One question I’ve been asked consistently over the last several weeks is, “How is the real estate business doing during COVID and the stay-at-home orders?” While business is operating somewhat differently, it most definitely has not stopped!
How are things different?
In an effort to keep the virus at bay, real estate agents and companies are taking precautions to help keep everyone safe, while still completing our mission. Most agents are working from home when they are not out meeting with clients. Masks and other preventative measures are being taken when with clients, both in homes and offices, which are being cleaned and sanitized more often. Closings are still happening, but in smaller groups with as much paperwork being signed electronically as possible (not everything can be e-signed).
Are homes still selling?
While the number of listing and homes sold (from January through April) is slightly down from last year (7.83% and 0.94% respectively), the total sales ($) is up almost 10%, mainly due to the average sale prices being up. (Data provided by Dayton Realtors®)
Ultimately, our biggest struggle in local real estate today is a severe lack of inventory. This has become a growing problem over the last couple of years. Normally, an ideal or balanced market has 6 months of inventory. With 1,584 active listings (as of 5/27/20), we currently have about 40 DAY’S worth of inventory. This means if no new listings were to come on the market, our inventory would be depleted in about 40 days. This extremely low level of inventory is unprecedented in the Dayton market!
With so many more buyers than sellers in the market, homes that are well-priced, can sell in a matter of hours, with multiple offers, well above list price. This is a great time for sellers looking to downsize, but for those who hope to sell and buy, their buy price will likely be as inflated as their sell price. This does NOT mean that all is lost for those hoping to buy! (See below about financing). Also, the general trend of the market does vary a bit depending on the price range for a given location, as luxury properties tend to have smaller buyer pools.
What about financing?
With the increases in sales prices, the government has taken measures to keep interest rates exceptionally low to help incentivize people to buy (it’s also a great time to consider refinancing!). The effects of quarantine on businesses and jobs has caused lenders to take some precautions. The minimum credit scores needed to qualify for loans has increased from 580 to 640 (and in some cases over 700). Some lenders are also requiring larger down payments. Employment verification at the time of closing has become a sticking point, but hopefully as things open back up, this should be less of an issue. Overall, the outlook for the economic forecast for the housing market and mortgage industry remain positive! (As always, a big thank you to Taylor Pegg from Prime Lending for keeping me up-to-date on all things financing!)
I hope this information is helpful for you, and if there’s ever anything you’d like to know, please ask!