As states began issuing stay-at-home orders this spring, prospective homebuyers went into a holding pattern. Real estate agents often couldn't list new homes, while buyers often couldn't, or weren't willing to, visit those on the market — let alone buy one, sight unseen. As a result, existing-home sales dropped 17.8% in April, the biggest monthly decline since July 2010, according to data from the National Association of Realtors.
When Washington Governor Jay Inslee effectively shut down the state with the exception of "essential" businesses, real estate agents were left out. "We were deemed unessential. We could only work on our current listings. We weren't allowed to list new properties," says Sarah Knight, a residential real estate agent from Spokane, Washington. "Nobody could do anything at that point."
Ryan Serhant, a New York City real estate broker and star of the Bravo series "Million Dollar Listing" and "Sell It Like Serhant," tells Grow that, like Knight, his business went into a state of suspended animation once the pandemic hit New York.
"All my clients just left and put all their deals on hold," he says.
But the pandemic's effect on real estate has varied by region, Serhant says. Places like Washington state and New York City have fared particularly badly. "I think New York has taken … a majority of the pain through all this," he says. But "the rest of the country seems to be doing a lot better."
Video by David Fang
While some homebuyers may have expected the pandemic to open up opportunities, the opposite appears to have happened. At the same time that state shutdowns led to a drop in the number of available homes on the market, record low interest rates generated more interest from prospective buyers. Mortgage applications are up 13% higher compared to a year ago, according to data from Mortgage Bankers Association's seasonally adjusted index.
That combo of short supply and increased demand has driven up prices. Across the country, home prices rose 5.4% annually in April, up from 4.5% annual increase in March, according to real estate data provider CoreLogic. Overall, though, CoreLogic expects average prices to drop for the year by 1.3% — the first decrease in nine years.
Serhant, who has a sales course and a members-only group comprising thousands of real estate professionals, says that he's constantly trying to answer questions about how to handle bidding wars. Many agents outside of the cities, he says, have their hands full. "Agents in the Hamptons — I can't even get them on the phone because they've never been busier," he says.
Allison Chiaramonte, a real estate agent at Warburg Realty in New York, says she's seen a similar effect: "I have agents I work with in Connecticut and the Hamptons who have never been so busy — both with an uptick in rentals and purchases as people look for second homes or to relocate permanently," she says.
"So [the pandemic] has been a positive for those markets."
It's hard to gauge whether this trend will continue. Banks have become more stringent in their lending standards, making it difficult for some prospective buyers to qualify for mortgages. A majority of workers (58%) have also experienced a disruption to their work status as a result of the pandemic, according to a new study from the Transamerica Center for Retirement Studies, which may further impair their ability to purchase a home.
Video by Jason Armesto
A few months out from the onset of the outbreak, the housing market is showing signs of resilience. Since local business restrictions were lifted and she was allowed to resume her normal business functions, Knight says, clients have come back in droves.
New home sales were up more than 20% in May, according to industry data. Knight has seen that, too: "I've been [incredibly] busy for the past 5 days," she says, as buyers, and sellers, have both flooded back into the market.
Knight expects business, at least in her area, to stay steady. Though pent-up demand may lead to a short-term burst of sales and listings in other areas, some parts of the country, particularly those that people are moving to in large numbers, should brace for a competitive market.
"People are moving here. We have limited inventory," Knight says of her city. "It's a nuthouse."
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