Uncertainty and fear surrounding the COVID-19 pandemic have impacted many facets of our lives. So, how is the coronavirus affecting the housing market? In a study conducted by Zillow on how previous pandemics have influenced sales, their findings concluded that home prices remained stagnant or faced a slight decrease.
Stated by a Houston credit repair expert, a large portion of the U.S. housing market has already mirrored this sentiment, with web traffic to real estate portals experiencing a 40% decline in the wake of the pandemic. Additionally, newly listed homes for sale dropped by a whopping 70% in areas heavily affected by COVID-19, like California and New York. In early April, they saw an estimated 17.9% drop in weekly mortgage applications.
How else has this unprecedented event impacted the housing market? Let's take a look.
COVID-19 Impact on Real Estate Buyers
Early in March REALTORS® noted that buyer behavior hadn't changed due to the coronavirus. On March 16, however, as social distancing guidelines were instituted and socials began shutting down, nearly half of the agents surveyed reported a decrease in buyer interest surrounding residential properties. One of the heavily impacted areas was New York City. Not only that the Big Apple was one of the largest real estate markets in the U.S., but they were now battling COVID-19 - with approximately ten times more cases than the other states.
Before gatherings were officially banned, traffic to open houses began to steadily decline. After all, many struggled with fears regarding the spread of coronavirus and the safety of their family. While there was a significant drop in open houses, many agents and sellers were forced to get creative - offering virtual showings and appointments in lieu of face-to-face ones.
The same reports are being echoed by realtors across the country. Although some buyers were initially thrilled by lowered mortgage rates, many let the stock market and declining economy over the next few weeks lower their enthusiasm.
COVID-19 Impact on Real Estate Sellers
It goes without saying that seller morale suffered as the number of coronavirus cases increased across the nation. In the same study, REALTORS® initially reported that 81% of sellers decided to keep their homes on the market. By March 16th, however, that number declined to 20%.
Because COVID-19 cases had spread so swiftly, many people were quick to take action. Buyers weren't just temporarily removing their properties from the market; they were electing to permanently withdraw their listing. Real estate agents, like many, are taking all the necessary precautions to keep buyers safe, following CDC and WHO guidelines by wearing masks and gloves, providing hand sanitizer, and limiting the number of people attending and going inside a home for viewing.
As new developments surrounding COVID-19 arise and we stride towards overcoming the virus, realtors remain optimistic that the housing market will bounce back. Both buyers and sellers seem to be lacking confidence right now and their behaviors are reflecting their uncertainty. The impact of the coronavirus was so quick, disrupting normal life seemingly overnight. When businesses begin to reopen and cases decline, buyers and sellers will feel more comfortable navigating the housing market again.