There’s no doubt the world right now is different from the world we lived in just last year. COVID-19 is impacting the economy in the United States and around the globe. The impact on families, business, and employment is especially devastating at this time.
The real estate industry is adapting and changing as conditions around us demand. While commentators now speculate on what all of this means for the housing market, we are now living in unprecedented times. With too many variables to consider —the level of containment of the virus, how long that might take and the changing reactions of government, business and the community — these are uncharted waters.
However, as with all pandemics, and as with all economic crises, this will at some stage be over. As a real estate professional, now is the time to be preparing for this recovery.
Here are some tips to ensure you can hit the ground running when the current restrictions are lifted.
Keep Updated About What’s Happening Nationally and in Your State
Recent survey data (April 6, 2020) from the NAR suggests a decline in the number of homes currently on the market. Further, more than 50% of respondents reported that sellers had removed homes from the market altogether as a result of COVID-19.
In terms of pricing, 72% of survey respondents who work with sellers reported that no sellers have reduced their prices to attract buyers. Only 2% reported a reduction of 15% or more.
On the buyer side, 90% of members cited a reduction in interest from buyers. Almost half of respondents reported a drop of more than 50%. However, with social distancing measures now in place, the NAR survey found that 27% of respondents who work with buyers had at least one buyer who put in a contract without physically seeing the property in the past week.
For rentals, as unemployment soars, some tenants are now struggling to pay their rent. These challenges are likely to continue for the foreseeable future until the COVID-19 crisis is over and the economy recovers.
The NAR continues to update resources and information about COVID-19 on their website, which you can find here: https://www.nar.realtor/coronavirus
To keep on top of National COVID-19 information, visit: https://www.usa.gov/coronavirus
To find out more about your state’s response to COVID-10, you can link to your state health department here for the latest information: https://www.usa.gov/state-health
Look at Past Recession Recovery Activities
COVID-19 isn’t the first world crisis to affect the US economy, and it certainly won’t be the last. Some insight can be found by looking at previous recession recovery patterns and activities, which may help you to survive these challenging times.
The US has weathered many recessions and housing market crises. The good news is, according to a report from Congress, the US economy tends to experience much longer periods of expansion than contraction.
The average time for recessions is around 11 months, although the Great Recession lasted around 18 months. Housing prices dropped around 33% during the Great Recession in 2007-09, which was the worst financial crisis in the United States since the 1929 Depression. However, by 2019, housing prices in most locations surpassed pre-recession levels — without the risky borrowing practices and high debt-to-income ratios that were commonplace more than a decade before.
Despite falling stock prices, interest rate fluctuations, and high unemployment, many of these challenging times provided a good opportunity to buy into the property market, especially for buyers trying to buy into tight housing markets.
Overall, home sales growth has typically recovered quite well in times of crisis, particularly for single-family homes and older properties. According to Redfin research, two-story homes and properties in spacious neighborhoods also held their value well after the Great Recession.
Keep in Contact With Prospects and Reach Out to Past Clients
During this crisis period, continue the conversations with your clients and prospects. While there are very few unaffected by COVID-19 in some way, not all people are financially affected. Some industries are thriving, such as supermarkets, manufacturers of hygiene-related products and the medical field
We’re also likely moving into a period of recession where buyers will have more negotiating power, so it’s worth checking in with prospects to see if they’re still interested in purchasing. They may now (or soon) be able to get more for their money than pre-COVID-19 times.
The pandemic is also an ideal time for buyers to get their financing in order and get mortgage pre-approval. While interest rates are currently low, the approvals process may be slower in the current conditions.
For sellers, now is the ideal time for them to prepare their properties for sale. Check-in with your sellers or prospective sellers. Give them suggestions as to what they can do to enhance or improve their properties to maximize their sale price now and once the COVID-19 crisis is over.
Review Your Marketing
Now is an ideal time to clean up your website and polish your listings. Review your marketing plans in light of the ‘new normal’ brought on by COVID-19, and identify new marketing opportunities for when the current restrictions are lifted.
There may also be some measures you’ve implemented as a result of COVID-19 that you may wish to continue or productivity and safety purposes. For example, virtual property tours and virtual auctions.
Networking and Education
Even though networking opportunities are somewhat limited right now, there are ways to network that don’t involve meeting face-to-face. There are many online networking opportunities available, and social media is also a great resource during these challenging times. Post regularly and engage with your audiences, so you’ll be the first real estate professional they turn to when they decide to sell or buy a property in the future. If you stay optimistic, your prospects will too.
It’s also an ideal time for you to pivot towards real estate education for sellers and buyers. With thousands of people at home and restrictions on social distancing measures in place, take advantage of this “captive audience.” Offer webinars or information sessions to prospective sellers and buyers to build your network and prospect list.
Review Your Insurance Coverage
As the real estate business landscape changes due to COVID-19, it’s an ideal time to review your insurance coverage to protect yourself against any potential lawsuits. CRES real estate E&O policies offer comprehensive protection and give you access to the ClaimPrevent®legal advisory service 7 days a week.
- For real estate companies, you might consider moving to a Per-Transaction Payment Plan, to reduce your upfront costs of E&O.
- With this plan, you pay based on the number of transactions you complete each month (with a minimum payment for 1 transaction per month).
Contact CRES at 800-880-2747 for a confidential discussion today.