With nearly 90 percent of the US under stay-at-home orders, hardly anything is business as usual. This is the third week (4/3/2020) I have reported on the effects I have been seeing from the Coronavirus. Most of the ways we do business in the real estate world were already changed as of last week… no open houses, virtual consultations, virtual showings, closings with sellers pre-signing and only signing buyers present at the actual closings.
At the end of our first week under the stay-at-home order we are starting to see the effects in various stats. Showings are not surprisingly way down… we are, after all, to stay home unless it is necessary.
Market stats based on info from the MLS show that both new listings and pending sales have started to decline, while price changes ticked up a bit. Expect those trends to continue more significantly as the effects of the drop in showings hits. Inspector Reuben said their inspections are way down… a leading indicator of sales in the real estate market.
Another indicator of changes in the marketplace is the increase in listings that are back on the market. Although this can happen for many reasons, we are perhaps starting to see the impact of sales falling through because of loss of income due to COVID-19.
Coming soon listings were starting to build as part of the growing spring market, then decreased when the Coronavirus first appeared. Now that listings can be coming soon for up to 60 days rather than 21, more listings are coming on the market that won’t be available for showings for up to two months. This enables sellers to let potential buyers know their homes will be available in the future, without being available for showings right now. Time will tell how this will all play out after we get out of the current stay-at-home and social distancing holding pattern but indicates hope for the future.
Look for pending sales to drop more, and keep an eye on price changes next week. Remember… pending sales are a lagging indicator, often changing to that status about two weeks after accepting an offer. That means that many of the properties that pended this week were already in process when everything changed because of COVID-19.
With such a shortage of inventory it is hard to say where prices will go. Sellers who can afford to wait probably will do just that, while those who want/need to sell now will drop prices. This could be a good time for buyers with softer prices and less competition. The market could be fierce with pent-up demand once we get back to business-as-sort-of-usual.
Looking to the Future
As our personal and business lives continue to change day by day, we are reminded how interconnected we are… all wondering how long this will last and how deep the impact will go. Our lives may be changed on some levels forever, but history shows that economic downturns are followed by a period of economic expansion, and past pandemics have had minimal impact on housing prices.
below from my blog at Keeping Current Matters
Here’s a look at what leading experts and current research indicate about the economic impact we’ll likely see as a result of the coronavirus. It starts with a forecast of U.S. Gross Domestic Product (GDP).
According to Investopedia:
“Gross Domestic Product (GDP) is the total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period. As a broad measure of overall domestic production, it functions as a comprehensive scorecard of the country’s economic health.”
When looking at GDP (the measure of our country’s economic health), a survey of three leading financial institutions shows a projected sharp decline followed by a steep rebound in the second half of this year:
A recent study from John Burns Consulting also notes that past pandemics have also created V-Shaped Economic Recoveries like the ones noted above, and they had minimal impact on housing prices. This certainly gives hope and optimism for what is to come as the crisis passes.
With this historical analysis in mind, many business owners are also optimistic for a bright economic return. A recent PricewaterhouseCoopers survey shows this confidence, noting 66% of surveyed business owners feel their companies will return to normal business rhythms within a month of the pandemic passing, and 90% feel they should be back to normal operation 1 to 3 months after:
From expert financial institutions to business leaders across the country, we can clearly see that the anticipation of a quick return to normal once the current crisis subsides is not too far away. In essence, this won’t last forever, and we will get back to growth-mode. We’ve got this.
My take
So much depends on how long we are held captive by COVID-19, but my gut says we will feel the effects longer than the experts predict above. I hope I am wrong. Time will tell.
Sharlene Hensrud, RE/MAX Results – shensrud@homesmsp.com
