THOUGHTS ON REAL ESTATE from my MARCH 21st email newsletter to clients...
What a week! Hope you and yours are holding up alright. I feel fortunate to have my entire family together at this time. I've had several calls asking me about what might be happening with real estate, and I wanted to pass along some thoughts. While I am usually fond of single sentence emails, here goes my first newsletter in a while...
FUTURE OF REAL ESTATE
The world hasn't completely stopped turning. While many sectors of our economy remain under siege, the crazy volatility of the past three weeks seems to have lessened. After watching the stock market carve out new multi-year lows, maybe real estate in the USA is not a bad place to be in times of uncertainty. Mainstream data isn't available yet to capture the fallout for residential real estate. It's hard to make any predictions about the future severity of the CoronaCrash, but I think confidence will return and markets will eventually bounce back. Many people have used this unexpected downtime to reassess priorities. I've fielded several calls from people who have just come around to making long delayed, life-changing decisions about where and how they want to live. Turns out that people still want and need to move for a host of reasons. Also, this Black Swan event could hasten the exodus that was already underway from high cost, high tax states to our area. I expect that our traditional peak demand season between May and July will shift this year. There were not many homes on the market before this event, and some sellers have taken their homes off the market over the past couple weeks. Job loss has impacted some closings. We are now seeing mortgage rate volatility. The Federal Reserve has started buying large amounts of mortgage debt again in an effort to keep rates near historic lows. Some investors may see a buying opportunity. Stimulus packages are on the horizon. Will an immense bailout calm the markets? Will our large and small businesses be able to sustain operations, service customers, and keep workers employed? Will home prices plummet as they did a decade ago when we experienced both excess supply and high mortgage rates? While there are many unknowns, we do know that bubbles require excess inventory. We had just the opposite in residential real estate leading up to this event: a shortage of supply. I was here selling homes when the market crashed from 2007-2011. Back in 2007, we had nearly 22 months of unsold inventory. Today we have a 2.1 month supply... or at least we have 2.1 months if houses keep selling at the same pace. And back in 2007, I can remember paying over 7% for a 30-year mortgage. The situation is rapidly evolving, and I will keep watch for fresh data to keep you informed.
OPEN FOR BUSINESS
One thing is certain: Real estate is still being transacted! I've had two offers accepted this week, with another one imminent. My business partner just had 2 new listings that were entered into the MLS over the last few days that already went under contract. I am unsure if our personal results can be extrapolated. We are working all day, every day, although with less face-to-face now. While sellers need to be realistic about prices (same as always), buyer demand remains strong. Homes perceived as good values are moving, while homes that are outdated, overpriced, or need-work are sitting. Realtors, lenders, inspectors, appraisers, and title companies are still doing their jobs. Most have revised business processes that emphasize safety and technology. My listings are still being shown. Agents are still showing houses, and they are also using FaceTime, Google Duo, Skype and Zoom for out-of-town buyers.
DIGITAL SELLING PROCESS
Some aspects of the real estate business thrive on physical interaction such as open houses, showings, inspections, appraisals, etc. Many of these will evolve moving forward to reduce face-to-face interactions. Open houses will be a thing of the past, at least for a while. We will see more reliance on technology. If you or anyone you know is thinking about selling, then you should know that I have a new digital selling process that can leverage any or all of the following:
Video conference listing appointment
Electronic signatures on listing paperwork
Over 50 HDR Photos
Video walk through and 3D virtual tour
Facebook Live Open House
More stringent qualification for showings
Electronic signatures on contracts
A repair credit instead of making repairs
An automated appraisal
Remote online closing
Seems like we are starting to regain our footing. I believe that we can all adjust to a new normal and find a way forward. We can get through this together. With grace, family, faith, focus, hard work, and determination - we can make tomorrow better than today. Hope we can all get back to our normal routines soon. I welcome your comments and questions. Please call me anytime. Take care and stay safe.