As uncertainty mounts over the impact of coronavirus on the housing market, industry experts say there’s no reason to panic. Instead, focus on short-term, mid-term, and long-term strategies.
Ruben Gonzalez, chief economist, and Michelle Figgs, senior industry analyst for Keller Williams have been keeping close tabs on the impact of the coronavirus pandemic on the real estate industry and the economy in general.
The experts point out that low-interest rates created a bump in sales that will help real estate professionals weather a slowdown. Lessons learned during the Great Recession have put real estate in a better position to endure this downturn. And technology will allow interaction with clients in ways that maintain front-of-mind awareness.
“Make no mistake, we’re in a shift. It’s a different one than we’ve ever seen before. Its cause in and of itself warrants caution. We owe that to ourselves and everyone around us,” Gary Keller said in a follow-up letter to a live-stream address from Keller Williams headquarters. “The health challenge that has shown up in our lives is very real. It must be respected and we must take all necessary actions to keep each other safe.”
How the coronavirus will impact the real estate industry
In the short-term
Social distancing is making its mark worldwide. In the U.S., that has been accelerated as businesses shut their doors. This will be one of the triggers that start to slow real estate sales.
The real estate market had been relatively tight until the second week of March in most areas of the U.S., and low mortgage rates temporarily boosted sales and refinancing.
“That said, the boost is likely winding down, so it’s important to continue to offer value and stay in touch with your clients, so when they are ready to make a decision on purchasing a home, you remain top of mind,” says Gonzalez.
What you can do: go digital
- Focus on lead gen sources that don’t involve face-to-face contact.
- Hold virtual open houses and focus on intensifying the digital presence of your listings with floor plans and video walk-throughs. A virtual presence will keep buyers interested even when they are concerned about contracting or spreading the coronavirus.
- Invite contacts to download your personally-branded KW App so they can stay plugged into hyperlocal insights.
- Host listing appointments and buyer consults remotely and communicate the value of historically low interest rates. This will pique the interest of buyers who might otherwise be reluctant to assume a new mortgage in an uncertain economy.
In the mid-term
As businesses begin laying off workers due to the impacts of social distancing, there will be increasing delays in big purchase decisions such as homes and vehicles Figgs and Gonzalez point out. There will also be more supply chain disruptions, including shortages of building materials for new homes.
“The second quarter is the place that’s going to have the harshest impact on the housing market. Depending on when the spread of the virus begins to slow and when life begins to return to normal, we may see some sales pushed to either the third or fourth quarter, but that is entirely dependent on the economy and credit markets making it through this without severe damage,” Gonzalez says.
Even if your first quarter was a record-breaker, now is the time to tighten. CEO and co-founder of Keller Williams, Gary Keller, advises rethinking business and personal budgets and spending.
“Review everything. Review every line, every month. And don’t stop until January 2021. You’ll be amazed at what you would have missed each time. You’ll often be encouraged by how once you cut something, the next month you’ll discover that you can cut even more,” he shares.
He also emphasizes that lead generation will be more critical than ever – and you’ll need to work harder to accomplish your sales goals
“Think of it this way. The number of people out there you can do business with is never zero. There are still people that need you, you’ll just have to work twice as hard to find them. Even in 2011, the worst year of the Great Recession, the number of sides per agent was nearly the same as in 2019. Make no mistake, there’s still a lot of opportunity,” Gary Keller says.
What you can do: keep in touch
- Come from a place of contribution – follow-up consistently with buyers and sellers to see how you can provide support and offer value to them in a turbulent time.
- Keep buyers and sellers focused on the long-term advantages of homeownership.
- Tighten your business and personal budgets and learn to live on less.
- Keep yourself and your team up to date on government programs that can assist employees, business owners, and home buyers, then share the most relevant information.
In the long-term
Unlike the Great Recession, stronger lending practices should avoid mass foreclosures, but “government assistance for those who are laid off or absent from work due to the coronavirus will be important,” Gonzalez says. Programs that help keep homeowners current on their mortgages will go a long way to keeping housing prices stable.
“While we’re not in the same scenario that resulted in a lot of price depreciation during the last downturn,” he continues. “We have to watch that closely as things evolve because demand is going to affect that as much as supply, and people’s ability to continue paying their bills will be a critical factor.”
As to how soon things get back to normal, it depends. “That will be entirely dictated by how well Americans work together to slow the spread of the virus,” says Figgs. “Which means following the guidelines from local, state, and federal authorities. The key is staying committed to social distancing.”
Overall, the shift in the economy leaves an opening and a reason to stay in the market.
“Every problem eventually presents a solution. A way to help someone when they need it most,” shares Keller.
“When the desire to do more comes from a place that’s bigger than ourselves, anything is possible. Potential can become reality. When we pivot, we help others pivot, and together we all have the opportunity to achieve more.”