The coronavirus pandemic, and resulting financial crisis, stock market crash, and growing number of layoffs, could make the already serious housing shortage even more severe.
Amid widespread fear and unprecedented measures, including social distancing and “shelter in place” procedures in especially hard-hit cities, nearly 28% of Realtors® are seeing fewer homes on the market as a result of the coronavirus, according to the most recent National Association of Realtors® Flash Survey: Economic Pulse report. And the inventory shortage is growing by the minute as only 10% of Realtors observed fewer listings the week before.
More than 3,000 Realtors participated in the survey conducted on Monday and Tuesday of this week.
“If sellers remove their home from the market, it will continue to plague the historically low inventory conditions that face the country,” says Jessica Lautz, vice president of research at NAR.
Many homeowners are practicing social distancing by taking the “For Sale” signs off their front yards as fears of an economic downturn and having potentially infected strangers tramping through their properties mount. But with the nation already experiencing a lack of inventory, this is likely to make the problem even worse as demand outstrips supply.
About 16% of Realtors saw sellers take their homes off the market due to the coronavirus—compared with only 3% a week earlier, according to the survey.
Sellers who don’t pull their listings are being careful.
Roughly 40% of Realtors are now reporting open houses have been stopped. Twenty-seven percent have seen buyers required to use hand sanitizer when entering a property, while 6% observed buyers being required to use gloves.
“Sellers are ensuring the health and safety of their families and Realtors,” says Lautz.
The fear of the virus and what could be a looming recession isn’t just confined to sellers. Nearly half of Realtors, 48%, say buyer interest has dropped because of the coronavirus fears. That’s a significant hike from 16% the previous week.
In areas with more confirmed cases of COV-19, 53% of Realtors said interest had waned, the survey found.
That’s likely because many potential buyers are worried about the security of their jobs. Some don’t want to make what could be the largest purchase of their lives and be tied to 30 years of loan payments if they don’t have steady income coming in.
About 28% of Realtors reported buyers lost confidence in the housing market after the stock market crash. But ultralow mortgage rates, which reduce monthly mortgage payments, are helping to offset the financial fears. Another 28% of Realtors said the low mortgage rates excited buyers more than all of the bad economic news.
“Buyer activity has slowed currently while buyers are listening to precautions of how to stay healthy,” says Lautz. But she’s optimistic that buyers will return to the market once the crisis has passed.
“Buyer activity will rebound after the quarantine is lifted, as buyers will be attracted to low interest rates,” she explains.
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