How Real Estate Functions in the Time of COVID-19
There’s a heading I never thought I’d write. I also would not have thought it possible to do so. But that is what has been happening in the Ann Arbor market over the past 60 days. Things are certainly moving more slowly for this time of year, but houses ARE selling. Why? How?
A few reasons. . .
Real Estate is driven by “Life Events”. People move because they have had a life event that causes them to do so - marriage, divorce, a baby, more babies, job change, death. Those things might slow down during a pandemic, but they don’t completely stop. The only move that doesn’t happen in times like this is the “Optional Move” where people up or downsize. Even though UM has put a freeze on hiring, they did not cancel the offers already in place. And all of those people still need to find a place to live. Soon. And Ann Arbor has many other employers with growing businesses.
The “How” has been interesting and creative. The Governor’s initial shelter-in-place order put a stop to all in-person Realtor activities like showing houses, listing appointments, closings, etc. BUT it did not stop Inspections, Appraisals and Closings, so long as precautions were in place. Some photographers also continued to work. So houses continued to be listed. And Buyers continued to house hunt online. (Which, I believe is the new American Past Time.) My listings have been getting tens of thousands of ‘hits’ (as in 80,000+) from buyers who didn’t have much else to do but sit at home and poke around Realtor.com. Those hits resulted in inquiries, virtual showings, and sales.
“Showings” have been done virtually. Sellers zoomed their homes to buyers, along with both agents present. Not the same as visiting in person, but it gave buyers the opportunity to ask questions of the sellers in real time. I am sure that there are many other agents in this market who, like me, have Buyers who are traveling to Michigan to buy a house just as soon as they are able. And sellers who have already moved and still need to sell their former home.
Now that the Governor has eased the restrictions, Buyers are out in force. We are back to seeing multiple offers on properly priced homes across price ranges.
This is the protocol that Realtors and their clients are being asked to follow:
To allow minimal contact - sellers are to sanitize all common surfaces, open all doors, turn on all lights, and open cabinets/drawers before the showing.
To narrow the list of possible showings, virtual tours and driving by the property first are recommended.
A maximum of 4 persons allowed at a showing (including the agent).
People must maintain a distance of 6’ during the showing.
No overlapping showings.
No open houses.
Gloves, masks, sanitizers, and shoe covers are recommended.
Use electronic paperwork (offers & earnest deposits, etc.) whenever possible, and minimum contact for inspections, appraisals, and closings.
Agents are allowed to schedule virtual in person showings for their out-of-town buyers or others who can’t visit the home in person.
But What About Values?
An Appraisal Management Company reports, “Over the last two months there was a decline in closings however there were closings with sale prices negotiated 30 days prior (prior to the Crisis). Per our analysis which has been supported by the Mortgage Bankers Association, listings are up 6% and pricing has started where it left off in early March."
"As a result, we have not seen a decline in values reported in our appraisal data and if progress with listings continues we do not anticipate a change in values. We still have a shortage of inventory, now exacerbated by the delay in the spring market boom. The lack of inventory typically drives sales prices up. The appraisals are reporting stable values over the prior six months and as a result utilizing sales data from 3 or 6 months ago will not warrant an adjustment for a market change.”