How is the coronavirus affecting the real estate market?

March 17, 2020

This paid piece is sponsored by Allen Edge Real Estate.

Think there’s no way anyone would consider buying a house amid the uncertainty of the new coronavirus? It’s actually the opposite.

According to Meyers Research, Google searches in the U.S. for “Should I buy a house” doubled in March from last month, reaching an all-time high last week. This potential spike could be that homebuyers are torn between taking advantage of historically low interest rates and waiting to see the effect that the coronavirus outbreak will have on the overall economy. 

The spread of COVID-19 has led to a big drop in the stock market — but it’s also led to a big drop in mortgage interest rates. 

The National Association of Realtors conducted an Economic Pulse Survey and here is what it found:

Regarding sellers: 

  • 88 percent of sellers have decided not to make a change in their home listing. 
  • 9 percent is the overall increase in sellers, who can move and finance a home with lower rates.
  • 4 percent of sellers chose to remove their home from the market and refinance.
  • Only 3 percent of sellers reported removing homes from the market. 

Agents also were asked about showing homes:

  • 77 percent reported no changes. 
  • 7 percent stopped open houses.
  • 6 percent require buyers to wash their hands or use hand sanitizer.
  • 4 percent are asking buyers to remove shoes or wear footies. 

Regarding buyers:

  • 50 percent of agents reported no notable change in clients’ behavior.
  • 37 percent of agents said lower mortgage rates excited clients much more than the stock market condition.
  • 13 percent of agents said the stock market correction significantly damaged confidence and lower rates weren’t helping.

As far as our Sioux Falls market, as of yet, we are not seeing a slowdown. When I asked some of my fellow agents, they reported a couple of clients canceled appointments, some experienced slower open houses, and some still had very busy open houses, which is typical for this time of year. Most reported not seeing showings slow down yet either. For the month of March, our team has seen multiple offers and pending sales in less than 24 hours on homes from $200,000 to $799,000.  

And let’s not forget February, when we saw a 77 percent year-over-year increase in pending sales. So we know demand is there. Here’s a look at what happened in the market last month:

Will we see a significant drop in home values?

I don’t believe so — especially if containment and quarantine are successful and this passes in a few weeks. Of course, that’s outside of any larger economic forces — but so far the real estate market in our area and most others across the country are still strong.

The fact is people still need to move. People need to sell, and others need homes, and inventory is still tight. Also, interest rates are incredibly low — it’s actually a pretty extraordinary opportunity. While some will sit on the sidelines, the ones who really want to buy or sell likely will find success.

Here are some ways that we can take extra precautionary measures during the buying and selling process:

  • Virtual open houses.
  • Agents can “walk” clients through the home using FaceTime.
  • Sellers can have the lights on and doors open inside the home.
  • Sellers can have soap and towels in the home to have buyers and agents wash their hands.
  • Use Zoom for listing and buyer appointments.
  • Require a pre-approval from buyer agents before they show clients the home. This will cut down on looky-loos, and only serious buyers will be allowed in. This cuts down on traffic and on possible germs being spread throughout the home.

If you’re not sure about putting your home on the market over the next few weeks and you don’t have an agent, call, private message me on Facebook or shoot me a text for a private conversation to see if this is the right time given your specific needs. Reach me at 605-929-5010 or [email protected].

Stay Healthy & Onward!

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Thank you for reading,

Tara Allen

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How is the coronavirus affecting the real estate market?

Think there’s no way anyone would consider buying a house amid the uncertainty of the new coronavirus? It’s actually the opposite.

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