What Will Be the Short- and Long-Term Effects of Covid-19 on Real Estate?

As I write this column on Tuesday, April 28th, the infection rate of Covid-19 seems to be leveling off, and the rule against in-person showings has been relaxed, although open houses are still banned.

The inability during much of April to show listings not only made it harder to sell homes, it also resulted in a reduction of roughly 50% in the number of homes being listed. Despite that, homes that were listed continued to go under contract quickly, thanks in part to good pictures and virtual tours.

It may be that the smart thing to do in April was to list your home. It was a matter of supply and demand — many fewer listings meant less competition for the homes that were listed, while buyers were apparently still willing to “pull the trigger.”  The key was to have good pictures and a narrated video tour because of the limit on showings.

I predict that there will be a bigger than usual surge of new listings in May and June, now that the no-showings rule has been relaxed. Although Denver and five other metro counties have extended their stay-at-home orders through May 8th, it was the Division of Real Estate and the state Attorney General’s office that were setting the rules about showings and open houses, and they don’t enforce local ordinances, so it’s expected that in-person showings will be happening throughout the metro area starting this week. Don’t, however. expect real estate offices to be open for walk-ins during this period.

So, what about the market going forward? The fact that mortgage rates are staying low, heading inexorably in the direction of 3% for a 30-year fixed loan, means that buyers are going to be supercharged as they go house hunting under fewer restrictions. There is pent-up demand, and there is also pent-up supply.

Nevertheless, we can’t ignore the near-depression economic conditions we face nationally in May. There will be many buyers not going back to work and unable to qualify for a home loan. However, the estimated 70% of Americans who were able to keep working from home or who had “essential” jobs, such as construction and health care, have been making good money — many earning overtime and/or hazard pay — and may want to reward themselves with a new home once things calm down.

So, while we real estate professionals have remained fairly busy during April,  I expect we’ll be even busier in May and throughout  the summer — especially as rules are relaxed. There will, however, be some subtle and not-so-subtle changes to the way we practice.

Most real estate agents were already accustomed to working from home, only going to their offices for floor duty, to handle paperwork, or to meet with buyers and sellers. Contract software has been online for a decade or more. We are used to emailing documents and having clients sign contracts electronically instead of on paper, which has served us well during the stay-at-home period. That will continue unchanged.

Showing appointments for nearly all MLS listings are handled by one company, ShowingTime, and increasingly the showings are being set online instead of speaking with an operator.

Where we will see the most changes will be with those activities that still require personal contact. Fist bumps and elbow bumps will probably replace handshakes long-term. We’re becoming hardwired as germophobes, I suspect.

Offices will be much cleaner. We’ll disinfect hard surfaces and wash hands more often. We’ll go back to having open houses eventually, but there may be fewer lookie-loos.

It will be a while before buyers want to ride in our cars, preferring to follow us to showings in their own cars.  I will continue to carry disposable gloves and Clorox wipes in my car, to use when showing homes.

More agents will learn to do their own narrated video walk-throughs of their listings, as Golden Real Estate agents have been doing for 13 years. And more buyers will look for those video tours and be more selective about the homes they choose to see.

In conclusion, real estate has shown great resilience during the pandemic thanks to how online the industry has already become, and I believe it will emerge from the current situation stronger than ever.

COVID-19 Will Certainly Impact the Real Estate Market, but By How Much?

By JIM SMITH, Realtor®

We Realtors are keenly aware that the COVID-19 outbreak will affect the real estate market, but we’re all waiting to see that happen in a more measurable way. We’ve seen a reduction in showing activity, but homes are still being listed and keep going under contract, especially in the higher price brackets.

I dropped in on an open house Sunday and spoke with the agent on duty. This was a million-dollar listing on Easley Road, north of Golden. I showed up two hours into the open house, and he said that he had already had about 10 sets of visitors. Indeed one visitor was in the house when I arrived.

Two Saturdays ago, I had my best open house ever at a $580,000 listing in Golden proper, and 18 agent showings had been set for that same day. Two days later, the home was under contract for $620,000. Other than bumping elbows instead of shaking hands, it was pretty much business as usual.

I’m under no illusion that the market won’t slow down as more potential home buyers are unable to get mortgages because they were laid off. Cash buyers may be less willing to sell depreciated stocks to buy a home. But that’s not happening a lot yet.  A local TV news program had a segment Saturday evening in which a local real estate agent gave a similar account of a busier-than-ever real estate market.

My broker associates have seen some impact.  One of them told me a buyer had terminated a million-dollar purchase because they were concerned that they wouldn’t be able to sell their current home.

Another broker associate reported that his buyers are moving forward with their contract on a home, but only because they have stable jobs — one a physician and the other a public defender.

A third broker associate has a vacant land listing that had failed to sell for three years but suddenly has multiple buyers talking to her about submitting offers for it.

Another broker associate has a buyer from Connecticut who is retiring and wants to move to Colorado but had to cancel her flight because of COVID-19. Her state has instituted a stay-at-home order. Meanwhile, she told our agent that she’s now thinking more about looking outside the metro area where there’s “more space.” Maybe she’d like Kim Taylor’s Cedaredge listing featured this week!

The same broker associate said that a buyer from Chicago had been planning to make a non-contingent offer on a home but now wants to make it contingent on the sale of his current home because of concerns that it may not sell as readily now.

Yet another agent has a client who was ready to list their current home and buy another but is a physician concerned about getting infected herself, so she is holding off on those plans.

Source: REcolorado

The MLS statistics above show that life goes on across our industry. Homes are still being listed, going under contract and selling. However, the 21 withdrawn listings and the 25 back-on-market listings are likely homes where a contract fell, perhaps because of COVID-19.

Like any business, Golden Real Estate is adjusting to the situation with new practices and procedures. We carry disinfectant wipes and rubber gloves in our cars, and we have buyers meet us at listings instead of carpooling.  At our office, we have disinfectant wipes handy for wiping down hard surfaces after we or visitors touch them.  When it’s warm outside, we keep our front door open so that visitors (and we ourselves) don’t have to touch the handles at all.

Title companies are adapting, too. I attended closings recently at which the closer handed out only new pens and wore blue gloves herself, and the rest of us were spaced out more than before around the closing table.  One title company is doing “drive-through” closings, in which the documents were passed through the car window for signing!

The real estate industry will survive and people will still buy and sell homes, but we expect the volume of sales to decline.  How much we can’t be sure.

Stay-at-home orders and the closing of businesses, as implemented this week, could have a big effect, but real estate was exempted from that ruling as an “essential professional service.”

For over decade, Golden Real Estate has created narrated video tours of its listings. For an example, click on any of the listings at www.GREListings.com. If all brokerages did this, it would greatly reduce the need for open houses and in-person showings.