How Has Covid-19 Already Impacted the Real Estate Market?

Key Highlights

• No doubt, COVID-19 has upended hand washing to education to remote working to home tours.
• Here are some numbers to go with those impacts as they relate to real estate
• Here are some expectations from real estate experts as to what is coming down the pike

We’ve discussed pre-COVID (PC) and after-Covid (AC) before. Let’s take a look at what has already and is currently happening in US real estate markets as we live in this COVID-world.

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Newly Built Homes

• -23% drop in new home construction began in March
• -32% in multi-family construction since March
• -17.5% drop in single-family construction since March
• Translates into terrible news for housing affordability

Marketing Shifts 

• +408% increase in agents using Zillow’s 3D home tour feature
• +500% increase in agents using Redfin video home tour requests
• No data on increase in agents using FaceTime tours but we know that usage has skyrocketed

Home Finance

• Credit scores of 700 now the qualifying norm for loan approvals
• 20% down payment now the minimum for loan approvals
• 120 day window now allowed for appraisals and “any combination of property inspections, asset records, photographs, property sketches and recorded media” by Federal Reserve Board, Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency to help loosen up lending
• Fannie Mae forecast mortgage rates for 2021 as being under 3% for 30-year, fixed rate mortgage

Transaction Management

• 27% of NAR members report being able to complete all aspects of transactions while maintaining social distancing guidelines
• Online and mobile applications such as electronic signatures, transaction coordination and other aspects of closing process plus dispensation from state and local authorities enable this 27% to assist buyers and sellers

Buyers and Sellers Attitudes 

• 44% of buyers are delaying their home purchases until after COVID restrictions lifted or for 2-3 months
• 55% of sellers planning to delay listing their homes until after COVID restrictions lifted
  • 93% sellers have cancelled open houses and asked that buyers/inspectors coming into their homes take additional precautions
• 64% of buyers anticipating lower home prices and increase affordability
  • Majority of this 64% expect price decreases of 5-10%

Real Estate Investment

• 63% property managers report tenants unable to pay rent or wanting to terminate leases
  • 47% of managers planned to accommodate late payments
  • 20% of managers reported they’d have trouble with late payments
  • 38% landlords reported late tenant payments or terminated leases
• 24 markets where ZillowOffers suspended home buying
  • Redfin and Opendoor also suspended home buying

Government Relief Actions

• $310B added to initial $349B Paycheck Protection Program
• $10.7B received by real estate and rental industry from this small business loan program
  • This $10.7B represents just over 3% of relief funds
  • Real estate and rental industry ranked 10^th out of 20 industry sectors applying for relief emergency funds 

Thanks to InmanNews’ Christy Murdock and the National Association of REALTORS®.

Also read: SBA’s $349B Paycheck Protection Program Now Out of Money, Podcast: Gov’t Bailout Programs Running Out of Cash? | Real Estate Brokers & Agents Fearing Failure, What’s Coming Next? “The Worst Economy in Our Lifetime”