Singing the Pandemic Blues in Real Estate
By Bill Primavera
Here I sit at home over the Memorial Day weekend, all fired up to get out of the house and do something – anything – that will divert my mind from all the gloom and doom of the COVID-19 pandemic.
But where to go, what to do? My options in life have never been so restricted.
In real estate, being stuck at home is lethal. Whether a buyer, seller or real estate agent, there aren’t going to be many sales when homes cannot be shown. Sure, a prospective buyer can take a virtual tour of a home for sale, but who’s going to buy sight unseen in real time?
All seemed well in the Westchester/Putnam home market in the first quarter right up until the coronavirus pandemic hit all over the state. While single-family contracts were up 8 percent in January and February compared with 2019, they dropped almost 4 percent in March, according to a report by Westchester Real Estate, Inc, the group comprised of local real estate companies.
While contract signings in Putnam County for the first two months of the year were relatively unchanged compared to 2019, they began slowing in March. Still, prices grew for single-family homes in both counties – 5.8 percent in Westchester and 2.4 percent in Putnam, compared to last year.
The pandemic has transformed life in New York City; the result is that more city dwellers want to buy houses in Westchester and Putnam, which is a good thing for us. New real estate listings have remained steady in Westchester, despite the collapse of inventory in the city.
The impact of the coronavirus on once-hot real estate markets is one of many emerging economic narratives of the pandemic. Despite fears of a housing crash with echoes of 2008, past experience with major disease outbreaks seems to indicate that prices will remain stable or rebound quickly, according to a March report from the real estate website Zillow, which looked at the 1918 influenza outbreak in U.S. cities and Hong Kong’s experience with SARS in 2003.
After a robust February, existing U.S. homes sales fell in March, according to data from the National Association of Realtors (NAR). But the median price of an existing home increased by 8 percent compared to last March.
It’s too early to say what the longer-term real estate picture will look like as a pandemic-powered global recession looms over us. But Lawrence Yun, the NAR’s chief economist, said in an April statement that he expected prices to continue to rise in the coming months despite “more temporary interruptions to home sales.”
Buyers and sellers are getting mixed signals when it comes to negotiating the spring housing market in a pandemic. The uncertainty and economic chaos sown by the coronavirus is balanced by record-low interest rates, a factor that’s boosted mortgage applications. Those rates are likely to only benefit those with good credit, as mortgage lenders tighten restrictions.
Only 50 percent of Americans believe it’s a good time to buy a home, according to a recent Gallup poll. That’s the lowest level of confidence Gallup has measured since 2006, just before the housing bubble burst. Economists and real estate agents predict that homebuying will stagnate during stay-at-home orders but rebound once government restrictions are lifted.
Those who do choose to buy or sell now will find that, like office meetings and happy hours, the once-intimate world of real estate has moved to Zoom and FaceTime. As stay-at-home orders swept the country in March, the number of 3D tours created on Zillow spiked. Online tours increased by 188 percent that month, compared to February, according to Zillow.
New York agents experienced regulatory whiplash after Gov. Andrew Cuomo deemed the real estate business nonessential when lockdowns began, only to change course two weeks later. The Empire State Development Corporation allows home inspections and appraisals, but buyers need to stay away, and other business, including house showings, must be conducted virtually. With those strict restrictions in place, many realtors are choosing to wait out the lockdowns this spring.
Agents are adding new taglines like “Just been cleaned!” and “Disinfected!”
No matter what government directives may say, some would-be sellers are deciding that it’s not worth the risk. A wait-and-see attitude has enveloped the market and is likely to remain that way either until a vaccine is developed or buyers and sellers lose patience with tight restrictions and are willing to take more risks, but with greater safety precautions, to have their homes shown and sold.
Bill Primavera is a realtor whose background includes public relations and editorial expertise. To have Bill help you in the purchase or sale of a home, you can reach him directly at 914-522-2076.
