In news that will do little to calm the nerves of America’s antsy mortgage professionals, data released by Point2 Homes last week finds sentiment among real estate agents around COVID-19’s impact on their businesses to be one of pessimism and concern.
The survey, which follows the far more optimistic polling of homebuyer sentiment Point2 Homes released on April 9, collected responses from 259 agents between April 7 and 14. There’s little potential for shock in some of the data, such as 77% of respondents noticing at least “quite a significant drop” in homebuyer interest. But the feelings realtors expressed around what business will look like once COVID-19 passes are somewhat out of step with what realtors told MPA.
When asked about their level of concern over the impact of the outbreak on their business, 88% of realtors said they are at least “somewhat worried”, but the majority of that cohort are either “very worried and concerned” (36%) or “extremely anxious” (29%). Only 3% of realtors said they are not concerned by COVID-19’s impact “at all”.
Eric Bramlett, broker at Bramlett Residential in Austin, Texas, says the brutality of the 2008 financial collapse prepared most agents for the worst COVID-19 will throw at them.
“The 2008 recession was very long and directly impacted the real estate market. This looks like it will be shorter and less impactful,” he says. “It looks as though we'll see a 10-20% decline in sales volume in 2020, which is not ideal, but not catastrophic. Most of my peers feel the same way.”
Kerry Martenson of 4 Seasons Real Estate in Billings, Montana, agrees that a 20% reduction in business wouldn’t be out of line with what her business has been experiencing, but because her state allowed sales to continue so long as safe showing guidelines were followed, the local market has been humming along without too much difficulty.
“Our available home inventory has been very low, but I expect to see more listings come on the market as the state continues to open back up,” she says. “For me personally, I am not overly concerned about how real estate in Billings will be affected. I expect to see home prices and home sales continue to increase.”
The responses were grim when agents were asked to estimate the extent of the financial damage COVID-19 will ultimately do to their incomes. Over 70% of respondents are expecting losses of at least 25%, while 20% are projecting losses of more than 75%.
The remaining questions provide a somewhat muddled view of the future. 44% of agents say they are expecting a significant negative impact on the real estate market in general (42% expect slightly negative effects), but 85% think the post-lockdown recovery will take 12 months or less. 41% of realtors surveyed feel the recovery will be complete in three to six months. But a not insignificant 13% say the recovery could take up to two years.
Ruth Krishnan of Krishanan Team in San Fransciso says that while sales activity has fallen by half because of the city’s strict stay-at-home order, business is already picking up.
“We’ve sold six or seven homes in the last few weeks,” she says. “I suspect what we’re going to see by the end of the year is a good, solid level of activity. As far as being worried or anxious, I’m not at all.” Krishnan says the San Francisco market had softened slightly before COVID-19 and that those conditions should continue.
Bramlett, for his part, believes the bottom might be hit as early as a few weeks from now.
“I believe we'll look back at April and May as the valley of this recession, at least for contracts written,” he says. “It's still early to predict with accuracy.”