As the novel coronavirus disease, COVID-19, continues to spread throughout the United States, the residential real estate market is continuing to feel the impact of quarantines and safety concerns. While it's not clear yet how much the strong real estate market could be damaged, Realtors are already starting to field questions from clients who are concerned.
A survey from the National Association of Realtors conducted March 9-10 found that home sellers are starting to change their practices. The survey received over 2,500 responses, including over 300 from Washington State where the virus first took hold in the U.S.
The research found that nearly 1 in 4 home sellers nationwide are implementing new practices including requiring visitors to wash their hands or use hand sanitizer. Some sellers are limiting open houses and showings. The study found that the amount of sellers adopting these practices is up to 44% and 34%, respectively, in Washington State and California.
So far, 78% of Realtors surveyed saw no change in buyer interest; however, both Washington State and California saw larger decreases in buyer interest and more homes being removed from the market.
California prepares for market changes
The California Association of Realtors conducted a poll of its members March 6-9 and found that half of California Realtors are expecting a negative impact on home sales. Realtors are expecting a variety of effects to home transactions: 49% feel that the coronavirus will lead to more time on market for homes for sale while 40% feel home prices could suffer and 38% expect closings to be delayed.
Moreover, 26% of Realtors reported that they already have had clients put their home purchase or home sale on hold, and more than one-third have had clients ask about how the coronavirus outbreak could change the market.
Many Realtor Association conferences on hold
Spring and summer are usually prime time for Realtor conferences. The National Association of Realtors canceled its Joint AE Institute event for March 13 to 16 and the Realtor Broker Summit scheduled for March 31 to April 1. WomanUP, a female leadership initiative from the California Association of Realtors, postponed a planned conference in Boston, Massachusetts. Bisnow and the Mortgage Bankers Association have also put some upcoming events on hold. A variety of smaller real estate associations and local groups are also limiting meetings and gatherings.
Concerns may prompt buyers to wait
Although worries over a potential recession and an unsteady stock market shouldn't change homebuying plans for most people, buying residential real estate is often an emotional decision where sentiment can carry the day. Lawrence Yun, the chief economist for the National Association of Realtors, has said that sales could be down around 10% in the short term.
There could also be repercussions for second home and resort markets. Ben Fisher, a real estate agent with Summit Sotheby's International Realty in Park City, Utah, says that he has seen multiple buyer trips canceled and "multiple buyers holding off on pulling the trigger until this calms down."
This situation is constantly evolving, which means that agents are adapting to new procedures as well as spending a lot of time comforting clients who are not sure whether they should change their plans. As Nicole Beauchamp, a real estate advisor with Engel & Volkers noted, "Every minute here in NY feels like a different scenario."
Much depends on how much the coronavirus spreads over the next several weeks and how the economy responds as a result. Residential real estate has enjoyed a long cycle of growth. This shock to the market could be temporary, or it could result in challenges for markets that are already struggling.