COVID-19 has forced the real estate market to push the brakes at a time when activity was really starting to take off for the year. Since it began, open houses and showings have been replaced by virtual tours and live streams in an attempt to keep homebuyers informed, interested and engaged.
Unfortunately, most home seekers have put everything on hold, and home sellers have followed suit. For many, home buying and selling is too important to be rushed, especially with rising uncertainty.
With all these changes, we recently conducted a homebuyer sentiment survey to gauge the main concerns of homebuyers and how they are adapting. Then, for a complete view of the market, Point2 Homes reached out to real estate agents and professionals nationwide to learn how the pandemic was affecting their business and what changes they anticipated in the real estate market.
Homebuyer Interest Falling, Agent Concern Mounting
A staggering 86% of the agents who took the survey said that they noticed a significant drop in homebuyers’ interest. While respondents to our homebuyer survey said they would continue to keep an eye on the market and were still searching (although less actively), agents and brokers reported that they had already heavily felt the toned down activity. In fact, only 2% of agents said that, so far, homebuyer interest hadn’t wavered much and that they had noticed only a minor drop in interest.
With the vast majority of agents experiencing plummeting homebuyer interest, their level of concern is, understandably, reaching new highs. Specifically, 75% of respondents said they were very worried or extremely anxious about the future of their business. Meanwhile, only 22% of agents said they were only somewhat concerned, and 3% were even optimistic, reporting no particular worries about the whole situation.
These numbers also seem to represent the situation at large. Many or most buyers and sellers have put everything on hold, choosing to be cautious at this time. But, the home seekers who are looking for a home to live in — as opposed to a property earmarked for investment — can’t afford to stop looking.
Grim Early Estimates of Financial Loss
Just 10% of all agents surveyed estimated that this period would translate into business losses of less than 25%.
The majority of agents were much less optimistic. In particular, 62% of respondents expected at least half of their business to vanish after this period. Meanwhile, almost one-third of respondents believed the outbreak would cause a drop of more than 75%.
Despite this, most agents and brokers surveyed tended to be more positive in their estimate regarding the timeframe for recovery. A full 80% of respondents expected their business to be back on track in less than 12 months. Of the remainder, 17% believed it might take between one and two years to get back to normal, while a small minority (3%) had a more pessimistic outlook.
More Tech Among Future Changes
Unsurprisingly, given their perspective so far, 95% of agents surveyed believed the outbreak would have a substantial negative influence on the real estate market in general. That left only about 5% who were neutral or slightly positive about the future of real estate after activity begins again.
In the meantime, real estate agents reported that they were incorporating new solutions into their work process — in an attempt to prepare for the future, but also to navigate the current situation and help homebuyers who still want or need to find a home. Namely, 28% of agents said they had been doing more for their clients, such as taking more pictures of properties and spending more time on the phone answering questions about homes that buyers were unable to visit in person.
What’s more, 23% of respondents said they had become more dependent upon technology and the tools available online. These agents noted they had introduced virtual tours in their home descriptions and even offered live streams to address buyer questions in real time.
However, 44% of agents said they had either cut expenses to keep the business going or had put everything on hold temporarily. With almost half of respondents mentioning cuts, the domino effect becomes more apparent: professional photographers, home stagers and even interior designers are affected in turn.
Agents: Precautionary Measures Are Here to Stay
For the last question (When it comes to home buying and selling, what permanent changes do you think this outbreak will bring?), the agents surveyed had varied responses.
Regarding the pandemic’s more permanent changes to the real estate market, many mentioned a heavier reliance on online tools like virtual tours, live streaming, online buying, virtual signatures and buyer pre-assessment. Others expressed concerns regarding market value, price drops and the real estate market tipping into buyer territory. For more details, check out some of their answers below (all answers were anonymous):
I believe more online tools for buyers and sellers will exist that will last beyond the outbreak. We will likely communicate differently with a combination of methods in the future.
People will just have learned to have virtual meetings and online resources as more part of their normal. Technology will be used more and become an acceptable way of doing business.
The use of virtual showings, respect of other people’s possessions, qualifying buyer’s and seller’s more diligently [are just some of the changes].
The big issue will be debt financing and mortgaging.
Interest rates should remain low for quite some time to encourage sales and we should see more inventory on the market which could cool demand and prices.
Buyers looking for deals will start to surface as sellers needing out (I work in a resort town) become more desperate to sell. [I’m expecting] fewer agents, fewer home buyers, lower prices.
House prices will drop. I believe it will be a buyers’ market when things get back on track.
I expect it is going to be difficult for buyers to get a mortgage and I expect sellers will be reducing their prices.
Hopefully positive changes to protection of clients through better hygiene practices. More care cleaning homes. A bit more concern about our interactions with public.
Pre-approvals will be mandatory. Buyers and sellers will be scrutinized in regard to virus symptoms and travel.
[I expect we’ll see] a focus on small town living, decreasing expenses and an ability to grow your own food. More people from larger cities will move to smaller centers.
The positive impact [I expect] – relocation from big urban centers to smaller communities like mine. The negative impact [I expect] – huge increase in foreclosures.
[I see] people downsizing and buying cottages, living a more simple life, in a move to more rural property.
- The survey for real estate agents and brokers included 6 multiple-choice and rating questions and 1 open-ended question.
- A total of 369 agents answered all the questions in the survey and provided usable, comprehensive answers.
- The agents were contacted over a period of 7 days, between 7-14 April.
- This was an anonymous survey; all data was aggregated for the final results.
- All percentages were rounded. Due to rounding, percentages presented for each question in this report may not add up precisely to 100%.
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