COVID-19 and the economic fallout that has come with it are putting some home buyers and sellers in the Twin Cities on edge.
“This is getting real in a hurry,” said Jerry Hall, who was planning to sell his house in Woodbury next year but has decided to get his house on the market as quickly as possible.
Hall and his wife are soon-to-be empty nesters who intend to rent an apartment in Minneapolis while they wait for the economy to recover. He is listing the house at $475,000, and depending on how quickly it sells and for what price, he plans to invest some of their equity in the stock market and will consider getting back into the housing market once there’s more certainty.
“The whole world is going crazy right now,” he said. “It will be interesting to see how the dominoes fall on housing.”
COVID-19, the illness caused by the new coronavirus, comes at what is otherwise an opportune time for the housing market. Mortgage rates have been bobbing near all-time lows, giving first-time buyers the opportunity of a lifetime to buy a home. That has added up to far more first-time buyers than sellers in some parts of the metro, and only enough listings priced at less than $300,000 to last less than a couple of months.
Agents said the primary concerns for some first-time buyers is whether COVID-19 will affect their job or income. Even if some of those buyers postpone their purchase, there’s enough pent-up demand for those listings to keep sales moving along.
The National Association of Realtors (NAR) said Thursday that 16% of its members say virus fallout has affected buyer interest; a much smaller percentage expressed concern about a diminished interest in selling. The survey of more than 70,000 members was conducted at the beginning of the week, before the stock market suffered its worst one-day drop since 1987.
Jessica Lautz, NAR’s vice president of demographics and behavioral insights, said housing is likely to be one of the most stable sectors in what is an otherwise turbulent economy.
“The housing market is one of the things where you do have consistent demand, even in an environment where things are constantly changing,” she said. “Inventory has been so low for a number of years that demand is likely not waning, especially when you have a drop in interest rates that’s very attractive.”
The most recent data showed a decline in sales in the Twin Cities, but some buyers and sellers are already hedging their bets and crossing their fingers.
“Everyone is talking about it,” said Sawyer Moon, a renter who recently signed a purchase agreement to buy a home with his girlfriend in Oakdale.
Moon said he doesn’t regret the decision to buy, and friends who recently closed on their purchases said the closings went off without a hitch. He said he won’t even consider the possibility that something could delay his closing at the end of this month.
“I don’t even want to put that [thought] into the universe,” he said.
Brenda Tushaus, CEO at Eden Prairie-based Re/Max Results, said that while some agents have reported showing cancellations or postponements due to concerns with the virus, showings are overwhelmingly “still very active.”
The biggest worry right now, she said, is how low interest rates will affect the supply of new listings.
“Many homeowners are choosing to take advantage and refinance,” rather than sell, she said. “How will that then impact inventory levels moving forward?”
Move-up buyers may be more affected by the turbulence. This group’s purchases are often elective, and with the value of their investments falling, they might be less likely to make a move.
Nick George, of the Nick George Group at Keller Williams Premier Realty, said that while there haven’t been wholesale shifts in the market so far, some buyers are concerned. He recently had a client say he wasn’t going to sell or buy until the COVID-19 situation is under control.
“He is planning on that being in a year from now,” she said. “I think it’s very possible to see the real estate market hit the brakes hard if/when the virus spreads and businesses/schools shut down.”
Hall, the owner of the move-up house in Woodbury, said that he is taking cues from the SARS outbreak in late 2002, which caused the Dow Jones industrial average to bottom out in March 2003 but fully recover by the end of the year. He expects a similar pattern with COVID-19, so he’s fast-tracked his timeline for selling. Painters are now getting the house ready for showings, and he hopes to have it on the market early next month.
“I wonder if it’s too late,” he said. “Only time will tell.”