Opinion: Real Estate and a Big, Scary Pandemic
Updated: Jul 15, 2020
So you're reading yet another article about COVID-19's effects on daily life.
Right on!
If you're not tired of it yet... you're lying, but this is still such a hot button issue no matter how drawn-out it feels. Have no fear though, these are my uncensored, cabin-fevered thoughts on the new world around your real property.
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Has the industry changed? YES.
I've heard a metric ton of Realtors spout off about how "not a whole lot has changed" and how wonderful they're doing, and for their sake I hope they are - I love seeing colleagues put up great numbers.
..But taking in the grand scheme of things, I can't help but notice incredibly important changes.
1. I've had first time buyers and veterans get laid off, now unable to get the mortgage they need. Seeing them dive back into a lease truly breaks my heart.
2. I've seen mortgage rates so volatile, it makes the stock market look sane. If you wake up one morning (they're changing daily) and you see an awesome rate from you lender, pay the fee and lock it in. You're welcome!
According to Pete Warden of The Mortgage Reports:
"Yes, [rates are] still higher than they were for a few days at the start of this month, when records were set. But they’re heading the right way. That good news is almost certainly a direct result of the Federal Reserve’s new policy of buying unlimited mortgage bonds. It’s a policy that should, with luck, keep mortgage rates low and perhaps drive them lower over time. But such interventions are an inexact science, meaning we’re likely to see unpredictable daily peaks and troughs within that stable or downward trend. And, of course, with so much volatility in all markets there are no guarantees things will continue to go according to plan. Today? We might have a quiet or better day. But we’re due a rise soon — before another fall." 3. I've seen sellers panic over the thought of another human being touring their home and quarantine space. Showings have become a massive challenge - even virtual showings.
4. I've held virtual meetings from my office that typically sign-off with the old "when this all blows over" monologue. Most prospective buyers and sellers are willing to wait - not because they feel any personal effects on the housing market, but because they see more immediate obstacles that require their attention.
5. I have noticed a dramatic dip in listings coming to market and homes going "pending". Contracts and timing are in a very odd place right now. Transactions take more than an agent and client, it takes inspectors, appraisers, lenders, coordinators and lawyers - and it's difficult to ensure that all of these moving parts will fall into place on time. Don't get me wrong closings are still happening and clients are still getting what they want, but some contracts are being mutually and purposefully delayed.
But what does this all mean?!?!
For current homeowners? Not much.
The housing market itself is still one of the least volatile markets available right now, which for those with "post-homeowners-stress-disorder" from 2008 - the thought probably makes you giggle.
There's still a solid balance of who is willing to buy and who is willing to sell, supply and demand, the rates are still low, there are still people that need to buy, and there is still not enough resale housing in Florida. This means market values will pretty much stay the same for now. This might be a good time for your honey-do list!
For soon-to-be buyers? You may need to start over.
Starting over sounds hard I know, especially if you've been laid-off or furloughed. The recent stimulus (CARES act) and small business incentives to rehire/retain their employees, should motivate you to get back out there and reapply for that mortgage once you're ready to. If you've had no issue with income through this, be patient with the idea that you'll do more virtual tours than physical ones and understand that a seller might pull their house off the market or not want to move until after the global emergency is lifted. This may become a matter of timing for you.
For soon-to-be sellers? A good bit.
Yes it's still a sellers market, but there are some technical changes you might want to consider. You make the rules for your Realtor. If you would truly rather that not a single soul steps into your home for any reason, please ask about 3D imaging services like immoviewer. These are great tools regardless of a pandemic, but now is an even better time to utilize this technology.
Most buyers are more comfortable if they can see the home in person... "sight unseen" doesn't have a great reputation with most folks. If selling is a time essential matter for you, formulate a plan with your Realtor to encourage showings per CDC guidelines or even personal guidelines (hands-in-pocket protocall?).
Rely on your Realtor to enforce your guidelines with any paperwork necessary and even disinfect doorknobs after the showing.
Long story short, the housing market is slow to react to any change and therefore hasn't changed - this is old news... so what is the new news' news?
People have changed a bit.
It's important to remember that this pandemic is a human health crisis, not a financial crisis; However, if this continues, consumer confidence will change just enough for it to become a financial crisis.
After all, fear is the greatest motivator in a free market and this unforeseen illness is pretty textbook when it comes to that motivation.
The uncertainty of when this will all come to a relative end makes consumers a little jumpy. Not everyone is going full missile-crisis-bunker crazy, but most people seem to be more of a "that's-not-an-important-purchase-right-now" kind of consumer.
And you can't blame them.
Even with the stimulus, the future for each individual is uncertain making most hold on to what they already have.
Home sellers who might not have a solid stream of income right now and need to stay in their home to take advantage of the mortgage payment deferrals from the CARES act.
Home buyers also may need to use their current down payment money on more immediate expenses and wait before committing to a larger purchase.
But that's just the point... they're waiting.
Personally, of all of the folks I've called, emailed, texted and pigeon mailed, no one has said that they're completely exiting the market, but rather that they need to make an adjustment that will put their plans off by a couple of months.
So, what's about the bottom line?
The world of real estate has changed. Hell, everything has. This hasn't been easy for many people - especially the clients I've come to know very well.
Housing is as essential as food and clothing, but it's also an investment that requires risk evaluation and assessment. A pandemic makes (most) people a tad more risk averse, but it doesn't seem to make them run for the hills. Buyers and sellers may need to temporarily stray from the traditional process and utilize virtual showings, be aware of locking in rates, and understand the wishes of either party in this unprecedented time.
The difference is that the housing market (as a whole) has remained generally the same with a few minor changes to consumer behavior, but I wouldn't bring any alarm to it.
This isn't 2008 - fear (I use that term loosely) is the only root change and the delay in making any major moves is the largest root reaction. Consumers are still aspiring to make the same life choices, but are just putting it off until things become more certain...and that is okay!
To you the reader: thank you for getting this far in my rant! I wish you and your family the best health throughout these troubling times. I'd also love to hear your thoughts and experiences surrounding the challenges faced in real estate. Please leave a comment or privately message me by contacting me here!