Since mid-March, the real estate industry has been heavily impacted by the COVID-19 pandemic, with market slowdowns reported across the country. But despite a steep drop off in the first few weeks since the country went on lockdown, it seems things are slowly improving.
As states develop plans to reopen, buyer and seller confidence is growing. Here are 10 positive trends that could signal an impending market upswing.
In the initial four weeks of the shelter at home order, sales of newly built homes were down 85% from normal spring activity at the same time last year.
But in the past two weeks, those numbers have increased 20% from their initial drop off, according to John Burns Real Estate Consulting, which tracks hundreds of builders nationwide. Even though they are down year over year — sales are recovering.
The upswing has been attributed to a wave of renters who are seeking to leave their apartments for permanent dwellings.
According to Zillow, new listings were up 14% nationwide at the beginning of March, but slowed dramatically until April 17, when new listings were down 43.8% from this time last year.
But over the weekend of April 18-19, new listings began to trend upward and were down just 37.7% year-over-year by April 19.
In recent weeks, pending sales activity has begun to rebound. By March 22, pending sales had fallen below 2019 levels, declining as much as 38.5% from a year ago by April 14. But they rebounded 6.2% by the end of the following week.
The total number of listings active at any point in March fell to a new seasonally adjusted record low of 1,429,267, down 9.5% from March 2019. While that might not seem like good news, it means that despite shrinking purchase activity, there is not yet a buildup of unsold inventory. Enough sellers have pulled out of the market to balance out the supply and demand of homes across the country. This is in contrast to the 2005-2006 housing market, which saw an overabundance of unsold homes and eventually stalled price growth.
Despite predictions, home prices are up during the coronavirus pandemic. The median home list price was up 1.6% in the week ending April 25 compared with the same week a year ago, according to the most recent national data from Realtor.com based on the 99 largest metropolitan areas. Real estate experts had predicted price growth would level off or dip.
Mortgage rates reached a new record low this week, with the 30-year fixed-rate mortgage falling to its lowest average ever since Freddie Mac began tracking data in 1971. Low rates are driving higher refinance activity and have helped improve purchase demand.
Freddie Mac reported the following national averages for the week ending April 30:
Given these record-low mortgage rates, mortgage applications for home purchases saw a 12% uptick last week, reversing a month of falling activity, according to the Mortgage Bankers Association. Housing experts say it could be a sign that buyer confidence is on the rise.
Web traffic to for-sale home listings on Zillow fell off dramatically in mid-March. But by mid-April, overall visits to for-sale homes had rebounded to levels that are actually slightly higher than a year ago.
While traffic to listings in some markets still remains down from a year ago, the national total has rebounded significantly, up 13% from a year ago for the week ending April 13.
According to a new report from the National Association of Realtors®, more than a third of real estate professionals say closings are occurring on time. Thirty-five percent of Realtors reported no delays to closings on a survey conducted April 26 and 27.
Recent NAR data also showed a quarter of Realtors had clients put contracts on homes the week of April 12 without even physically seeing the property. Similarly, 58 percent of Realtors reported that buyers are using virtual tours and 43% said buyers have taken advantage of e-closings.
While it does appear the real estate market is looking up, it likely won’t return to normal levels overnight. Agents should still take measures to protect themselves and their clients and conduct business virtually when possible.
We recently reached out to agents in our Smart Agents community to find out how they’ve been conducting business over the last couple of months.
Here are some of their responses:
“We are still selling homes, and the market is brisk with the good homes selling fast when the price is right. In order to protect our buyer and seller clients, I am providing plenty of information about my listings, including 360-degree tours and measured floor plans so that those buyers who do schedule a showing will be fairly certain that the house would work for them. I am requiring that buyers agents have confirmed prequalification for financing or proof of funds. Staggered showings only are allowed. At the entry point of the house, I provide a sanitation station, including wipes, plastic gloves and shoe covers. Buyers agents are instructed that only agents with a gloved hand are to touch surfaces and open doors and cabinets.” — David Lyngholm, Canton, OH
During this period, I did successfully sell a home through a Zoom meeting with the agent and their buyers. It was actually very easy and efficient—I could open any drawers and closets so they could see everything they asked about. This whole experience has made me reevaluate how I should handle listing showings. For me, I think there should be more steps now: 1) requiring that the buyer have a preapproval letter; 2) that the buyer drives by the property and/or sees the virtual tour online with the listing; and 3) if still interested, we can arrange a private showing. Virtual open houses are a great concept for those buyers who are just starting their home search, but not having in-person open houses solves a few perpetual concerns about safety, theft, etc. I think doing business differently may help agents work more efficiently and effectively. I’ve heard from numerous agents that this has made them reevaluate their time as well, so those changes dovetail nicely together.” — Susan Hughes, Pittsford, NY
“My business has actually been doing very well. I listed six homes in the last three weeks and all but one are under contract. Half were occupied and half were vacant. I was able to find hand sanitizer for all the homes, which was great. We also did virtual tours, which got a lot of hits, but all homes were under contract by folks who actually came in person to tour them. I also put two buyers under contract. I am starting to see a slow down for my July closings so am ramping up my marketing and targeting now. Naturally, I am practicing social distancing at all times when interacting with clients. I have a mask available and ask my clients if they are more comfortable with me wearing one.” — Tracy Watson, Fuquay-Varina, NC
To find out more ways you can help your business thrive through the COVID-19 pandemic, be sure to check out some of the other content on our blog: