What do you need to know about the impact COVID-19 has had on real estate? Watch the recording of this live event with Coldwell Banker CEO Ryan Gorman where he gave an update on the industry and answered the most frequently asked questions from buyers and sellers.
COVID-19 March - May, Recovery June As our country looks back at the difficulty of the last few months, I reflect upon my place as the President and CEO of one of the world’s largest real estate organizations. I am very proud of this vast and diverse group of agents, brokers, managers and owners for continuing work despite possibly being afraid, confused or burdened with the hardships of the global pandemic. With that in mind, let’s dive in to see what the first half of 2020 brought for real estate.
The adage “real estate is local” holds true, as every market was impacted differently by COVID. Some slowed down significantly in March and April, while others were much less affected. In my conversations with offices across the country I have seen one commonality: business is now heating up and the summer market is poised to be very active.
Additional Trends Across the Country
Home prices did not drop: On anational level, prices in March rose 4.4% annually, up from 4.2% in February, according to the S&P CoreLogic Case-Shiller index. Additionally, NARreportedthat the median existing-home price for all housing types in April was $286,800, up 7.4% from April 2019 ($267,000), as prices increased in every region. April’s national price increase marks 98 straight months of year-over-year gains. This was confirmed by offices across the country. In fact, the city of Montecito, served by Coldwell Banker Realty Southern California, saw an 11% increase between March and May!
Lack of inventory: Total existing-home sales dropped 17.8% from March to a seasonally adjusted annual rate of 4.33 million in April,according to NAR’s latest figures. Understandably, sellers seemed afraid to list their homes, whether from fear of having people in their homes or because the lack of inventory made it hard for them to in turn find the next perfect home. As states we reopen, we expect more homes to come on the market.
Resilience of our agents during lock-downs and stay-at-home orders. Agents continued to make connections, show houses and close contracts, albeit virtually.
Some offices did not see much of a decrease in activity from the pandemic. Coldwell Banker Sea Coast Advantage in North Carolina, saw an increase in web traffic and contracts in March, April and May, with sides up 6.8% from the same period in 2019. As we’ve heard anecdotally, much of this interest came from folks relocating from bigger cities and other more densely populated states.
Other markets saw a bigger impact, such as those where real estate was not deemed an essential service or where the effects of COVID-19 were particularly devastating. The bottom point for many such areas occurred in late March and early April, then they began rebounding in April and May.
For example, at Coldwell Banker Bain, which serves Washington and Oregon, sales volume in January, February and the beginning of March was 110% of sales from the same time in 2019. However, March 27 through April 11 was 10% of 2019, April was 30% of 2019, and May was 70% of 2019. The office expects June to be back at 75%-80% of 2019, which would be a sign of the “V” shaped recovery many have hoped for. However, because of low inventory, time on market remained short for CB Bain despite these lower sales volume numbers: in some markets under $1 million, it’s as little as 3 days and on average 2-3 weeks.
Coldwell Banker Mid-America Group Realtors in Iowa agreed that, while the beginning of March was equal to 2019, the end of the month brought a quiet period – listings were at zero but quickly began to rebound in April and May, and now listings increase weekly.
Other markets fell somewhere in between completely shutting down and having their numbers up. Coldwell Banker Realty in Texas serves cities and towns all over the state, each with distinct demographics and economies. In Austin, low inventory in April and May meant short times on market and multiple offers on listings – a rarity in the area. Homes in the $200,000-$300,000 range kept demand up in cities like Dallas and Houston.
Despite uncertainty and, at times, fear, Coldwell Banker agents kept doing what they do best – serving clients and their communities. Real estate is very much open for business and if you think it might be the right time for you to buy or sell, contact a Coldwell Banker agent who can talk you through exactly what’s going on in your market. COVID-19 represented a great upheaval to our everyday lives, but often the greatest opportunities exist in periods of tremendous change.
Real Estate in the Virtual Aage Offices relied heavily in March, April and May on virtual tools to keep businesses running. When lockdowns first began, broker-owners and managers kept offices communicating through tools like Microsoft Teams and Zoom. Many utilized training sessions from home office including the virtual education expos for skills such as online marketing or virtual showings. Generally, the agents that remained active with virtual listings or on social media continued to do well. While Facebook live is often cited as the go-to tool, Instagram and TikTok are not just for millennials and Gen Z, as I told CNBC last month.
So, in this virtual world, what trends will stick post COVID? Everyone I spoke with agreed that virtual showings would continue, with one reason being that it allows buyers to narrow down homes they’d like to see in person.
How do agents think the virtual age will change homebuyer preferences? The move to more remote work could change housing preferences especially in expensive urban areas (with commute time less important and space for a home office more important). Some markets will see this more than others, which may not see this shift at all.
A Coldwell Banker snap poll of agents in May found that fifty-eight percent of those surveyed think buyers will desire a home office and 47% think the same for a private outdoor space. Fifty-five percent of those surveyed think buyers will seek out flexible spaces for convertible office / dining / living options, 23% said the same for large windows to let in lots of light and 21% for ample pantry and storage space. In Southern California, kitchens are getting special attention as many people started cooking more these past few months. In states with the most restrictive lock downs, the way people lived in their homes changed and those regions may see shifts in preferences.
As for location, that same survey found 25.71% think there will be an increased interest in people buying real estate within suburban towns. Further, 22.14% think there will be a decreased interest in city living and 17.86% think there will be an increased interest in rural areas.
Fair Housing and Equal Opportunity So, while the real estate market is once again functioning well in most markets, transactions are closing and prices are rising, I do not want to imply that all is well. COVID-19 has impacted many our neighborhoods, including my own, in ways that we are only beginning to fully appreciate. While these impacts sadly continue in many areas, we as a nation are also confronting the fact that different communities and different populations have long been impacted very differently by illness, financial distress and even violence.
The real estate industry in the United States has a long history of creating opportunity for individuals, families, professionals and entrepreneurs. Unfortunately, our industry also has a long history of systemic racism, through such pervasive and even government-sponsored practices as red lining, racist deed restrictions, exclusionary zoning, and predatory lending to African American and other minority homeowners.
Coldwell Banker’s clients, agents, employees and broker-owners have always driven our efforts to improve everything we do, and recently each of these constituents has been asking what Coldwell Banker is doing to equalize opportunities, from employment to entrepreneurship to home ownership, and what more we should be doing. The answer is that we have done a great deal, and a great deal remains to be done.
An example of our recent work includes our Diversity in Ownership program, launched in February of this year, which is designed to increase real estate brokerage ownership, overall real estate entrepreneurship, and home ownership in and among some of our most underserved communities where both business ownership and home ownership are well below national averages. While this program seems to me to be far and away the most aggressive in the industry – including up to $100,000 of initial investment in each business and personal mentorship from me and many other top industry leaders – we can, should, must and will do more.
For us here at Coldwell Banker, this is a movement, not a moment. Today we are listening more than ever, especially to our communities, clients, agents, brokers and employees; and we are acting, doubling down on our commitment to equality of opportunity as a core tenant of the American Dream and an important measure of integrity for Coldwell Banker. We appreciate our consumers and other constituents holding us accountable to results, not simply commitments, and we look forward to sharing those with you.
I am sure you will have questions about this topic, about buying and selling in the age of COVID-19, and about the housing-related challenges and opportunities you may be facing… so it is my pleasure to now take your questions…
Takeaways: If your life right now dictates a move, then you should not be afraid to search for that new home. There are ways to see properties today in person or virtually in every state in the country. Most of the brokers and owners I spoke with anticipate a strong “second spring” or summer selling season.
Real estate has always been local but this is even more true now! Our agents are primed to work within their markets, which can vary drastically one community to the next. For example, Coldwell Banker Residential Brokerage Atlanta & Carolinas has 34 offices and nearly 2,000 affiliated sales associates that serve across three states – each with differing stay-at-home restrictions and economic forces. This is to emphasize that your local agent knows the latest about regulations, market conditions and inventory and is a great source for the best and most up-to-date information for buying or selling your home.
Your Coldwell Banker agent is also part of something much larger: the American Dream. We know this dream feels more realistic for some than others, and we are committed to do our part to ensure fair and equal access to housing no matter who and where you are. Earlier this year, we even developed new Fair Housing training for all our agents and made it available to the entire industry – indeed, even available to individual consumers like you. If you would like to learn more, go tofairhousingpledge.comI also recommend an excellent book on the topic, The Color of Law by Richard Rothstein. We can all learn from the past as we change the future.
In closing, I know these past months have been hard for you, your families and your communities. I hope that this information will help inform you about the real estate market and help you see where you fit in. I promise that Coldwell Banker agents will be there when you need them most, to guide you home as they have done for over 113 years.
MLS Internet Data Exchange (IDX) information is provided exclusively for consumers’ personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing, and that the data is deemed reliable but is not guaranteed accurate by the Lansing Association of Realtors® MLS.