If you had been asked to make predictions about the 2020 real estate market a couple of months ago, you likely would have responded with a great deal of optimism.5% of real estate agents polled predicted a recession in 2020 in the 4th quarter of 2019 vs. 40% in Mid-March 2020.Click To Tweet
Indeed, the market was set to have a stellar year, with interest rates remaining low and more buyers coming to the market. And then the coronavirus began sweeping across the globe, creating uncertain times and an increasingly unpredictable economy.
Let’s take a look at how the housing market is being impacted by the pandemic.
All signs pointing towards a strong market
By all accounts, the real estate market in 2020 would remain strong and steady.
HomeLight, a real estate referral agency, surveyed top agents across the country in the fourth-quarter of 2019. In addition to conveying the current market conditions, agents were asked to make predictions about the coming year.
4th quarter of 2019.
79% of agents reported low-interest rates boosting buyer activity in their markets, but only 19 percent reported bidding wars on properties as commonplace (down from the previous quarter).
And perhaps most telling, only 12% of agents predicted the country would hit a recession by the end of 2020.
Flash forward to February.
A tale of two polls
In mid-February, HomeLight again surveyed agents across the country to get an idea of how the first quarter was shaping up.
The results showed that 2020 was proving to be an even better year for the housing market than most agents anticipated.
Mid-February of 2020.
94% of agents reported that low-interest rates were boosting buyer activity, compared to 79 percent in the fourth quarter of 2019.
62% of agents said that bidding wars were becoming more frequent, in stark contrast to the 19 percent in Q4.
And then the coronavirus began spreading at unprecedented rates.
A flash survey reveals a marked change in attitudes
As coronavirus casts a shadow of uncertainty over the real estate market in 2020, real estate agents have gradually shifted from extreme optimism to cautiousness.
In mid-March, HomeLight conducted a flash poll of U.S. agents, which resulted in an evident shift in attitudes.
While only 5% of agents predicted spring 2020 housing sales to be slower than the previous year, the same question, asked just three weeks later, was in stark contrast.
44% of agents believing this spring will be slower than last.
And in February, 65% of agents expected home values to rise in the coming months. In contrast, the March poll showed much different results.
25% of agents still believed in an uptick in home values.
40% of agents responded that they think the U.S. will hit a recession by the end of the year
Versus only 12% in Q4 2019.
Current market conditions
A look at the March flash poll is telling, with 41% of agents seeing seller activity decline in their markets, and 45% seeing buyer activity slow to a trickle.
Almost a quarter of agents have had sellers take their homes off the market in response to the coronavirus pandemic, while 52% have reported buyers putting their home searches on hold.
And if you’re wondering how agents are adapting, the increasing number of people working from home is creating more demand for virtual home showings, making agents more reliant on technology than ever. Many have canceled open houses, opting for individual showings, and agents are proceeding with those showings with caution. This means arming themselves with gloves and plenty of hand sanitizer, as well as disinfecting homes before and after tours.
While the exact economic effects of the pandemic can’t be predicted, it’s almost certain that there will be a lull in real estate transactions. The best advice at this time is to pay close attention to your local market and be willing to adjust as the market continues to fluctuate.