With real estate restrictions set to ease up tomorrow, May 7, I thought it might be interesting to take a look back and see how the stay-at-home restrictions announced March 23 have affected our local market.
The big picture
Overall, market activity has been significantly reduced compared to the same period in the previous year.
While there are fewer listing on the market than there would normally be at this time, those listings are selling slightly faster than in previous months, indicating there is still interest from homebuyers.
What has been restricted
Real Estate showings have been disallowed under the order and so have the activities of professional photographers.
Professional home inspections have been allowed to continue, and inspectors can allow buyers to attend the home inspections.
Practically, this means that sellers have been taking their own photos for their listings, and buyers have been writing offers site unseen, and using the home inspection as their chance to walk through the home for the first time.
How was our April market? — what the data show
April is the first full month in which real estate restrictions have been in place. We’ve seen flat-to-lower total active and sold listings compared to previous months.
However, because real estate is seasonal and typically ramps up in springtime, it’s important to compare this to the previous year’s data. To wit, active listings were reduced by 35% compared to April 2019, and sold listings were down 32%.
While the number of homes sold was lower, the median sale price was about 3% higher than April 2019.
Additionally, average market times were shorter, meaning the average home sold faster than previous months. Average market time for April 2020 was 32 days, compared to 40 days in April 2019.
In other words, while the “inventory,” or how many homes we have for sale, has contracted, the interest in purchasing remains relatively high. Even with the restrictions in place that prevent touring a house before making an offer, the homes that are for sale right now are selling.
What does the future have in store?
Economic forecasters from the National Association of Realtors have been optimistic, more or less predicting a return to business as usual. Take that as you will.
I think it’s safe to assume some potential sellers have held off listing their home during the stay-at-home period, knowing buyers would be unable to tour the home.
The calculation being made on the seller’s part would be that some buyers are just not going to be willing to write them an offer based on photos only. Additionally, they have a higher likelihood of a buyer walking away after a home inspection since that’s the first time the buyer has seen the house. They could attract more interest and potentially a better, more serious offer by waiting for a bit.
Therefore, it seems likely to me that we will see an increase in new listings after May 7 — at which point showings will be allowed again — sort of a “catching up” period similar to the increase in listing activity that usually follows winter. Mortgage interest rates remain low, which encourages homebuying and, indirectly, selling.
What remains to be seen, I think, is how uncertainty around income and job prospects will affect buyers’ purchasing power. Shelter is essential, though, as everyone needs a good place for their family to live.
Whatever the outcome, I hope people’s homebuying and selling decisions will be in the interest of what’s best for them. And that is what I am here to promote.
So if you’d like some professional advice or even just a sounding board for your specific situation, call me on my cell. I’m happy to hear from you.
All of the data shown in this post pertains to the greater Grand Rapids area market, but it’s very easy for me to run local stats. If you are curious about your specific neighborhood, I’m happy to run those numbers for you.