Local real estate media is spouting off about how COVID-19 is affecting the real estate market in Dallas. And it may not be totally accurate, either. So yeah, excuse me, I’m in a fit of rage.
“Home showings down as much as 60% as North Texas firms prepare for slowdown”
“With fewer home showings and expected sales declines, companies are taking steps”
Those were Steve Brown’s published headlines about 7 p.m. Tuesday for a story describing the economic fallout of the novel coronavirus pandemic on North Texas real estate.
With all due respect, I’m disappointed. And I think the headline, charting experiences of companies based outside of Texas in COVID-19 hot zones, is not only misleading but could further erode our market. Which means fewer people getting a paycheck at a very dark time in our nation’s economic history.
One of the country’s fastest-growing home sales firms — Compass Real Estate — has already pared back its nationwide staff by more than 10%, according to multiple media reports.
Compass, best known for its black yard signs, expanded into North Texas in 2018 and has quickly become a major player in this market.
But CEO Robert Reffkin is reporting that the company has experienced a 60% drop in home showings and expects a substantial decline in revenues.
Compass is a national real estate firm based in New York City with offices from Boston to the Bay Area, the company having made several acquisitions along the route. When Reffkin talks of a 60 percent drop in showings, he is not talking Dallas-Fort Worth; he is talking a national drop on numbers including New York City, a current hotbed of COVID-19 — an area so bad everyone who leaves there is being asked to self-quarantine if they come to Texas.
Michael Coburn, broker/owner of RE/MAX Town & Country in Allen, told the Dallas Business Journal’s Bill Hethcock showings on properties in North Texas from March 1 through March 17 of this year dropped 31 percent compared to the same period last year.
Some real estate “disruptors” are also putting parts of their real estate business on hold. Three of these companies hail from COVID-19 hotbeds where quarantines have been in effect for two weeks.
Seattle’s Zillow Group, San Francisco-based Opendoor, and Chicago-based RealSure (which launched last fall) are also suspending their cash offers for homes.
Redfin, based in Seattle — Ground Zero of the pandemic, has canceled open houses for public safety. But in an interview with Inman News Wednesday, Redfin CEO Glenn Kelman says that while his firm is cutting back on the number of leads it sells to non-Redfin agents, traffic to its sites is up:
“Despite tough times, real estate will recover from the current crisis,” he said..“Mostly what we’re seeing is a massive decline in people bidding on properties and touring properties,” he explained. “But traffic to the site is holding up very well. And it’s especially holding up well given that fewer listings are debuting.”
D/FW Agents Are Using Technology to Sell Homes Buyers Haven’t Stepped Foot In
I talked to James Keoughan, a Southlake-based agent with Allie Beth Allman who is selling homes right now virtually. The homes are 20 years old or less, and the inspections are videotaped. In the last two days, he has had two listing appointments through FaceTime — a tool that more and more Dallas-area agents are using to get deals done. One property closes Friday, another mid-April.
“The Chicago buyer walked through the home by phone,” says James. “They will not actually see it until day of closing.”
Another couple are from Virginia. They traveled to Dallas very early March, found no appealing properties, returned home and toured more properties by phone with James. Cash offers boxed them out, but James snagged a Keller home, did an immediate FaceTime tour, submitted an offer. The sale is now pending for a mid-April move-in date. The sellers, who are moving to Australia, have actually accelerated their departure.
“As Realtors we have to adapt,” says James. “What would have happened had this hit 10 years ago? Fortunately, we live in a time when abundant technology is available.”
James estimates that 60 percent of the migration to Southlake is from out-of-state: many of his clients depend on tech tools anyhow. He is working with four buyers, all out-of-state, from Chicago, California, and Virginia.
His favorite tech tools are Matterport for 3D virtual tours of listings; FaceTime for buyers; a PDF of his listing presentation; Docusign; and mobile, digital, or online notaries.
Is it possible, I ask, to find and buy a home now without ever having set foot in it?
Yes, says James, with a solid, tech-tooled agent.
“And the buyers out there now, at this time, are serious,” he says.
Robbie Briggs, CEO of the namesake brokerage founded by his father 60 years ago, says looking at contract volume is a better bellwether for real estate activity than showings at this time. Up until the Dallas County quarantine that started at midnight on March 23 showings were fairly active, he says. Robbie has advised his agents to stay home for the next two weeks, observing the quarantine, which he thinks will actually lead to enormous real estate activity once it ends.
“Can you imagine being quarantined in a home you do not like for all this time?” says Robbie. “People are either going to say, we have to get a new home when this is over. Or if the house is too big, they will say, ‘We have to downsize.'”
Coronavirus and the resulting quarantine has basically made the home more central than ever.
Internet traffic on real estate search portals (because everyone is at home) is currently more than robust. Robbie says that the Wall Street Journal tells him their “Mansion” home section is experiencing crazy-high traffic, which we are seeing here at CandysDirt.com, too: a doubling and often tripling of page-views most days, even on weekends. A friend who once worked at Zillow told me Zillow’s traffic took off during the financial apocalypse of 2009: during troubled times, people want to check on the status of their most expensive investment, their home.
Please understand, I am not saying our market is immune. We are going to take a hit. We have shelved CandysDirt.com Staff parties, open houses are on hold, and agents are practically putting buyers in Hazmat suits to take them through homes.
There is a difference: This recession did not come from housing.
“This was shaping up to be a fairly competitive homebuying season, and that may not be the case now,” says Realtor.com’s chief economist Danielle Hale. “It doesn’t mean that we won’t still see sales. But I would expect fewer crowds at open houses. I would expect more shopping online.”
During the previous financial crisis, there were way more homes available than there were (often over-extended) buyers. Not the same today. Hale also doesn’t believe home prices will nosedive, as they did about a decade ago. Today, we have a housing shortage, particularly in affordable and mid-priced properties.
The point for agents: don’t hibernate, stay in touch with your clients, stay visible to your clients online, market properties efficiently, and be ready for the recovery.
To quote data-driven real estate consultant Mike Del Prete: “International and historical data shows that as the pandemic spreads and more stringent lockdown measures are put in place, the volume of real estate transactions will drop significantly — up to 90 percent. While the drop is temporary, only the most agile and resilient businesses will survive.”
It’s nearly impossible to pivot to a new businesses model during an economy-shuttering pandemic. Virtual tours won’t save your business when transaction volumes drop 80 percent. The alternative strategy is to weather the storm — cryogenically freeze yourself — ready to emerge when the recovery begins.
All real estate businesses will be moving quickly to adapt to the changing environment. It’s those that are able to move the fastest, adapt gracefully, and have the strongest foundation and balance sheet (survival of the richest) that will survive and thrive in the recovery.Mike Del Prete