No doubt, Covid-19 has been one of the largest, most disruptive forces of the last decade. It has affected all of us, regardless of background and career, and has required social solidarity, unlike anything we have seen in the recent past. People are seeking innovative ways to keep our lives moving forward, as normally as possible. At the Layson Group, we realize that despite the current uncertainties, many people are still eager to sell their homes or to find their new one. For many, waiting until the virus is no longer a threat simply isn’t an option. We have sought to bring the safest possible experience to our clients, offering phone and video consults with agents, 3D virtual tours, live video showings, and electronic document review and signing.
We have also kept our eyes on the market, observing how social distancing measures and virus concerns are affecting the way people are buying and selling homes. We have been paying attention to the ways in which banks are responding and what opportunities this will provide for homeowners. We have also considered the implications that distancing measures could have on the future of business.
Statistics During Quarantine
We took a look at the statistics for Shelby County from the past 5 weeks during COVID-19. We saw an 18.8% decrease in home sales from this time last year, from 1119 to 909. However, the good news is that sales prices are up significantly by 27.4% ($250,652) from this time last year ($196,723).
Drops in showings
We have seen a significant drop off of showings compared to this time last year. There is reason for hope, however, as the current safer-at-home order will be lifted in the near future and the number of showings are starting to pick up.
Due to Covid-19, we have seen a direct impact on both supply and demand in the housing market. New listings have decreased significantly as sellers have been understandably reluctant to sell their homes amidst these uncertainties, and we’ve seen an increase in delistings. Meanwhile, buyers are still looking for homes, and they now have less inventory from which to select. We have seen and can expect to continue to see buyers and sellers involved in multiple offer situations as social distancing measures remain in place. While this can be a frustrating situation for buyers, it can also be a good opportunity for sellers willing to list their home during this time.
Pros and Cons of Forbearance
Fortunately, most mortgage lenders are adjusting to accommodate borrowers. Fannie Mae and Freddie Mac have required flexibility of lenders, allowing for reduced or suspended payments for up to 12 months—this alone addresses half of US home loans.
Another option that is available with most lenders is forbearance. Forbearance allows for a suspension of payments for a set time, but different lenders have different approaches to this practice. Borrowers should carefully consider their lender’s policy, as some will require that the borrower pays a lump sum of all missed payments at the end of the forbearance.
A safer option for most borrowers is mortgage modification. This also allows one to suspend payments for a set time, however, it accommodates the borrower by giving them multiple payback options. Some lenders will spread payments over several months while others will add the missed months to the end of the mortgage, simply extending the life of the loan.
As each lender is handling the current challenges differently, it is best to reach out to your lender to see what your options are.
Drop in Commercial Real Estate Sales
The last several weeks of social distancing could have an unexpected impact on the way businesses approach the idea of the office and the way we all work. Despite social distancing measures, many companies have experienced surprising success with employees working from home. What has already been imagined as a potential future of business could much sooner become the reality. That is, companies could soon use this evidence of success to promote more permanent remote working, reducing their overall physical presence.
We could see this impact sales in commercial real estate, as companies could quickly cease physical expansion, potentially even beginning to decrease existing physical space.
For many, this is a scary and uncertain time. The fear of not being able to sell or buy a home can only make matters worse. However, we are hopeful that as safer-at-home orders lift, the pace will pick back up. In the meantime, we will continue to provide services with which our clients can feel safe and confident every step of the way. We are all in this together, and the Layson Group is committed to helping in any way that we can.
If you have any questions about what we are seeing in the real estate market feel free to contact us here.