Coronavirus Effects on RI Real Estate Market
Coronavirus Effects on National Real Estate Market
As the majority of Americans are seeing their net worth crater due to drops in retirement fund value, business income, or employment income – one could expect the housing market to crater, as well.
According to a new analysis by Capital Economics, home sales could drop by 35% annually this spring when compared to the last quarter of 2019. This translates to around 4 million annualized total home sales, which is the lowest since 1991.
According to the report, the key reasons for the drop are “increasingly restrictive measures on people’s movement, and an imminent surge in unemployment.” We’ve all seen this firsthand, as sellers are refusing to host open houses or even home inspections to limit the amount of interactions with potentially infected people (and to stay within the guidelines of social distancing).
Realtors across the country are reporting a drop in buyer interest, and that figure tripled to half of all realtors in just one week, according to the most recent survey by the National Association of Realtors.
However, it’s worth noting that although volume is down, home prices are likely to remain steady. Because there are both fewer sellers and fewer buyers (i.e. fewer listings in a housing shortage), simple laws of supply and demand dictate prices should hold. So your commission checks should also hold steady! Although there may be fewer of them…
Coronavirus Effects on Rhode Island Real Estate Market
So what does this all mean for the Rhode Island real estate market and the realtors of RI?
In short, it’s very similar to the national housing market. As of right now, we only have the data from February so March could look very differently. I’ll explain why:
In February, Rhode Island experienced an active market. February monthly housing sales and prices both saw increases compared to the year prior. HOWEVER, inventory saw major decreases heading into March.
Here’s the breakdown:
|Single Family||Multi Family||Condos|
|Sold % Change from Last Year||14.04%||6.03%||8.80%|
|Median Sold Price||$274,900||$280,500||$236,200|
|Price % Change from Last Year||9.96%||10.00%||13.38%|
|# of Listings||2435||360||611|
|Listings % Change from Last Year||-12.06%||-15.49%||-16.42%|
As you can see, there are significant increases in total homes sold and prices of homes sold, even though the number of listings are significantly down. This is simply due to the fact that RI has a housing shortage.
So don’t let the decrease in listings scare you. The number of listings has been down every month so far this year. In some cases listings were down more than 20%, but the number of homes sold and prices were both still up.
March will most likely see a significant decrease in number of homes sold and number of listings, but this is only due to the fact that sellers are unwilling to go through the normal notions of the selling process during the coronavirus pandemic.
The fact still remains that people want to buy real estate. Before the pandemic, we were experiencing record highs in employment and earnings. And although there is no telling when life will be back to normal, White House Advisor Dr. Anthony Fauci gave some room for optimism when he stated early today that we should start to see “the beginning of a turnaround after this week.”
When this is all said and done, analysts across the board estimate total annualized home sales will only be down 3.2% from original estimates, from 6.3 million to 6.1 million. They predict that buyers and sellers will both flood the market, and have historically low interest rates to add some wind to their sails.
There is no way to tell what the future holds, but barring a complete economic collapse, it’s still reasonable to expect a flood of activity at the end of the pandemic. The next few months might be drier than normal, but real estate agents should work even harder to set themselves up for success when this flood of activity inevitably reaches us.
Now more than ever, it’s incredibly important to keep your pipeline full. There are plenty of marketing activities you can be doing to attract both buyers and sellers. Considering people are at home in front of their computers all day, it may be one of the best times to get in front of prospective clients.
The cost of advertising is also down sharply. You can get in front of much more people for the same amount of advertising spend you were using before. Other brokerages and agents have most likely cut or eliminated their advertising spending, which means you have the opportunity to be the only voice for people trying to navigate through this difficult real estate environment.
For help with advanced marketing solutions, feel free to reach out to our partners at Shepherd Marketing Group. They have worked with countless agents across the country, and can help you come up with content, advertising, and strategy, among many others.
Shepherd Marketing Group
While there is no telling what the future may hold, there is significant optimism that life will be back to normal sooner than later. When people ask me about my predictions for the economy, I tell them to remember our resiliency and our ability to adapt and overcome. You are already seeing this with business today, where companies are doing everything from offering delivery services to virtual gym classes.
As a real estate agent, you’re essentially your own business owner. You need to fight every day to make sure you can put food on the table and build a comfortable life. Although analysts predict that we won’t see a huge dip in real estate activity for the year, we may still be several months away from normalcy.
It’s more important now than ever that you continue to work to build your pipeline, research trends, and help your clients navigate through an uncertain world. So if anything is certain in the current world, it’s that you need to keep working!