Two thousand twenty forecasts boasted a strong housing market, and indeed, the first two months of the year exceeded expectations. Then a global pandemic hit and turned the market on its head, leaving many scratching their heads and struggling to make predictions. What is known, however, is how buyers and sellers are responding amid COVID-19 concerns. Let’s take a look.
Source of Information
In mid-February, real estate referral company HomeLight surveyed agents across the country to get top agent insights for Q1 2020. And while the February survey was routine, the COVID-19 spread and economic impact necessitated a flash poll in mid-March to get a more accurate picture of current U.S. housing market conditions.
HomeLight’s Q4 2019 survey was overwhelmingly positive, with agents predicting a healthy 2020, characterized by a more balanced market (shifting away from a seller’s market). By the end of February, however, the housing market was exceeding agent expectations, with an increase in bidding wars, low-interest rates luring in more buyers, and a seller’s market developing stronger than planned.
However, as coronavirus cases continue to rise around the United States, the economy has shifted. Undoubtedly, coronavirus cast a shadow of uncertainty in the real estate market, ushering in a new era of cautious buyer and seller behavior.
HomeLight’s mid-March flash poll results showed 45 percent of agents reporting a decline in buyer activity in their markets. While just over half of agents report buyers putting their home searches on hold while the economy weathers the pandemic. However, buying activity hasn’t come to a complete halt. A full 20 percent of agents reported seeing an increase in demand for virtual home showings, likely due, in part, to the rise of people relegated to their homes.
While there are still buyers in the market, sellers are exhibiting cautious behavior. Forty-one percent of agents reported seeing seller activity decline in their markets in March. The majority -- 66 percent -- of agents across the country report sellers taking measures to protect their homes while on the market.
Those measures include halting open houses and adopting showings-only policies (32 percent), and asking buyers to wash their hands or use hand sanitizer before entering their homes (21 percent). Perhaps the grimmest report is that of the 22 percent of agents who reported sellers pulling their homes off the market altogether.
But it’s positive that available inventory remains the least impacted area in the housing market, with agent perception remaining within a three percent margin of their original outlooks.
The shift in buyer and seller behaviors isn’t unwarranted or surprising, given the uncertainty of the times. But what industry experts do know is that the economic impact is not focused on the real estate market, as it was in 2008, and the market should hold up through the coming recession.