COVID-19 impact on the real estate market May 15, 2020

This is the last week of the current MN stay-at-home order, but cell-phone tracking showed we have been moving about more and more as the order continued. At the beginning we got an “A”… latest grade was a “D”. As I was driving to a showing last evening, I really could feel the difference on the roadways. The real estate market is moving into spring market mode.

Even though new listings slowed a little compared to last week they are still strong, and the continued growing trend of coming soon listings indicates more are yet to come.

Showings have risen to only 6% below last year… better than the national average of 15.1% below this time last year. I know I can feel it, fueled by the shortage of inventory. I showed a new listing yesterday that had showings booked all day and evening the first day on the market, and second day was already almost full.

With overlapping showings no longer allowed, making a showing appointment is like making a restaurant reservation… there are only so many times slots available. This may be having an impact on the increase in coming soon listings… appointments can be made during this period for when the listing comes active.

I have a listing in coming soon status that will be active a week from today… we already have 8 showings booked.

Some takeaways from this week

The thing to keep in mind when looking at national predictions is that Minnesota is behind the curve in the spread of COVID-19. We have effectively pushed our peak back to late June-July to better prepare our healthcare system to handle the peak when it comes, but we aren’t necessarily in sync with the national COVID-19 timeline.

from various nationwide sources…

SALES

• US home sales will rebound late summer and fall before falling again at the end of the year along with a second wave of the coronavirus… a W curve… and a road to recovery by spring 2021
• Home sales will be down 15% year over year
• Home prices are projected to flatten, up by 0.5% – 1.1% for the whole year from different projections, but a severe housing shortage will keep prices stable
• Take March, April, May data with a grain of salt due to violent swings in economic data and stay-at-home orders
• Despite the horrific recent job losses, the majority of Americans are still employed and record low mortgage rates give buyers reason to buy

Mortgage applications for home purchases posted their fourth consecutive weekly increase last week

FINANCING

• Freddic Mac forecasts the average rate for a 30-year fixed home loan will be 3.2%
• Others predict mortgage rates will drop below 3% by the end of the year
• Although I have read headlines ‘Mortgage availability is worst in years’, my understanding is if you qualify with requirement changes mortgages are relatively easy to secure…
  • higher credit scores
  • higher down payments
  • verification of continued employment within 3 days of closing
• I have read of mortgage interest rates as low as 2.5%, but reality is there are many overlays based on individual circumstances that raise your actual interest rate higher… don’t assume, check it out
• If you are currently in mortgage forbearance that may affect your ability to secure a mortgage for a new home

MISCELLANEOUS

• Although traditional retail spending showed steep declines, building materials and gardening spending increased by 10.4% over last year
• According to a National Association of Realtors flash survey, 77% of potential sellers are preparing to sell once stay-at-home orders are lifted
• After experiencing life under quarantine, many buyers are searching for affordability and greater space, driving demand from the core cities to suburbs and surrounding smaller towns
• Home sales will be driven primarily by Millennials
• Baby Boomers will be more likely to stay put
• New luxury apartment market amenity… free coronavirus testing, free masks and gloves
• Majority of tenants are keeping up with their rent payments

from our blog at Keeping Matters Current…

Will the housing market turn around this year?

Today, many people are asking themselves if they should buy or sell a home in 2020. Some have shifted their plans or put them on hold over the past couple of months, and understandably so. Everyone seems to be wondering if the market is going to change and when the economy will turn around. If you’re trying to figure out what’s going to happen and how to play your cards this year, you’re not alone.

This spring in the 2020 NAR Flash Survey: Economic Pulse, the National Association of Realtors (NAR) has been tracking the behavior changes of homebuyers and sellers. In a reaction to their most recent survey, Lawrence Yun, Chief Economist at NAR, noted the beginnings of a turn in the market:

“After a pause, home sellers are gearing up to list their properties with the reopening of the economy…Plenty of buyers also appear ready to take advantage of record-low mortgage rates and the stability that comes with these locked-in monthly payments into future years.”

What does the survey indicate about sellers?

Sellers are positioning themselves to make moves this year. More than 3 in 4 potential sellers are preparing to sell their homes once stay-at-home orders are lifted and they feel more confident, which means more homes will start to be available for interested buyers.Just this week, Zillow also reported an uptick in listings, which is great news for the health of the market:

“The number of new for-sale listings overall has shown improvement, up 5.9% last week from the previous week. New listings of the most-expensive homes…are now seeing the biggest resurgence, up 8%. The uptick is likely a sign sellers are feeling more confident because of improving buyer demand, as newly pending sales have also jumped up during the same period.”

What does the survey note about buyers?

The recent pandemic has clearly impacted buyer preferences, showing:

• 5% of the respondents said buyers are shifting their focus from urban to suburban areas.
• 1 in 8 Realtors report changes in desired home features, with home offices, bigger yards, and more space for their families becoming increasingly important.
• Only 17% said buyers stopped looking due to concerns about their employment or loss of a job.

As we’ve mentioned before, buyer demand is strong right now, and many are simply waiting for more inventory to become available so they can make a move, especially as the country begins to reopen.

All for this week… have a good weekend!

Sharlene Hensrud, RE/MAX Results – shensrud@homesmsp.com