From small businesses to large corporations, almost every industry across the board is being affected by the coronavirus. This includes the real estate industry.
Whether you’re buying a home or selling a home, it’s important to understand how the coronavirus is changing the real estate market landscape.
1. There Are Fewer Homes on the Market
One of the biggest changes in the real estate market since the coronavirus is that there has been a decline in home listings.
Unsurprisingly, a shortage in home listings has also led to less interest in buyers. In fact, according to the National Association of Realtors, nearly half of realtors have reported a decreased interest from home buyers.
Another recent survey conducted by the National Association of Realtors found that as of March 9th, 81% of surveyed agents said that their sellers had no interest in removing their homes from the market. However, just 10 days later, on March 19th, that number dropped all the way to 61%, with 16% of home sellers actually taking steps to stop marketing their homes.
There haven’t been any updates on these stats since the 19th of March, but we can only imagine the numbers have dropped even more.
2. There Are New Rules for Showing a Home
If you can’t host an open house, what about showing your home privately to buyers?
Because buyers are more reluctant to be out and about and sellers are worried about who is coming in and out of their home, it’s now becoming standard practice for a seller’s agent to call a buyer’s agent the night before a showing to make sure the prospective buyer doesn’t feel ill.
It’s also standard practice to ask if the potential buyer has been out of the country recently and to let buyers know that they shouldn’t bring kids along to the showing.
When a showing does take place, many real estate agents are showing up to them early to wipe down countertops and disinfect the home before the buyers arrive.
3. There’s a Spike in Short-Term Rentals
Even though the government and CDC are encouraging people to shelter in place, many people who aren’t yet sick don’t want to get stuck waiting out the coronavirus in a highly contagious area, such as New York or Seattle.
This means those who have second homes in other areas of the country are heading to them, while others are looking into short-term rentals in sparsely populated suburbs.
If you own a rental property in a suburb or small town, don’t be surprised if you all of a sudden notice an uptick in rental applications.
4. Coronavirus Is Pushing Mortgage Rates Lower
During the 2008 financial crisis, we saw the housing market and stock market crash in unison.
However, the housing market isn’t usually tied to the stock market, as most people don’t buy homes purely as an investment. Housing is a basic need, and the decision to buy a home is typically prompted by entering a new life stage.
Whether it’s a newlywed couple moving in together, a family having a baby and needing more space, or empty nesters looking to downsize, a recession doesn’t change these circumstances for people.
Even in a full-blown recession, the housing market can be incredibly durable. In fact, in some previous recessions, prices have even gone up.
However, since the coronavirus outbreak, the Federal Reserve has implemented two emergency interest rate cuts. Additionally, a stock market crash can affect interest rates.
When investors feel that the stock market is too risky—like it is right now—they start selling stocks and buying bonds. This increased demand pushes the price of bonds even higher. The higher the price of bonds, the lower the interest rate payment.
This is also known as the bond yield, and it’s always relative to the price of the bond. When bond yields are lower, as they are now, mortgage rates are also lower.
5. Homebuilder Supply Lines Are Being Disrupted
If you’re looking to build a home soon, you can expect it to take some time. This is because homebuilder supply lines are being disrupted.
A lot of home building materials come from China, as do many other finished products such as sinks, bathtubs, appliances, and more. These supply lines have been hurt by the pandemic, which is leading to a delay in home construction. Not only that, but inventory shortages are also happening across the board.
6. Virtual Home Tours Are Becoming the New Norm
As we mentioned earlier, home showings and open houses have become rarer and rarer as this virus continues to pick up pace in the US.
Luckily, thanks to technology, you don’t have to rely on a few measly photos to make a decision about a home or to sell your home. Buyers and sellers can now rely on virtual reality tours, and many real estate companies can help set these up.
7. Commercial Real Estate is Taking a Huge Hit
Compared to the commercial real estate industry, residential real estate is actually faring quite well.
In the same survey by the National Association of Realtors that we discussed at the beginning of the article, it was discovered that initially, only 17% of commercial real estate agents felt that the virus was having a negative impact on buyers’ attitudes.
By the time the second survey came out, this number jumped to 46%. It seems that the market’s low-interest rates are doing little to spur commercial buyers to act. However, many commercial buildings have adopted new practices to deal with the coronavirus, such as requiring tenants to work remotely.
Real Estate Market: Are You Ready for These Changes?
As you can see, there are a lot of changes going on in the real estate market right now.
For buyers, one way to sidestep all of these issues is to sell your home for cash. Contact us today if you’re interested in selling your home as-is for cash!
So, what do you need to know?
Check out this guide to discover the top ways the coronavirus is affecting the real estate market.