How The Real Estate Market Is Reacting To COVID-19

The COVID-19 pandemic has been affecting multiple businesses and industries. Health and safety is obviously the world’s main concern, so make sure you’re continuing to stay informed, distant from others and are continuing to practice good hygiene. Among the multiple industries taking a hit due to coronavirus, the real estate industry is beginning to see how they might be affected within the coming months as quarantine/lockdown policies begin to be enforced.

According to the National Association of Realtors (NAR), the index of pending home sales has increased by nearly 3% in February of this year. This specific index measures real-estate transactions in America where a contract of sale was signed, but the sale has yet to be closed. 

The index itself helps provide agents with existing-home sales reports and what the coming months for their specific regional industries should expect. February’s national report in 2019 showed that pending signings were up by 9.4% nationally, indicating an obvious decrease in the buyer market, likely due to COVID-19 concerns. 

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“February’s pending sales figures show the housing market had been very healthy prior to the coronavirus-induced shutdown. The data does not capture the significant fallout from the pandemic or the measures taken to control the outbreak. Numbers in the coming weeks will show just how hard the housing market was hit, but I am optimistic that the upcoming stimulus package will lessen the economic damage and we may get a V-shaped robust recovery later in the year,” said Lawrence Yun, NAR’s chief economist.

This time last year, Yun also noted that on a month-to-month basis, pending sales were up in every region of the nation; not entirely uncommon but definitely not common for this time of year for the market in general. The West had an increase of 5%, the midwest 4.5%, the North 3%, and in the South, a mere .1%, still an increase.

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The fact that the market/pending sales reports were much higher this time last year may seem like it should cause some major economic concerns, however, this wouldn’t be the first time the real estate industry has had to cope with a worldwide health crisis or economic downfall. Before the coronavirus pandemic hit the U.S., the market was relatively stable. Supply was a little lower than what the nation is used to, however, the demand to buy was at a relatively high position.

According to NAR, in the winter of this year, America experienced an overall low interest rate environment that began in the summer of 2019. This caused an excess in sales to occur within the past few months, and also made buying a home more affordable. 

Of course, the concern now is how much the COVID-19 pandemic will reverse the real estate market and hinder America’s economy. Based on previous widespread illness outbreaks, the NAR is not too concerned with how the market will respond to this pandemic. In the past, the real estate industry has always rebounded back to where it was in areas of the country that have had their economies affected by health crisis’. It just obviously depends on the specific job/housing market.

“Housing, just like most other industries, suffered from the coronavirus crisis, but once this predicament is behind us and the habit of social distancing is respected, I’m encouraged there will be continued home transactions though with more virtual tours, electronic signatures, and external home appraisals. Many of the home sales that are likely to be missed during the first part of 2020 may simply be pushed into late summer and autumn parts of the year,” Yun said.

Yun went on to encourage any real estate clients who are currently involved in pending transactions to talk with their agency, and bank/financial advisers, about the best possible route to take for the time being. Many industries are trying to comply with the multiple ways the world is adjusting to living during a pandemic, the real estate industry included. So work with the professionals and they’ll work with you, according to Yun, eventually we will return to a place of normalcy, and the market will bounce back.