While we deal with the coronavirus (COVID-19) pandemic practicing social-distancing, shutting down events, public gatherings and the like, we are still trying to go on with our lives at the same time. A big challenge to this is the unknown; not knowing how bad things will get, how long we may have to live like this, etc. Fortunately, for those of us in Missouri, at the time I’m writing this, we have just 41 confirmed cases putting Missouri at number 40 of the 50 states in terms of the number of cases. Granted, once more people are tested, our position may raise, but hopefully, due to the swift action by our leaders and citizens here, it will not rise anywhere close to the levels we are seeing in some states, including our neighbor to the east, Illinois where there are 423 cases as of this morning.
What effect is the coronavirus having on St Louis real estate?
One of those things some St Louisan’s are dealing with right now is what effect will COVID-19 have on their pending real estate transaction, whether they should keep their home on the market, put their home on the market now or wait or should they buy now or wait. Obviously, everyone’s situation is somewhat unique, so the advice we are giving varies based upon those circumstances but I will address, in a general manner, some of these issues and dilemmas people are facing.
Pending transactions…
For those people that are currently under contract to buy or sell a home or condo, while there may well be some hurdles, delays, etc, transactions are closing and will likely continue to close in the coming days and weeks. Granted, buyers that suddenly find themselves out of work as a result of layoff or furlough will risk losing their financing and thus terminate their purchase, assuming that is not the case, lenders and title companies are quickly changing business practices to accommodate closing transactions in a safe manner. For example, Investors Title Company is offering to send out closing packages to buyers and sellers in advance (just like they do for an out of town closing) and send a remote notary to the client’s home so the closing can be done in the clients home.
Current listings…
Homeowners that currently have their homes listed for sale faced the decision of whether to leave their home on the market for sale or withdraw it. For those whose financial, or employment situation has changed as a result of the coronavirus pandemic, the decision may be made for them, but for others, they have a choice. There may be issues, such as health concerns of at-risk people that live in the home but assuming there are not, strictly from a real estate market standpoint, for most people I see no reason to take their homes off the market at this time. Granted, there must be immediate changes made in how their homes are shown, traditional open houses should not be held until safe to do so again, but there are still people out there buying homes so I think sellers want to continue to make their desire to sell known to those buyers.
What steps should be taken to help protect sellers?
In our firm, MORE, REALTORS®, we have implemented some new best practices for showings that include pre-screen buyers and buyers agents to prevent showings to people that have traveled outside the country recently or are showing any signs of illness, providing hand sanitizer and/or disposable vinyl gloves at the entry of the home and requiring their use as well as limited physical showings to just one showing at a time. In addition, we provide alternatives to a traditional showing such as 3d virtual tours, narrated and guided video tours, etc. With a few practical precautions like these, I believe listings can still be marketed during this time in a manner that gives the seller, potential buyers, as well as agents, involved comfort knowing they are not putting themselves in harm’s way.
St Louis Sellers do not appear to be fleeing the market…
As the chart below shows, the number of active listings for March 2020 still shows an upward trend from February, although the trend is not as great as this time last year. As of this morning, the median number of active listings for this month has been 5,372, which is down about 1,000 from the same time last year when the median was 6,385 but I might add that February was down about 500 listings from the year before as well so some of that is simply low inventory.
To try to get a handle on how many sellers are fleeing the market, I just checked to see how many listings have canceled, withdrawn or been put on hold since March 11th and there has been just 199 total thus far. There are always going to be listings pulled off the market (for example, during the same period in February there were 93) so this number makes it appear that sellers are staying on the market for the most part at this time.
Number of Active Listings – St Louis 5-County Core Market
Source: MARIS
Showings are dropping…
Not surprisingly, the number of showings of listings taking place is dropping dramatically. As the chart below shows, the number of showings on listings in Missouri this year (orange line) dropped significantly beginning March 11th. This is to be expected though both as a result of just some initial panic to some extent as well as everyone taking some time to figure out what is going on as well as people looking for alternatives to physical showings. Worth pointing out is while showings in Missouri have dropped 17.9% since March 11th, and on a national level, they have dropped 18%..
Impact of COVID-19 On Showings In Missouri
(click on chart for live, interactive chart)
Homebuyers….
For people in the market to buy a home while they will likely find the process has changed to some extent (as I described above), they will also likely find that if they are in a position to buy, there will be some good opportunities for them. One way that buyers that buy now will benefit will be that they are less likely to run into the bidding wars and multiple offer situations that have become so common over the past few “low-inventory” years or at least not to the extent that they would if not for COVID-19. With less competition from buyers and perhaps sellers that may be more flexible in negotiations, buyers are, for the first time in several years, in a stronger negotiating position perhaps than the seller, or at a minimum, at least not in a weaker position than the seller as they have been the past few years.
What steps should buyers take to protect themselves?
The new procedures and practices I described above to protect sellers will protect buyers as well. One thing for sure is buyers want to use all the tools, resources and technology available to shop for and view homes and only physically look at a home after doing so.
Investors…
This one is pretty simple. For investors that have the financial resources to do so, now is, in my opinion, a good time to buy. As has happened in all the real estate downturns I’ve seen over the years, there will be investors that see opportunities and will take advantage of them. The best opportunities will be there for longer-term investors, those that are buying property to lease out and then sell later versus buying now to flip immediately. However, having said that, given that most homes bought to flip need renovation and improvements before being ready to sell again, which takes time and, assuming the folks predicting a quick economic recovery from the damage caused by this pandemic, by the time the house is ready to go back on the market may very well be in better shape.
Agents…
Now, more than ever is the time to choose a real professional, one that knows the market well, has the tools and resources necessary to help their clients make good decisions as well as safely and easily view homes and conduct the transaction virtually to the extent possible. Caution…shameless plug coming…At MORE, REALTORS® those are the types of agents we have and we have used a virtual business platform for 8 years now…we do it better than most!
Need help or have questions?
If you are a consumer with questions, please feel free to contact me on my direct line, 314.332.1012 or my personal email, Dennis@STLRE.com and I’ll be happy to try to answer your questions. If you are an agent that would like to know more about conducting business using a virtual platform, how to use technology to do some of the things I’ve mentioned, please reach out to me and I’ll be happy to help!
Dennis Norman, Broker-Owner, MORE, REALTORS
