The Housing Market Now
2019 showed a shortage of inventory in the housing market, and the trend for 2020 may only intensify that, especially when paired with the lockdown that the U.S housing industry is on. Construction for new homes has been halted nearly entirely and real estate agents can’t show homes. Inspectors can’t inspect houses, appraisers can’t appraise, and any closings that are being done, are being done virtually to appease the stay at home orders and the social distancing rules. COVID-19 hit the housing market during the prime home-shopping season, as March and April are usually the two months for search activity relative to inventory.
Throughout states and various housing markets, there are hints of the impact that COVID-19 has left in its tracks, with a slowdown in housing sales and even a decrease in mortgage purchase applications. At a time of year when listings are usually increasing, the market has experienced dramatic pullback, and the number of houses pulled from the market has nearly doubled in the last month. There are many theories and calculated outlooks that predict what the rest of the year could look like, like the v-shaped scenario (deeper contraction, quicker recovery) and the u-shaped scenario (extended contraction), but with the ambiguity surrounding the length of the stay at home orders and the sustained impact of the economic slowdown on the housing market, the future remains uncertain.
The decline of new listings is a response to the restrictions put in place due to the pandemic, but is indicative of reevaluating and postponing sales. Distressed sellers aren’t necessarily rushing to lower prices, but there are more and more negotiations working in the buyers’ favor. Mortgage rates have shown to be volatile, causing investors to keep a conservative outlook on the market. They are expected to be more volatile as the pandemic continues, and higher rates are very likely to impact prospective buyers’ access to the housing market.
The Shift in the Industry
There is one known, however, and that is the fact that the housing market, which has traditionally opened its flood gates around this time, is getting hit hard. There is no easy answer, because in order to sell homes and pique interest, physical tours and meetings are usually necessary. Now more than ever, however, there is an obligation to stay home and help flatten the curve, keeping the community, and yourself, safe.
One of the many things that the pandemic is teaching us that the housing market needs to adjust to a new way of doing business. Making the transition into the digital and virtual world is more important than ever, and could be one of the very few ways in staying relative and competitive in a currently volatile industry.
Everything from 3D tours to virtual presentations, home sellers and agents are doing what they can to sell their property. Virtual open houses, a tour via FaceTime, and other digital tools are imperative to being seen while people are staying home. Despite the hardship, the resiliency and creativity learned in this pandemic will pay off, as closings are still happening, while they may be few and far between.
If you’re trying to sell a property, then have a voice with your clients and renters. You’re allowed to be opinionated in reminding them what is going to be the best choice for their family. That being said, you will have to adjust how you present the property. Many prospective buyers are looking for deals right now, so positioning the property at an attractive price point is critical if you’re wanting to sell. Don’t scare buyers off, accommodating if you need to, and be mindful that right now might not be the time to drive a hard bargain.
The New Standard
During this time at staying at home and finding the small wins in being safe and being surrounded by loved ones and family, there may be a shift in what buyers are looking for. There could be more of an emphasis on simplicity instead of the “bigger is better” mentality that still runs many markets. We could witness a shift in the desire to own a property that caters to a healthy lifestyle. This could mean that people turn away from crowded urban settings and find a more peaceful location to work remotely.
One of the upsides to COVID-19 is the emphasis of family and community. Homes with patios, backyard, space for the kids, and space for working from home could easily become new necessities as people look for houses post-pandemic. The definition of “home” will look different post-pandemic, and the best thing to do as a home seller, and home buyer, is to hit the ground running once you are able to.
Amid the pandemic, the fear, and the uncertainty, remember that you have First Western Federal Savings Bank on your side. While no one can predict what will happen post-pandemic, there is a proposition that the delayed spring selling season will be something to be optimistic about. Purchase real estate with a non-recourse loan and self-directed IRA and experience the possibility of an appreciating asset for yourself and your self directed IRA or Solo 401(k). Contact First Western Federal Savings Bank and speak with a non-recourse loan lender today.