For the housing market in the Twin Cities, it’s looking a lot like January as the COVID-19 pandemic puts a chill on home sales in the metro.
During the past two weeks, home buying in the metro has steadily declined to winter-doldrum levels.
During the week ending March 24, pending sales of houses priced from $250,000 to $350,000 were essentially flat compared with the previous week after increasing double digits during the first half of the month, according to the Minneapolis Area Realtors (MAR).
Upper-bracket sales, however, fell double digits with the biggest declines for the most expensive listings.
Until two weeks ago, agents were looking at one of the busiest spring markets in more than a decade. Now, a sharp economic downturn and a government-ordered shutdown have put house showings in a deep freeze in some sectors of the market.
“The spring fever of the coronavirus has no doubt overshadowed the anticipated spring fever of the real estate market,” said Dan Frank, a sales agent with ReMax Advantage Plus.
Frank said during the first two weeks of March, showings in the Twin Cities had been tracking at 20% higher than last year, but have been declining rapidly during the past two weeks.
The precipitous decline in sales is being led by move-up and upper-bracket buyers who are most likely to be making discretionary moves, while entry-level buyers — likely first-time buyers and downsizing baby boomers — are still scrambling to take advantage of lower mortgage rates and less competition than they had a month ago.
“We’re still seeing multiple offers daily with very high demand in the entry-level price segments under $300k and in the hot neighborhoods,” said Frank.
Frank said that when he and his clients drove up to a recent showing for a $350,000 new listing in south Minneapolis, there was a line of people outside the house standing 6 feet apart.
Inside, the home sellers had hand sanitizer, disposable gloves and required that only real estate agents could open any doors or touch anything. “Ironically enough this home had 15 offers with a bidding war after one day on the market,” he said.
On the flip side, he said, there have been several homes he hasn’t been able to show buyers because sellers had placed their homes in “temporarily not available for showing” (TNAS) status as they wait things out.
Frank said that as of earlier this week there were 128 additional listings marked with TNAS status compared with the previous week.
David Arbit, MAR’s director of research and economics, said that the market had remained “remarkably resilient” and on a consistent growth trajectory until March 18.
He said the most stabilizing force in the market are entry-level buyers who tend to be younger and perhaps less concerned about the impact of the virus, but they also tend to be much more payment- and rate-sensitive than move-up buyers. The average 30-year fixed mortgage has declined slightly in recent weeks and has been hovering about 3.5%.
“It’s possible that was a motivating factor for some first-time or second move-up buyers,” said Arbit. “Some buyers are taking advantage of a less crowded marketplace where they have a better chance of an offer being accepted compared to a more competitive market where strong demand is overwhelming already tight supply levels.”