The COVID-19 outbreak sent people into lockdown and, almost overnight, home buying and selling changed drastically. As uncertainty and concerns mounted, the home seekers who were still interested in buying transferred most of the process online. But, can virtual tours, phone calls and video conferences replace the real thing?
Real estate is a domain where first-hand experience and first impressions are the norm. But now, agents and homebuyers alike need to completely rethink their approach to one of the most important financial and life decisions: buying a home.
With that in mind, we recently conducted a homebuyer sentiment survey to gauge the outlook of homebuyers. Then, to get a full view of the market and see how the outbreak is influencing and changing the future of real estate, Point2 Homes created another survey. The latter was aimed at real estate agents and professionals nationwide, and asked for their opinions about the changes and transformations that they believed this crisis would bring about.
Interest Is Dropping, Concerns Are Rising
The bulk of the agents who took the survey (77%) stated that they noticed quite a massive drop in homebuyers’ interest, or at the very least a drop in the decision to act on it. While in lockdown, many people remain interested in buying, according to numbers from our previous survey, but they have probably put everything on hold until some of the uncertainty caused by the outbreak is dispelled.
However, in some cases, agents noticed only a minor drop in interest, with homebuyers eager to sign on the dotted line despite the general uncertainty. This could be because many homebuyers were already far enough along and needed to finalize the process, or because certain markets were not as affected by the measures of containment. Regardless, one fact remains: those who noticed only a minor drop in buyer sentiment were part of a very small minority.
When discussing the severity of their concerns, 65% of agents stated that they are either extremely anxious or very worried and concerned about the future of their business.
And there’s good reason for concern. Both home sellers and homebuyers are worried about their health and safety and, therefore, are much less active on the market for now. But their dwindling interest and reluctance to involve a broker is just one part of the puzzle. Even if real estate was deemed essential business and agents could try to continue doing their job, they might not be able to.
For instance, virtual tours might drive interest and could help home-seekers make up their minds, but these aren’t likely to lead to closings until the ancillary services are back up and running. In particular, the lawyers, home inspectors, bank tellers, appraisers, and title company or IRS representatives are not as easy to reach as they were before, which delays the process even more
Agents Estimate Negative, but Short- to Medium-Lasting Impact
Almost half of the respondents (47%) expected at least 50% of their business to simply vanish following this period of inactivity. Those who were slightly more optimistic were, once again, a very small minority.
Although the U.S. government and the Federal Reserve have committed over $4.3 trillion in stimulus measures, trying to help as many workers, families and businesses as possible, uncertainty remains a big factor in the recovery equation, leaving many agents wondering how the return to normalcy might happen.
As for when things are expected go back to normal, agents tended to be more positive. Their opinions varied, but 85% of the surveyed real estate agents estimated that it would take under twelve months for their business to get back on track post lockdown. In fact, 22% of those believed the recovery period might take less than three months.
However, some of the agents who took the survey thought the ripples could extend much further into the future, with 13% estimating it would be between one and two years before businesses and all activity would get back to normal; a smaller percentage of respondents were even more conservative about the timeline for recovery: 3% of agents expected their businesses would need over two years to recover.
In Light of Protracted Recovery, Agents Plan to Increase Reliance on Tech Tools
There’s no denying it: this pandemic will have a lasting effect on almost every aspect of society, and the agents surveyed were no different. A staggering 86% of respondents said they expected this period to have either significant or moderate negative, long-term effects on the real estate market as a whole. Only 8% of agents had a positive outlook, hopeful that the pandemic would bring about a change for the better.
COVID-19 has also changed most of the rules that governed the status quo. Some scientists, economists and analysts believe that many of the changes are here to stay, and that could certainly be true for real estate agents.
When talking about the efforts they are making to keep the business going, 45% of agents said they are trying to go above and beyond for their clients. They take more pictures of homes and spend more time on the phone with their clients, answering their questions. They have also started including more virtual tours in their home descriptions.
On the other hand, 22% of respondents said that the main change they had to make was cut some expenses, while another 23% have put their entire business on hold.
Agents’ Discuss Crisis Costs, but also Long-Term Gains
In answering question number 7, which was an open-ended question (When it comes to home buying and selling, what permanent changes do you think this outbreak will bring?), most agents (56%) mentioned they’re expecting the future of real estate would include a heavier reliance on social media marketing and online tools like virtual tours, online buying, virtual signatures and buyer pre-assessment.
Others (16%) expressed concerns regarding market value, price drops and the decreasing number of sellers transforming the market into a buyers’ market. Another 5% of agents mentioned potential consequences such as a spike in interest in rural or smaller communities, where owners might have access to bigger homes and properties with land and/or pools. Additionally, 20% of those surveyed said they believed some of the precautionary measures were here to stay.
All answers provided by agents were anonymous. However, for more insight into their challenges, general perspectives on the future of homebuying and home selling, and thoughts about where the market might be headed, check out some of their responses below.
[There will be] more virtual transactions – will be a hot market when things return to normal.
I think people will become more tech savvy by necessity and video tours will become more prevalent even after things return to normal.
I am hoping that there will be some serious reconsideration of revamping and updating the whole real estate profession, making changes that are 10-40 years overdue. Making the more professional service-based and less “clearance sale retail platform” that does not sufficiently focus on actual buyer-seller needs.
[I believe] the amount of physical contact in the process of transactions will be permanently reduced.
Hopefully, we can move beyond some of the archaic systems of “wet signatures” and hand delivery of documents to the courthouse. I am thinking there will be some good permanent changes.
As a Realtor in the Adirondacks and a huge vacation/second home area, I think we’ll see an upswing in activity as we did after 911 with people looking to get out of the city.
People seem to think living in the city is dangerous and they are leaving. I think it will be a permanent lowering of demand.
People want a rural second home option.
If unemployment remains high prices may drop.
Homes prices will take a huge hit.
Less buyers because of job loss and holding onto savings. Less sellers, due to price drop from lack of buyers.
- The survey for real estate agents and Realtors included 6 multiple-choice and rating questions and 1 open-ended question. For Question 7, the percentages do not add up 100% because some of the answers and comments were not usable or addressed issues other than the one mentioned.
- A total of 259 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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