When Angela VanHouten was visiting sellers to arrange for showing the properties to buyers through Facetime, the sellers had prepared hand sanitizers, turned on all lights themselves, disinfected door knobs and opened all their doors that did not need to touch anything in their properties.
“People who are looking for their primary residence, they still need a house,” said VanHouten, a real estate agent in Lake Martin, Alabama. “It was not the first time using FaceTime this month.”
VanHouten showed a property via FaceTime on March 25 and wrote an offer and had an offer on the next day on March 26 from the buyers, who have never physically visited the property. The buyers wanted to purchase the house for their daughter, who is moving to attend college nearby. With the exception of closing documents, paperwork has also been done through online meetings.
VanHouten is not only the agent who conducts viewing and transactions online.
The most-heated-in-a-decade housing market is frozen because of the coronavirus. Both sellers and buyers are reluctant to conduct transactions as the pandemic brings economic uncertainty. Realtors offer virtual home tours to break through the crisis but it will not contribute to a fundamental solution.
Realtors.com released its latest data today, providing a glimpse into the pandemic’s impact on the U.S. housing market. The initial reaction of sellers in the latter two weeks of March, after the virus severely blunted all business activity in the nation also is reflected in the decline of newly listed properties. The number of newly listed properties in March declined by 34% compared with a year ago, the largest year-over-year decrease in 2020.
In addition, while the inventory — homes that are for sale — declined by 16.8% in the last week of February, the biggest year-over-year decrease since April 2015, in the last two weeks of March, the drop of inventory slowed to 15.2%.
“About a month ago, everybody was very busy,” said Glenn S. Phillips, CEO of Lake Homes Realty, which is a multi-state real estate agency specialized in properties near lakes. “But we have already seen across the board, not a complete stop, but a rapid deceleration. There’s a fear of ‘I don’t want to be around people and let people visit my home,’ and that affects buyers and sellers.”
Consequently, the number of virtual home tours has increased because even those who want or need to buy a home are reluctant to visit houses. Realtors try to connect buyers and sellers through FaceTime, Zoom and Google Hangouts. The number of 3D home tours on Zillow rose 326% in the week of March 20.
Mary Roberts, the president of the Arizona Association of Realtors, says real estate agencies in Arizona are also working with people who still need to buy or sell a house for career or other reasons after the coronavirus outbreak using the technology.
“The biggest change we can see in our data is the amount of access to the properties, which is going down dramatically,” said Roberts. “People are going more virtual now with their showing.”
Although the real estate agents try to minimize the downward pressure of the pandemic by using virtual meetings, the market is likely to deteriorate while the coronavirus crisis continues. Contracts have been completed through video chatting, but this doesn’t reflect the status of the market. The number of active contracts hasn’t gone down drastically yet, but there are signs of decline. The Realtors.com data shows that buyers and sellers who are not in the primary home market but are looking for investment properties are stepping back and waiting to see what is going to happen.
This is the first time that a historically strong housing market has been stopped because of a health crisis and not because of an economic downturn like that caused by the financial crisis of 2008. Even climbing housing prices, which were not highly correlated to the economic crisis, decelerated in the last week of March.
No one can say how long the pandemic will freeze the market, which is in unknown territory. Phillips of Lake Homes Realty believes that the market is going to behave unpredictably and that housing will not get back to its pre-pandemic status until people get some stability in their lives.
“The industry is not going to suddenly become all virtual,” he said. “What really happens now is almost a complete halt until the pandemic passes.”