales but should quickly recover as housing is critical at this time with many Americans spending even more time in their home.
We are seeing people starting to get concerned and be a bit more cautious. There are some buyers who were going to write contracts are starting to have second thoughts. They are postponing making offers on homes. Some sellers are postponing listing their homes because of the uncertainly of the market. Some people are fearful of losing their jobs. Real estate agents are hoping this will be a short-lived pause in the spring market. The United States is proactively trying to prevent the virus from spreading. Sellers should get ready to put their homes on the market now, to be ready for buyers to come out of the cracks and start purchasing homes again. Some listing agents are requesting a 12 month listing agreement expecting longer days on market.
Mortgage Interest Rates
Mortgage interest rates have been at historic lows. Buyers should lock in these low interest rates now. Hopefully, the pandemic will subside as quickly as it came. Buyers who lock in these low mortgage interest rates may be able to be qualified for a more expensive or larger home. People who thought they couldn’t get qualified to purchase a home may be able to now. Investors should take advantage of the interest rates. Borrowing money is cheap right now which will help them increase and improve their real estate investment portfolios.
Homeowners Should Consider Refinancing
Currently, the industry is experiencing a refinancing boom. Many homeowners are taking advantage of the low interest rates to refinance their homes in order to have a lower monthly payment. Or they are refinancing to a 15-year or 20-year mortgage to be able to pay off their homes faster. This will save them money in the long run. Refinancing now can save some homeowners thousands of dollars over the life of their mortgage loans.
The National Association of Realtors® Survey
The National Association of Realtors® sent out a survey last week to its members asking them if and how COVID-19 is affecting their businesses. As of last week, 11 percent of Realtors® reported a reduction in buyer traffic. The survey reported 7 percent of Realtors® are noticing lower seller traffic. As the trade association for real estate agents known as REALTORS, they are offering a guide to Coronavirus for REALTORS.
Open Houses During the Epidemic
For the most part, Open Houses have come to a screeching halt. Some of the more nimble real estate agents are leveraging technology to implement a “virtual open house”. Truth is, at this point with the Coronavirus, homeowners don’t necessarily want large groups of strangers gathering in their home and touching things. From the buyers site, some people are afraid to go out in public right now – but will do so to find that perfect home. We are expecting individual showings of properties as opposed to large gatherings.
Real Estate Training and Education
Some real estate associations are canceling continuing education classes and training seminars. Many are moving to online learning only right now. They are trying to reduce group gatherings as much as possible. The National Association of Realtors® has put a halt to all traveling for their employees. Luckily, some of the more advanced real estate education providers have been offering online classes for a long time. This provides real estate agents with a safe way to complete their CE and post licensing requirements from their home. Some of the aggressive real estate education providers have went as far as to offer specials to get your real estate license while quarantined.
Because we handle many real estate websites across the country and run countless reports on showing activity to come up with our tips and tricks in real estate marketing. We can say although we are seeing a slowdown in appointments being made, we are still seeing appointments being set and being shown at a pretty good clip. This did come after a sharp increase in appointment cancellations. Once again, some of the more tech savvy agents have been doing “virtual showings” to ease the slowdown. Many of the best listing agents are setting up hand washing stations, and leveraging that in their MLS remarks (and even pictures) to reduce the pain points of getting their homes shown.
Long Term Contraction
If we do see long term contraction of the real estate market, expect some changes in the marketing strategies of agents and brokers as well as a compression of commissions paid for by the seller. This will push even more aspects of real estate online as well as see a rise in discount real estate brokers and flat fee real estate models.
Cash for Down Payments
It is true that much of the country is shut down and many workers are loosing their hours at work, some without Paid Time Off (PTO). That is not the case for everyone. With tax refunds flowing coupled with the strong probability of millions of Americans receiving direct checks there is a certain subset of the American population coupled with the extremely low mortgage rates.
Hopefully, the COVID-19 pandemic will be over soon and the real estate industry will return to a successful spring and summer market. Prevention is key. It’s important to stay positive and look forward to the industry making up for lost time quickly.