What Is Coronavirus?
COVID-19, better known as coronavirus, is a viral infection with flu-like symptoms. The virus is primarily transmitted via respiratory droplets, such as when an infected person coughs or sneezes. At press time, there are more than 1,000 reported cases of coronavirus in the United States.
Effects on Real Estate Industry
As coronavirus spreads, people are becoming more cautious. Many conferences and large public gatherings have been canceled and people are postponing or canceling travel plans. Meanwhile, other industries, such as soap, bleach and hand sanitizer, are booming as consumers stock up on emergency supplies.
While the coronavirus is having widespread effects across the globe, the real estate market in the United States is coping with a mixed bag of positive and negative effects from the outbreak. Overall, real estate remains a trusted long-term investment option in a time where stock prices are falling and the return on bonds is at an all-time low. Here are some ways the coronavirus outbreak could affect the real estate market moving forward:
The Federal Open Market Committee issued an emergency interest rate reduction on March 3 in an effort to bolster the economy from the effects of the coronavirus. With benchmark interest rates lowered to just 1-1.25 percent, buyers who were on the fence about purchasing could see that now is a great time to lock in their mortgage rate. Lowered interest rates may also help buyers afford a more expensive home or take advantage of the increased affordability while interest rates are down.
Another positive note in real estate is that the mortgage industry is currently experiencing a refinancing boom as rates hit an all-time low. Mortgage Bankers Association Senior Vice President and Chief Economist Mike Fratantoni explains that “given the further drop in Treasury rates this week, we expect refinance activity will increase even more until fears subside and rates stabilize.”
Inventory could become tighter as listings are delayed and buyers and sellers become wary of making contact with strangers. Chief Economist and Senior Vice President of Research for NAR Lawrence Yun suggests that, in the short term, “home sales will be chopped by around 10 percent, compared to what would have been the case, due to the spread of coronavirus.” A recent NAR survey found that 11 percent of REALTORS® are seeing a reduction in buyer traffic and 7 percent are reporting lower seller traffic when asked about the impact of the coronavirus on their market.
Showings and Open Houses
Real estate agents may see fewer buyers interested in attending open houses while the coronavirus outbreak is in effect. Instead, agents may consider hosting more online open houses and take some time to try out the latest virtual tour technology to showcase their listings without the risk of exposing themselves and homebuyers to contagions.
If you are unable to show a property and you have a motivated seller, as a last resort you could ask the sellers to let the potential buyer in. In the event that they purchase, the seller could be provided a gift card or small discount for helping with the showing.
With people being more cautious about getting out in person, there will be added incentive for people to attend online learning. This applies to both real estate professionals and real estate consumers. If you want to keep up to date with the latest real estate news, attend a webinar or subscribe to a podcast channel you haven’t listened to before. You can also consider creating a webinar, podcast or Facebook Live video to discuss topics buyers and sellers in your community may be interested in learning more about. Find ideas for your real estate seminar here.
Let us know what you are experiencing in your market by joining the conversation on the Secrets of Top Selling Agent Facebook group to share your thoughts and see what others in the industry are saying about the effects of the coronavirus in their market. Comment on the post pinned to the top of the group and sound off.
Patty McNease is vice president of Brand Marketing.