This is the ten million dollar question on every agent’s mind this minute: how much will COVID-19 affect the housing market? Most specifically, the LOCAL housing market. OUR housing market?
It’s still early in the game. On Friday. I listened to real estate tech strategist Mike DelPrete’s “The Real Estate Pandemic Survival Guide.”
It’s 50% Time
Using data from China, Italy, and even COVID-19 afflicted areas in the U.S., DelPrete predicted how the U.S. would fare: International and U.S. markets, he said, could see a 50 to 75 percent drop in NEW listing volumes.
As the pandemic and associated effect on the real estate market spreads, one of the best leading indicators of a decline in transaction volumes — new listings — has dropped an average of 63 percent in the earliest hit markets. Seattle, the Bay Area, and New York City, along with Italy and the U.K., were among the first markets hit and are the best examples of what comes with strict lockdowns.
But it won’t be a uniform hit. Now ATTOM Data Solutions, a national housing analyst, has produced a list of which housing markets around the country could be hit the hardest.
Good news for Texas: we are among the least likely to suffer. The worst areas include New York City, New Jersey, and Florida. The least vulnerable areas include the Midwest and West.
Housing markets in 14 of New Jersey’s 21 counties are among the 50 most vulnerable in the country to the economic impact of the coronavirus. The top 50 also include four markets in New York, three in Connecticut, and 10 from Florida. There was only one in California, none in other west coast states, and only one in the southwest.
ATTOM Data used 2019 Q4 data risk factors as predictors: ratios of foreclosure notices, homes underwater, and wages required for home ownership expenses in 483 U.S. counties.
“It’s too early to tell how much effect the coronavirus fallout will have on different housing markets around the country. But the impact is likely to be significant from region to region and county to county,” Todd Teta, chief product officer with ATTOM Data Solutions, said in a press release. “What we’ve done is spotlight areas that appear to be more or less at risk based on several important factors. From that analysis, it looks like the Northeast is more at risk than other areas. As we head into the Spring home buying season, the next few months will reveal how severe the impact will be.”
New Jersey and Florida Have Almost half the Highest Risk Counties
· New Jersey and Florida have 24 of the 50 most vulnerable counties: 14 in New Jersey include five in the New York City suburban area. The 10 Florida counties are concentrated in the northern and central sections of the state.
· Texas has 10 of the 50 least vulnerable counties, followed by Wisconsin with seven and Colorado with five.
· The 10 counties in Texas include three in the Dallas-Fort Worth metro area (Dallas, Collin and Tarrant counties) and two in the Midland-Odessa areas.
Over at the Texas real estate bible, the Real Estate Center at Texas A&M University, our friend Dr. James Gaines, said he has also seen data forecasts predicting Texas’ home markets will do better coming out of this pandemic than other markets. Still, it’s pretty early to make predictions
“Obviously the New York market will be collapsed and the tourist areas,” Gaines told Steve Brown. “Beyond that, we simply flat don’t know.
New listings are down 75 percent in New York City. Many experts think New York City will take years to recover. As for Dallas Fort Worth, we are in slowdown mode with quarantine in effect (though real estate is considered essential, agents tell me few sellers want showings) as agents scurry to re-tool for virtual tours and drive-by closings,
As Gaines pointed out, March, April, May, June, and July are usually DFW’s hottest real estate months. DFW could be in quarantine for three of the five months.
The tendency for many agents might be to do nothing while in pause mode: NO! Stay active and in touch with clients… plan for the coming wave.
“It’s halftime,” says Mike DelPrete. “Which means you don’t sit it out, you plan for the next two quarters now.”
The market does come back, but consumer behaviors may change forever. DelPrete believes consumers will embrace the convenience of online real estate shopping even more, as well as online closings and notaries.
A friend in commercial real estate put it to me this way: The pandemic was like adultery in a marriage. There may not be a divorce, but there will be some MAJOR changes ahead.
This time will also be a stress test for iBuyers, says DelPrete, seeing how long each can glide on capital while transactions are on hold. Once the market comes back, sellers may relish the ease of turning their properties over to an iBuyer.
“It’s halftime,” says DelPrete: “You need to make sure you are around for the rest of the game.”