There is no question that the spread of COVID-19 (coronavirus) has drastically disrupted daily lives and thrown a wrench in many future plans. As Chicagoans adapt to the Stay-at-Home order and we enter what was primed to be an especially hot spring for listings, many current and future homeowners are left wondering how COVID-19 is going to affect the real estate market.
What History Shows Us
Zillow recently conducted a study that focused on housing during previous pandemics. The research found that while home sales dropped during an outbreak, home prices stayed about the same. This makes sense since home prices are determined by home transactions, and without transactions, prices don’t really move. Essentially, during previous pandemics, the housing market was put on pause.
As for concerns regarding how the stock markets will affect the housing market.
Historically, the housing market has shown to stand steady even through full-blown recessions, sometimes even improving. This is because houses aren’t typically bought purely for investment purposes. So even though the stock market is shifting, the housing market isn’t tied to those changes.
Housing is a basic need and the life stages that prompt the purchase of a home aren’t likely to change. People will still move out of their parent’s homes, families grow and require more space, and empty nesters may find a smaller house is a better fit for them. These life circumstances won’t change based on a stock market correction.
What the Current Market Shows Us
COVID-19 is affecting the real estate market through mortgage rate drops, which currently stand around 3.8%. It is also instilling a feeling of uncertainty in buyers and sellers. The pandemic has a lot of people experiencing job insecurity and unemployment for the first time. This financial shift and overall feeling of instability reduces consumer confidence and puts the purchase of a new home on the backburner.
It’s still a seller’s market given the low rate and low inventory environment. This slight inventory dip is likely to increase the demand for what is currently on the market. Over the past month, Pearson Realty Group has reduced the number of days a home spends on the market, as our listing to contract time has decreased 28%. While its too soon to know for sure, this could be attributed to the buyer demand mentioned before.
How Pearson Realty Group Agents are Adapting
During Illinois stay-at-home order, real estate-related activities are still considered essential and can continue under its effect. So like most Realtors, our agents remain active and working but now rely heavily on technology, both for communication & marketing.
- Virtual property tours via Facetime, Facebook Live, Skype, Zoom, etc.
- Buyer and seller video consultations
- 3-D virtual reality walkthroughs using Matterport
- Online listing syndication
Digital marketing is a top priority right now, as most buyers have taken to online property searches while the stay-at-home order is in effect. Our agents are using listing platforms to their fullest and are creating detailed property descriptions to attract the right buyers.
Advice to Buyers
- Moving quickly may be to your benefit
- Use online property searches during the time at home.
- Mortgage rates are at all-time lows & there is a good chance competition and prices will heat up this summer.
- Take advantage of technology
- Cash transactions can be signed electronically and returned via email. For lender transactions, please limit the signing party and counsel to only the necessary people. If you are exhibiting symptoms, please reschedule.
- Make a move that fits your current life
- Businesses are adapting, make sure you are confident in your job security
- Financial planning is key
Advice to Sellers
- Now is the perfect time to do all the prep work for selling.
- Signing paperwork
- Spring Cleaning
- Getting photos and videos done for marketing
- Work with your realtor to push digital marketing
- Complete any documents online- originals can be shipped express so that the title company has copies.
- Following these next couple of weeks, we expect to see an increase of buyers as the result of online searching to pass the time at home.
Overall, COVID-19 is affecting the real estate market but not necessarily in the way we might think. It has shown to remain stable even when the stock market isn’t and it hasn’t done a whole lot to Chicago’s home prices. Inventory saw a slight dip, but this could be a positive as it will increase demand and clear out what is currently on the market. Buyers are in a great spot with low mortgage rates and if they are financially sound, they should proceed with their purchase. Most importantly, discuss your options with a Pearson Realty Group Realtor. They are offering virtual consultations and can help map out a plan that works best for you.