Mike talks about sales dropping up to 50% in 2020, but there’s a bigger problem.
We have 10,000+ baby boomers retiring every day in America, but they aren’t moving – they are staying put. This lockdown is training folks on how to survive at home, and if boomers don’t have the savings, they can get by on social security and not have to sell their house to survive.
Sales could drop 50% this year, and not come back much – especially at these prices.
Buyer interest declined by 90%? I think they meant that 90% of buyers don’t want to risk their life to see a home in person – they are still interested in the market as seen from the couch.
NAR’s latest Economic Pulse Flash Survey – conducted April 5-6, 2020 – asked members questions about how the coronavirus outbreak has impacted the residential and commercial real estate markets. Several highlights of the member survey include:
View NAR’s Economic Pulse Flash Survey full report here:
https://www.nar.realtor/research-and-statistics/research-reports/nar-flash-survey-economic-pulse
We noted last week how the jumbo mortgage market is back-pedaling in two ways. Banks stopped funding jumbo loans with 10% down payments, and the program that qualified the self-employed borrowers by using their last 24 monthly bank statements was also terminated.
The actual impact is hard to gauge, but we can say the buyer pool is quite a bit smaller today than it was a month ago….and those loan programs won’t be coming back anytime soon.
For the remaining buyers left in the hunt, won’t they have their way when negotiating. How many other buyers are competing to buy that house? Any?
Doesn’t that mean the sellers have to come down off their price? Shouldn’t there be a correction?
The reason that sellers hold out for their price is because they have other options. They have plenty of equity so they can get additional financing if they need money, instead of moving. They can also rent their house for a ridiculous amount if they don’t need to tap their home’s equity. The majority of sellers need to leave town to make the move worth it, so there is a natural reluctance to give up the familiar – unless they get their price.
Today we hear agents say they don’t know when the market will come back.
Let’s identify which market. They don’t know when the sellers’ market will come back.
It’s going to be a buyer’s market for the next 2-4 months, and the vast majority of agents have never seen a buyers’ market, let alone know how to navigate it. Over the last ten years, listing agents have gotten away with doing little or nothing to accommodate the buyers – their mantra has been, “hey, if you don’t like it, then cancel and we’ll get someone else”. But will there be any other buyers today? If so, at what price?
Buyers might get talked into escrow at a price close enough to list to make the sellers happy, but getting them to the finish line will be a major challenge today.
Here are my tips for sellers in a buyers’ market:
You may still need to do a little something for them to get the deal done, but at least being prepared will keep it to a minimum.
The governor’s stay-at-home order was issued on March 19th (red line), but showings had already been dropping steadily. Realtors were changed to essential workers on March 28th, but it doesn’t look like agents rushed back to work. The weekly average improved from -68.9% on the 28th to -57.3% yesterday. At least it’s heading in the right direction – we’d like to avoid a complete meltdown if possible.
On average it probably takes at least 2-3 showings minimum to procure a sale. Some homes sell after the first showing, and other take many more visits so averaging 2-3 before finding a buyer is optimistic – but in this era only the highly-motivated buyers are looking in person.
The seven-day moving average was +32% on March 8th, and now the average is -68.7%! This is during the peak showing season too!
But at least the current trend looks like it is flattening out? Hopefully the change of realtors being declared essential workers will mean more activity, but it might be too late already.
This will probably be the death knell for buyer-agents, especially if the ‘rona tightens the supply further, which would cause fewer listings to make it onto the MLS.
We are listed under the Other Community or Government-Based Operations and Essential Functions:
Hallelujah!
One of the most insane MLS rules prevents agents from including videos in the remarks. The MLS police is afraid that agents will slip in their contact information, and buyers will rush to purchase direct from the listing agent – but they can do that anyway. How hard is it to find a listing agent’s phone number in 2020?
Our MLS is temporarily allowing virtual tours and virtual open houses, but let’s hope it will be a permanent change. The real estate world is well on the way to eliminating the buyer-agents that provide no value, and those that give good advice don’t have to worry about losing a client to a video message.
In addition, allowing video tours in the remarks would cause more agents to do them!
Listing agents hire Showingtime to schedule appointments for cooperating agents to show a house for sale.
As of yesterday, California showings were down 55% from the first week of the year, which doesn’t sound so bad for a state that is lockdown. But next week will probably be worse.
The California Association of Realtors, one of the most powerful lobbying groups in Sacramento, has petitioned the governor to change the status of realtors to be essential workers – with stipulations. We can’t apply for unemployment, so there has to be a way for us to keep working.
You better be an all-around expert at fixing stuff in this environment – and be able to present a reasonable case to the buyers that’s easy to digest. We’re not out of the woods yet, but this video kept a situation from turning into a problem:
E-notary companies are out there….can we close a sale with one now?
There still needs to be at least one personal interaction with a stranger to be able to finance the purchase of a house in San Diego County, says the boss at First American Title today:
Good morning – sorry, the county recorders are still not accepting a document notarized remotely. The county still requires wet signatures and original notary seal.
Cash buyers wouldn’t need a signature notarized if purchasing as individuals, and not in a trust.
Are you looking for an experienced agent to help you buy or sell a home?
Contact Jim the Realtor!
CA DRE #01527365, CA DRE #00873197
