Housing market moves forward during pandemic

Posted 5/1/20

What a difference a year can make. This time last year, unemployment rates were at an all-time low. Salaries were up and, across the country as a whole, home prices were down. People had more to …

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Housing market moves forward during pandemic

Posted

What a difference a year can make. This time last year, unemployment rates were at an all-time low. Salaries were up and, across the country as a whole, home prices were down. People had more to spend on cheaper homes.

In March 2019, Fanny Mae’s Home Purchase Sentiment Index (HPSI), which measures Americans’ attitudes toward the housing market now and in the future, was at 89.8 — a sentiment driven by increases in the “good time to buy” and “good time to sell” components.

The housing market was still looking pretty good at the start of 2020. Then the pandemic hit. Last month, the HPSI fell to 80.8, a nearly 12 point drop from the previous months and the lowest since December 2016. Concerns about job security were a big driver of the decrease.

“It’s definitely slowed down for this time of year,” said Eric Paul, broker/owner of Heart Mountain Realty.

He’s had fewer people at showings, and showing a house is much more difficult. Heart Mountain is utilizing virtual showings as much as possible, and Paul points out that with people spending a lot of time at home, they’re spending much more time looking at homes online.

John Parsons, co-owner of 307 Real Estate, said when they are doing in-person showings, there’s a lot of precautions to take. They don’t ride to showings in the same cars as clients and they use a lot of hand sanitizer and gloves.

If the homes being sold are occupied, they have to ask the residents if anyone in the household is sick. Then, they have to ask them to open doors and turn on the lights so the people viewing the home don’t need to touch anything. And afterwards, the place has to be wiped down before they leave.

“This is inconvenient,” Parsons said, but they’re still moving forward with sales.

Despite the challenges, they’ve been able to close on houses whose sales started prior to the pandemic.

Paul said, while the market is slower, it’s still a good time to sell a home.

“Is it going to go on the market and sell in one day? Probably not,” he said, but when the health crisis passes, a lot of people could be putting their homes on the market.

“Doing it now, as opposed to waiting for things to be OK, you’re going to face a glut,” Paul warned. 

On Heart Mountain’s blog, Paul points to the NAR Flash Survey, which indicates agents are seeing a noticeable decline in homebuyer interest. However, 10% of agents said in the same survey that they saw no change or even an increase in buyer activity.

He also notes that pandemics historically had v-shaped recoveries in which the sharp decline rebounds rapidly once the health threats diminish. The low inventory now also puts sellers in a good position.

Parsons agrees on this point.

“It’s the first time I’ve seen a sellers’ market” in Park County, Parsons said.

He noted another reason why there could be a sharp rebound in homebuying in the area: The hardest hit areas, the places that require the strictest lockdowns, are the highly populated urban areas. It’s possible, after this thing dies down, people might see more benefits to living in the wide open spaces of Wyoming.

“I’m happy I live in Wyoming and do business in Wyoming,” Parsons remarked.

Andrew Whitlock, owner/broker of Whitlock Development, said real estate agents’ thinking on how the pandemic will play out on the housing market falls into two schools of thought.

One is optimistic. This prediction says that we’ll see an explosion in the housing market here in Powell as people move from big cities to safer, rural areas.

Whitlock said if that happens, it’s going to be a few years down the road, but he believes buyers are going to be wary for some time after things open up again.

The other school of thought sees a contracted market for some time as the economic wounds of the shutdown heal slowly.

Whitlock said he doesn’t see doom for the market, and no one really knows what will happen. However this pans out, he said, one or the other camp will be right.

“I don’t think there’s going to be a middle ground,” he said.

Another sign of difficulty is what’s going to happen with the rental market. Eviction processes can’t go forward, and so some renters aren’t paying rent — some can’t, of course.

The decline in tourism this season will also impact this market. Homeowners who use their properties for short-term rentals are going to switch to long-term rentals. Supply will go up, which will soften that market more.

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