What a crazy few weeks for headlines
You are probably wondering what this means for real estate.
Here’s a few summary points:
- Showing traffic for the first 15 days of March this year is off about 20% from same period last year.
- Mortgage applications are up 6% for March, year over year. Apps are +12% YTD vs. 2019! There is a lot of buyer demand.
- At the moment, our deals under contact seem to be running about in-line with this time last year.
Here’s our guess of what’ll happen
Flattening the Curve on COVID-19
The US is implementing social distancing measures, closing borders, closing restaurants, etc. The goal is to flatten the peak number of people who are severely sick at any one moment in time (the hospitals and doctors get less overwhelmed this way).
It’ll extend the duration for how long people get sick, but the total number of cases will go down. The scientists call that flattening the curve.
Slight Flattening for Real Estate Closings
We’re going to see a slight flattening of closings, too. March is usually one of our busiest months. Homes often get 3 or 4 offers if they priced right. Now, they’ll still get offers, but perhaps 1 or 2. They will still sell.
The question is, how many sellers are going to say they want to “wait and see” before they list? We might not have as much inventory to sell as normal. That’s going to flatten our curve. We’ll end up selling a house that was intended to be listing now…. In May.
Unlike the virus, though, I think we’ll still end up selling the same number of houses.
The spring “rush” might last thru July.
The Chinese character for “crisis” is a conjunction for “danger” and “opportunity”.
There are silver linings, as always
Sellers that decide to stay the course and list now might be doing so in an environment with a fewer listings. They might have a little more pricing power than if they “watch the market”.
Overpriced listings won’t sell now, just like they wouldn’t sell at any other time. However with all of the panic in the headlines, buyers (e.g., first time buyers and investors) might be able to be more aggressive on price / terms than they usually could with a stale listing. I feel confident if an investor offers very strong terms (e.g., non-refundable earnest money), they could push harder than ever on price. That’d be true for any buyer, of course.
Mortgage rates are at rock bottom. The economics of trading up are better than ever. For the clear-thinking opportunists in the market, this is an exceptional opportunity.
Baron Rothschild, an 18th-century British nobleman and member of the Rothschild banking family, is credited with saying that "the time to buy is when there's blood in the streets."
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