COVID-19 has put the real estate market on pause for many buyers and sellers. Real estate is considered non-essential in many areas across the country, so in some states with outbreaks, real estate agents cannot show homes to interested buyers. Even in places where real estate is considered essential, very few buyers want to attend showings and the overall demand for buying has dropped.
Potential home sellers who intended to go to market in the spring have pulled their homes off the market, waiting until the pandemic passes to list. Amid these challenges to the real estate industry, there are opportunities for real estate investors.
New, Preexisting Home Listings Decline
Real estate listings in cities as diverse as Philadelphia and Los Angeles declined by 6 percent in the last week of March alone.
New home listings are down by one-third across the country. Here again, Philadelphia is impacted by a 63 percent drop in new home listings. Detroit is experiencing a similarly dramatic dip. As the pandemic spreads to different cities at different times, creating a ripple effect, more markets will suffer declines. This could potentially squash the spring real estate market in the U.S.
Prices are Remaining Stable
Home sellers who aren’t delisting are keeping the price as-is in many markets – which is good news for real estate investors. According to a recent survey from the National Association of Realtors, 73% of sellers are not dropping their listing price to entice buyers and 60% of buyers do not expect sellers to budge.
Many the pandemic first started to shake up the market, many predicted that home prices would plummet. Now that we can see that prices are remaining stable, investors with vacant properties that are ready to sell can follow the trend of keeping their listing price as scheduled.
In-Person Showings are a No-Go
Traditional real estate showings are a no-go under the pandemic. In many properties, it’s impossible for a real estate agent to remain six feet from prospective clients while showing the house. Some agents are using videoconferencing technologies to compensate for the lost opportunities.
These brokers are cleaning the premises before a showing, unlocking the door for clients, then sitting in the car, where they use videoconferencing technology to virtually walk their clients through the house.
Video-led home tours are up almost 500 percent. Homebuyers also have access to online listings, drone flyovers, and photo galleries. In good news, buyers are looking and low prices are encouraging browsing; however, deals have slowed.
Mortgage Applications are Paused
Buyers traditionally get pre-qualified before starting to shop for a home. Mortgage applications have dropped by 11 percent in the last week of March.
Mortgage applications are likely to remain low as potential buyers feel out the financial uncertainty of the pandemic. Some prospective home buyers may have lost a job or experienced a reduction in wages or work hours. Until things return to normal, a subsection of potential buyers will likely stay on the sidelines.
Real estate investors may have access to hard money loans or savings, thus not need a mortgage to pursue an attractive deal.
Off-Market Deals are a Bright Spot
Taken together, these trends show the real estate market is deeply impacted by COVID-19. Fewer properties are going to market, fewer buyers are interested (or financially able to move ahead), and fewer deals are getting finalized right now.
With fewer homes on the market, real estate investors may consider placing more importance on finding off-market deals. However, finding these deals on your own can be highly time consuming and expensive.
New Western Acquisitions can do the heavy lifting for you. Our acquisition agents help you identify potential investment properties, including exclusive, off-market deals, so you can move forward with your real estate goals despite the industry pause.
