Until Sunday, U.S. housing demand seemed unaffected by the coronavirus. The National Association of Realtors reported last week that pending home sales were at the second-highest level in the last two years. But over the past three days in Seattle, where the first U.S. coronavirus death was confirmed on Saturday, February 29, we’ve seen a significant drop in demand from homebuyers and sellers.
Smart People at Redfin Disagree About the Virus’s Impact
Redfin’s demand fluctuates plenty from day to day, especially in a single market, and this may only be a significant but short-lived reaction to the first serious virus infections on the U.S. It could also be more serious, and affect the rest of North America.
Redfin Agents Across the U.S. Mostly Still Confident
The word among our agents, who have been sensitive to demand shifts in the past, especially when rates began rising in the summer of 2018, has mostly been good. In many markets, last week’s stock-market decline seemed to have had a bigger impact than consumer fears about the virus itself. Our agents still report strong demand in the middle of the country, especially Chicago, and in Washington DC, Virginia and Boston.
Different Markets are Reacting Differently
Portland, Oregon, had its first three confirmed virus cases last week, but the market manager there reports he hasn’t seen much effect beyond a few customers asking to meet agents in private rather than a coffee shop. Closings have mostly been on time. Some buyers are putting their home search on hold in Tampa Bay and San Antonio, where the virus recently surfaced.
In Seattle, the reaction has been strongest among sellers, who worry about strangers entering their homes; this only started on Monday morning. Three canceled their listings, and at least one buyer canceled an offer.
It’s Too Early to Tell, But Long-Term, The Housing Shortage Is Likely to Continue
No one knows how our society will respond over the next few weeks to the old scourge of an infectious disease. What’s easiest to talk about are the long-term forces shaping the housing market. Most North Americans over 30 will want to own their home. Housing starts have recently started to rise, but because of zoning gridlock, anti-developer sentiment and a dearth of undeveloped land, we believe there will be a long-term shortage of homes to buy in most cities. We started 2020 with the lowest inventory levels in more than two decades, and stronger demand growth than we’d seen in several years.
Economic Stimulus Matters
Homebuyers over the past two years have been extraordinarily sensitive to interest rates, which the Federal Reserve dropped another half point Tuesday morning; in anticipation of this drop, mortgage rates had already hit an all-time low Monday. The question is just whether the virus’s economic damage is short-lived or becomes self-perpetuating.
A Tech-Powered Brokerage Is a Good Choice for Folks Worried About the Virus
Fortunately, Redfin’s technology investments over the years leave us better prepared for virus fears than many other brokers. We perform three-dimensional scans of nearly every home we’ve been hired to sell so that buyers can tour the home virtually, without having to congregate in an open house. We create online marketing campaigns for nearly every Redfin listing on Facebook and other sites. Perhaps alone among brokers, we believe we can sell homes just as effectively without an open house.
Starting Today: Video Home Tours, On-Demand
We’ve long had a push-button tool for requesting a private, in-person tour of homes for sale; starting today, we’re letting homebuyers use that tool to ask the agent to conduct the tour virtually via video chat. Our customers can also complete every part of a contract virtually; in the states where the law allows it, customers who use our mortgage and title service can close electronically. If you’d rather not meet others except where necessary, we can let you see a home, bid on it, and close on it, all virtually.
Other Common-Sense Measures to Protect Our Customers
Out of an abundance of caution, we’re taking other measures to protect buyers and sellers. We’ve advised our agents not to shake hands with customers who would rather not have to worry about contact with new people; please don’t take it personally. The Centers for Disease Control and Prevention have said that you can clean frequently touched objects with a regular household cleaning spray or wipe; we’re asking our listing customers to have these materials on hand during private showings, for agents from other brokerages to use after a tour. We’re also supplying our agents with wipes and cleaning materials.
This is what we know so far, and what we’re doing about it.