New and existing houses aren’t selling like they were prior to the pandemic. But people are still selling and buying houses.
In January and February, the market was heading toward its best year in ages. New construction was selling at about 14% over the first two months of 2019, and existing places were changing hands at a rate not seen since early 2007. But then the business all but shut down, even though real estate is considered an essential economic activity in most places.
According to the latest information from the National Association of Home Builders, most builders say COVID-19 has curtailed traffic at model homes -- often dramatically. Builders have already experienced a 20% drop in sales compared to last year, according to the RCLCO advisory firm, and they are bracing for a 50% drop by summer.
Meanwhile, the National Association of Realtors reports that 9 in 10 of its members have seen a decline in buyer interest in resale houses. Half of those Realtors have seen drops of 50% or more. Most buyers are delaying their purchases for a few months, but some are out of the market indefinitely. (The figures cited here are national; your market may be markedly different.)
Nevertheless, some buyers and sellers are soldiering on.
“Deals are still happening. There’s been a lot of really good activity,” reports Coldwell Banker agent Jill Eber in Miami-Dade County, Florida.
Aaron Kirman, a Compass agent in Beverly Hills, California, says he’s currently working on eight or nine deals. Fellow Beverly Hills agent Joyce Rey, with Coldwell Banker, has four deals under contract at the moment.
Pending home sales in Sarasota County, Florida, were up 69% in the first two weeks of April compared to the first two weeks of March. That’s especially promising, because in that market, the first half of the month is often weaker than the last, reports agent Robert Goldman of Michael Saunders & Co. in Venice, Florida.
Still, there is no denying that sales have cratered overall. But if you are a serious buyer or seller, now may be as good a time as any to go for it.
Some tips for sellers:
-- People who are looking right now are serious buyers. They’re not tire-kickers who visit open houses on the weekends for fun.
-- With so many sellers taking their houses off the market, you have less competition right now than at any time in the past year.
-- You stand a better change of getting your asking price, or something close to it, now than sometime down the road. No one knows what the future holds, but if the pandemic lasts too many more months, experts expect prices to tumble.
-- You may not need to show your house in person. NAR says 25% of its members worked with at least one buyer in mid-April who made an offer on a place they never physically visited. “If a buyer wants to buy,” says Kirman, “I think you have a greater chance of getting a better deal today than in three months. I’d rather be ahead of the curve.”
Tips for buyers:
-- Honest-to-goodness sellers may be anxious, so make your best offer and see what happens. “If you identify a property you really love, go for it,” advises Eber. “Make an offer. I don’t have a crystal ball, but if you wait, there won’t be enough properties to satisfy the pent-up demand.”
-- There are fewer buyers in the market, so you, too, have less competition. That means you might be able to be a tad more discerning, advises Jay Parker of Douglas Elliman Real Estate in South Florida.
-- There are going to be hurdles along the way. Some lenders, though not all, are exercising caution: raising their minimum credit score and down payment requirements.
-- Seeing houses in person could be problematic. “Virtual tours are important,” says Tim Sullivan of Meyers Research, a new home market advisory firm. “But they don’t take the place of an in-person visit.”
Be that as it may, many realty agents already had programs such a virtual tours in place prior to the pandemic, and those who didn’t are adding them as quickly as they can. Ditto for appraisers, title companies, closing agents and the like.
-- Mortgage rates have dipped to their lowest level in decades. As of this writing, the Mortgage Bankers Association pegged the 30-year, fixed-rate loan at 3.45%. But Freddie Mac says it slipped to 3.31% in mid-April. “It’s practically free money,” says loan broker Grant Stern of Morningside Mortgage in Miami.
However, actually securing financing at a decent price may be a formidable challenge. Many lenders are taking and processing applications electronically, but risk-sharing overlay fees on top of loan rates have tripled since the beginning of last year, reports Karan Kaul of the Urban Institute. That adds to the cost of the loan.
At the same time, if you don’t feel comfortable dabbling while most people are staying home and social-distancing, there’s nothing wrong at all with playing a waiting game. Realize, though, that the housing market is very likely to be much different a few months from now than it is today.