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COVID-19 impacts on real estate

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With COVID-19 cases continuing to rise each day, realtors in hard-hit states are adjusting their practices to slow the spread of the illness.

By the second week of March, nearly one in four home sellers nationwide had reported that they had changed how their homes were viewed on the real estate market due to the COVID-19 novel coronavirus, according to the National Association of Realtors. The changes included measures such as stopping open houses, requiring potential buyers to wash their hands or use hand sanitizer, asking buyers to remove shoes or wear footies, or other changes.

In Washington, 44% of home sellers reported these changes, with 34% in California, two of the three states hit hardest by the novel coronavirus.

The statistics are based on NAR’s Economic Pulse Flash Survey, conducted March 9 and 10. The survey asked NAR members questions about how the coronavirus outbreak had impacted home buyer and seller interest and behavior, including any significant changes due to declines in stock market values and mortgage interest rates. Several highlights of the member survey include:

  • 37% said lower mortgage rates excited home buyers much more than the stock market correction.
  • Almost 8 out of 10 (78%) said there has been no change in buyer interest due to the coronavirus.
  • 16% said buyer interest has decreased due to coronavirus, with members in California and Washington State citing larger decreases in buyer interest – 21% and 19%, respectively.
  • Nearly 9 in 10 members (87%) said coronavirus has not affected the number of homes on the market.
  • In Washington State and California, 5% and 4% of members, respectively, reported homes were removed from the market. That figure is 3% for members nationwide.

Now that there are confirmed COVID-19 cases in Idaho, Boise Regional Realtors doesn’t yet have any hard data on how this may affect the viewing of properties for sale.

BRR President Michelle Bailey did issue the following statement about ways to view properties during the epidemic:

“The NAR has encouraged members to have open and honest conversations with sellers about the pros and cons of holding an open house so they can make informed decisions based on local risk factors and their comfort level. These types of conversations are also happening with buyer clients regarding how they choose to view homes.

“We have heard local reports that folks are taking advantage of video and virtual tours, which allow buyers to view listed homes from anywhere, and instead of making appointments, some listing agents have implemented ‘showing hours’ to limit the number of people who visit the property to a predetermined time frame.”​

BRR reported that the sparse inventory of homes for sale in Ada County set another record. Key points from the February market statistics are as follows:

  • There were only 1,039 homes for sale in February in Ada County — 23.4% less than a year ago, and the lowest number since at least 2004, which is when the Intermountain MLS started tracking this metric.
  • Of the housing inventory available for purchase, only 344 were existing or resale homes, another record low. This metric was down 37.6% from February 2019.
  • Persistent buyer demand compared to low inventory, as well as an increase in the share of new home sales, continued to influence home prices in Ada County. The median sales price in February was $361,350, up 11.3% compared to last year.

February 2020 saw a new record low number of single-family homes for sale in Ada County, falling below the previous low of 1,143 in March 2018, bottoming out at 1,039 homes for sale. This was 23.4% less than the number of homes for sale in February 2019 and the lowest number since at least 2004 when BRR started its tracking.

While the inventory of new homes for sale was down 13.7% year-over-year, the lack of existing/resale homes for sale is the main drag on inventory, hitting a record low in February 2020 with just 344 existing/resale homes for sale — 37.6% less than the same month last year.

Jeff Wills, 2020 president-elect of the Boise Regional Realtors, added: “Regarding buyer demand, my sense is that demand isn’t currently waning — if anything, historically low mortgage rates are increasing the purchasing power of today’s buyers.”

The lack of existing supply compared to demand was a main driver of prices, as well as the increasing share of new home sales — which makes sense as buyers have limited options among existing and resale properties. New homes made up 42.7% of all home sales in February, a 9% increase from a year ago. New homes are usually priced higher due to the increasing cost of land, labor and materials, so as the share of new construction sales grows, it has a greater impact on the overall median sales price.

Bailey had this to add: “If you’re hoping to buy, keep in mind that low inventory isn’t the same no inventory. There are options available, and rates are making mortgage payments more manageable. On the other hand, if you’re considering selling, keep in mind sellers are getting a great value for their properties with today’s home prices.”

About Catie Clark