Will the Housing Market Turn Around This Year?

Today, many people are asking themselves if they should buy or sell a home in 2020. Some have shifted their plans or put them on hold over the past couple of months, and understandably so. Everyone seems to be wondering if the market is going to change and when the economy will turn around. If you’re trying to figure out what’s going to happen and how to play your cards this year, you’re not alone.

This spring in the 2020 NAR Flash Survey: Economic Pulse, the National Association of Realtors (NAR) has been tracking the behavior changes of homebuyers and sellers. In a reaction to their most recent survey, Lawrence Yun, Chief Economist at NAR, noted the beginnings of a turn in the market:

“After a pause, home sellers are gearing up to list their properties with the reopening of the economy…Plenty of buyers also appear ready to take advantage of record-low mortgage rates and the stability that comes with these locked-in monthly payments into future years.”

What does the survey indicate about sellers?

Sellers are positioning themselves to make moves this year. More than 3 in 4 potential sellers are preparing to sell their homes once stay-at-home orders are lifted and they feel more confident, which means more homes will start to be available for interested buyers.

Just this week, Zillow also reported an uptick in listings, which is great news for the health of the market:

“The number of new for-sale listings overall has shown improvement, up 5.9% last week from the previous week. New listings of the most-expensive homes…are now seeing the biggest resurgence, up 8%. The uptick is likely a sign sellers are feeling more confident because of improving buyer demand, as newly pending sales have also jumped up during the same period.”

What does the survey note about buyers?

The recent pandemic has clearly impacted buyer preferences, showing:

• 5% of the respondents said buyers are shifting their focus from urban to suburban areas.

• 1 in 8 Realtors report changes in desired home features, with home offices, bigger yards, and more space for their families becoming increasingly important.

• Only 17% said buyers stopped looking due to concerns about their employment or loss of a job.

As we’ve mentioned before, buyer demand is strong right now, and many are simply waiting for more inventory to become available so they can make a move, especially as the country begins to reopen.

Bottom Line

If you’re thinking about putting your house on the market, let’s connect today. There’s a good chance an eager buyer is looking for a home just like yours.

How to Test-Drive a Neighborhood While Sheltering in Place

Some Highlights

• Staying at home doesn’t mean your search for a new place needs to come to a standstill.

• Check out these tips on how to explore other neighborhoods virtually in the homebuying process. You may find a spot that better suits your needs without ever leaving your living room!

• Let’s connect today so you have help with all of the additional steps along the way, and you’re ready to make your next move.

Buying a Home Right Now: Easy? No. Smart? Yes.

Through all the volatility in the economy right now, some have put their search for a home on hold, yet others have not. According to ShowingTime, the real estate industry's leading showing management technology provider, buyers have started to reappear over the last several weeks. In the latest report, they revealed:

“The March ShowingTime Showing Index® recorded the first nationwide drop in showing traffic in eight months as communities responded to COVID-19. Early April data show signs of an upswing, however.”

Why would people be setting appointments to look at prospective homes when the process of purchasing a home has become more difficult with shelter-in-place orders throughout the country?

Here are three reasons for this uptick in activity:

1. Some people need to move. Whether because of a death in the family, a new birth, divorce, financial hardship, or a job transfer, some families need to make a move as quickly as possible.

2. Real estate agents across the country have become very innovative, utilizing technology that allows purchasers to virtually:

• View homes

• Meet with mortgage professionals

• Consult with their agent throughout the process

All of this can happen within the required safety protocols, so real estate professionals are continuing to help families make important moves.

3. Buyers understand that mortgage rates are a key component when determining their monthly mortgage payments. Mortgage interest rates are very close to all-time lows and afford today’s purchaser the opportunity to save tens of thousands of dollars over the lifetime of the loan.

Looking closely at the third reason, we can see that there’s a big difference between purchasing a house last December and purchasing one now (see chart below):

Bottom Line

Many families have decided not to postpone their plans to purchase a home, even in these difficult times. If you need to make a move, let’s connect today so you have a trusted advisor to safely and professionally guide you through the process.

What Impact Might COVID-19 Have on Home Values?

A big challenge facing the housing industry is determining what impact the current pandemic may have on home values. Some buyers are hoping for major price reductions because the health crisis is straining the economy.

The price of any item, however, is determined by supply and demand, which is how many items are available in relation to how many consumers want to buy that item.

In residential real estate, the measurement used to decipher that ratio is called months supply of inventory. A normal market would have 6-7 months of inventory. Anything over seven months would be considered a buyers’ market, with downward pressure on prices. Anything under six months would indicate a sellers’ market, which would put upward pressure on prices.

Going into March of this year, the supply stood at three months – a strong seller’s market. While buyer demand has decreased rather dramatically during the pandemic, the number of homes on the market has also decreased. The recently released Existing Home Sales Report from the National Association of Realtors (NAR) revealed we currently have 3.4 months of inventory. This means homes should maintain their value during the pandemic.

This information is consistent with the research completed by John Burns Real Estate Consulting, which recently reported:

“Historical analysis showed us that pandemics are usually V-shaped (sharp recessions that recover quickly enough to provide little damage to home prices).”

What are the experts saying?

Here’s a look at what some experts recently reported on the matter:

Ivy Zelman, President, Zelman & Associates

“Supported by our analysis of home price dynamics through cycles and other periods of economic and housing disruption, we expect home price appreciation to decelerate from current levels in 2020, though easily remain in positive territory year over year given the beneficial factors of record-low inventories & a historically-low interest rate environment.”

Freddie Mac

“The fiscal stimulus provided by the CARES Act will mute the impact that the economic shock has on house prices. Additionally, forbearance and foreclosure mitigation programs will limit the fire sale contagion effect on house prices. We forecast house prices to fall 0.5 percentage points over the next four quarters. Two forces prevent a collapse in house prices. First, as we indicated in our earlier research report, U.S. housing markets face a large supply deficit. Second, population growth and pent up household formations provide a tailwind to housing demand. Price growth accelerates back towards a long-run trend of between 2 and 3% per year.”

Mark Fleming, Chief Economist, First American

“The housing supply remains at historically low levels, so house price growth is likely to slow, but it’s unlikely to go negative.”

Bottom Line

Even though the economy has been placed on pause, it appears home prices will remain steady throughout the pandemic.

How to Buy and Sell During our Stay at Home

By: Dream Town Realty

The Chicagoland area has been under a ‘stay-at-home’ order for over a week now, but as an essential business, Dream Town brokers have been continuing to find creative and safe ways to conduct business for their clients. While the executive order does permit brokers to engage in real estate showings, there are some additional safety measures that have been put in place during this unprecedented time. 

• Clients and brokers must maintain a distance of 6 feet from one another during showings. 

• Individuals present should bring hand sanitizer or sanitizing wipes to all showings. 

• To limit the number of individuals, sellers should not be present, and listing brokers may opt to use a lock box to grant access to buyers and their brokers. Individuals present on showings should be limited to the buyer’s broker and the primary decision maker for the buyers. 

• Sellers should turn on all lights and open doors to any rooms/closets prior to the showing.

• Brokers and buyers are encouraged to drive separately to and from showings.

• Individuals with any sign of symptoms should stay home. 

While in-person showings and open houses are not restricted by law, the Chicago Association of Realtors strongly urges brokers to find alternative ways to show properties during this time. Dream Town brokers have been leveraging property videos, 3D virtual tours (Matterport), video conferencing software, and even virtual open houses to safely show their listings to prospective buyers. 

Dream Town broker Aaron Masliansky is now conducting his business almost exclusively through video conferencing and lockboxes. This past week, he conducted a final walk-through with an out-of-state buyer and the listing agent via a 3-way Zoom call. “The listing agent had the keys to the property and walked my client and I through the home on a video call, which I recorded,” Aaron said. “After seeing the property at our virtual final walk-through, the listing agent mailed my buyer the keys so we could proceed with closing virtually.” 

We have even seen our brokers hosting virtual open houses, providing members of the public with an opportunity to tour the home during a pre-specified time, just like a traditional open house. “I am able to bring the house to our potential buyer, even those who may not have looked at the house initially, while keeping everyone safe,” says Dream Town broker Abby Powell. “Potential buyers can literally tour the home while in their robe and slippers, in the comfort of their own home.” Abby has been hosting her virtual open houses via Facebook Live, showcasing a pre-recorded on-screen walk-through and answering questions in real-time from her viewing audience. Abby has also relied on Dream Town’s Matterport program to create 3D walk-throughs that buyers can access at any time. 

Aaron has been utilizing Matterport for his own listings, too. But what about his buyer clients that want to tour properties listed by other brokerages? “I’ve been asking listing brokers for videos or virtual walkthroughs to share with my buyer clients,” he says. “During this time, everyone is working together to come up with creative solutions – not just other real estate brokers, but industry partners like attorneys, lenders, and title companies, too.” 

With so much technology at our disposal, the stay-at-home order isn’t stopping sellers from listing their homes. Dream Town broker Nicole Hajdu still has many active listings and listings under contract. She even just listed her own home for sale, and spent the first week of the stay-at home order cleaning, staging, and photographing her house… at a distance. “The stagers came in with booties and gloves, and were out of my house within an hour. The photographers came in at a different time, wearing gloves and masks,” she says. “We all stayed 6 feet away from each other at all times as we moved through the home.” 

However, Nicole understands that listing a home during the stay at home order is not the right decision for everyone. She says she is taking it day by day, and client by client. “For seller clients, this is a great time to clean and prep their homes to go on the market. For buyers, it’s a great time to do as much preliminary research as possible to narrow down their areas of interest and what they are looking for in a home,” she says. “Sometimes we need to take a few steps back to move forward in a better, more favorable direction.” 

If you’re thinking about buying or selling a home during the stay at home order, talk to your broker about the timeline that makes the most sense for you. Ultimately, health and safety is the number one priority.