How is Covid 19 changing real estate?
Wow Covid 19 has changed things quickly!
Its amazing how quickly things can change! March 1st 2020 we were rolling right along in Flagstaff with low interest rates, increasing supply and buyers at the ready when that inventory supply increased. March 25th 2020 and there are just a handful of new listings, buyers are worried and sellers are fearful of showings. The Flagstaff real estate market has come to a grinding halt but that could present opportunity for many. Will this last? Will the market tank? What should someone do right now that wants to buy or sell?
To answer the question of will the last, who knows. The Flagstaff Real Estate market will be impacted, likely much less drastically than the economy as a whole but it depends on how long this all lasts. If we are relatively ‘back to normal’ by Mid May I see very little long term effects, if it takes until fall there will be some fall out in the Flagstaff Real Estate market. The longer it takes the more investor owned properties will hit the market. Those properties that are used as vacation rentals are no longer producing income and will not be able to stay afloat as the duration of this shut down increases. We will also start to see second homes and vacation properties in Flagstaff hit the market as people need cashflow due to the Stockmarket being down. Primary residences likely won’t have a huge effect as far as foreclosures or short sales as many people have significant equity in their properties. Those that don’t have a lot of equity will likely still be able to sell if needed as interest rates are extremely low and buyer demand is still present in many segments of the market. However selling in this market is definitely changing and in order to get top dollar an agent that uses the right marketing is crucial.
Answering question two, will the market tank? Most economists say there is not much reason to anticipate a huge decrease in market values. For many of the same reasons as listed above there is a lot of stability in the real estate economy with substantial equity that many homeowners have. This change in the economy is not due to economic factors its an economic reaction to an outside factor. Compared to the real estate crash of 2008 this is completely different and will likely end entirely different as well. I don’t see any reason to suspect we will see a real estate value downturn or even a buyers market. I doubt we will see sellers rush to sell during the pandemic for a variety of reasons which will keep the market in low supply.
Question three, what should someone do if they are looking to buy or sell? If you are considering buying, it depends on whether your employment has been effected. I don’t see any reason why you should wait or decide not to buy, in fact its probably better to buy during the pandemic than after. There will likely be a huge pent up demand that hits the market as soon as this ends. Assuming this doesn’t drag on for more than a couple of months there will likely not be enough supply for the demand. Interest rates will stay low, many workers are getting extra cash from the Corona Virus bill that will help them with a downpayment, and furloughed workers that were considering buying will be back and work and ready to be a player in the market. Waiting could be costly as prices would likely jump if this scenario plays out.
Selling in this market
If you are a seller should you list or wait? In my opinion it depends on the situation. If you are selling and not purchasing a replacement home then I would wait. I anticipate values will go up after this pandemic is over so waiting it out is likely a good choice. If you are downsizing (in value) then I would also wait. An increase in value of your current home will outweigh the value increase of the property you are buying if you are downsizing. Waiting is likely a prudent decision. If you are selling in order to upgrade then I would not wait. As values increase you’ll be paying more for your replacement as the value increases relative to the increase of your current home.
So, if I decide to sell what is important right now?
- Eliminate showings of those that wouldn’t be interested. They will add an increased likelihood of spreading illness for a showing that isn’t going to produce a buyer.
- Reduce the number of surfaces that a buyer will need to touch during a showing.
- Eliminate the in person meetings as much as possible with your agent.
- Reduce the number of people entering your home to as few as possible to properly market your property.
- Create an online presence for the listing that utilizes as many virtual showing components as possible
How do you market a property and accomplish all of these things?
- In ‘normal’ real estate markets most agents promote trying to get as many showings as possible. Considering the importance of not spreading Covid-19 its important to not get showings that won’t have interest. Eliminating uninterested showings is something I’ve stressed for years. Doing the highest quality photos, 3d virtual tours, video walkthroughs, and accurate listing information is extremely important to preventing showings that will not produce results. I’ve used all of these techniques for years on every listing I take. I have professional equipment to shoot photos, matter port virtual tours, zillow virtual tours, zillow video walkthroughs, high definition video walkthroughs, a drone for aerial photography as well as detailed listing info.
- Reducing the number of surfaces during showings will be important during the pandemic. It will be important for a seller to prep a house properly before showings. In addition to the normal procedures of preparing a showing for a showing a seller should make sure all lights are on so a buyer won’t have to touch any light switches. All doors should be left open as well as cabinets that a buyer would open to view the entirety of a home. This will eliminate the need for touching knobs and door handles. Providing slip on booties and gloves are also good preventative measures. After showings are complete the use of cleaning products on surfaces, door handles that may have been used and any other surfaces that are typically touched will help kill and potential virus cells left behind.
- Eliminating in person meetings with your agent is simple if you have an agent that is technologically savvy. As much as I may not want to admit it I’m a nerd and I’m perfectly comfortable handling any and all listing prep virtually or via video meetings on a computer or device.
- The only thing that I can’t do remotely is photograph a property however instead of needing 2-5 different people to photograph your home I do it all. Photos, video, virtual tours, sign installation, key safe installation, etc. One person that is sensitive to any concerns you may have at one time.
- It’s unusual that I see another agent’s listing have the same quality of marketing that I do. Most listings have photos only, which in this market just doesn’t cut it. Many listings that only have photos have bad photos which in a good market hurts your end sales price and odds of selling, in this market it may make a sale impossible. Very few listings currently use high quality virtual tours. Zillow has created a platform to create 360 degree virtual tours. It’s a good platform but the final product lacks quality. Most agents that do use a virtual tour only use this medium quality tour. It’s similar to the difference between watching a movie in sd vs watching one in High Definition. I use the highest quality HD quality virtual tour camera to create an interior and exterior virtual tour. I also shoot a Zillow tour as their system sets listings that have their virtual tour higher in its search results than those that don’t have a tour. I also shoot a video specifically for Zillow which again helps in the search result rankings. In addition I shoot a high definition video for distribution on MLS and all sites other than Zillow. I’ve yet to see another agent do all of these things on their listings unless its a multi million dollar listing. I shoot and compile all of these to create a complete marketing plan that will allow a buyer to get the full picture of the home without ever stepping foot inside. I’ve had a number of listings sell sight unseen after seeing the marketing for the listing.
Buying in this market
As is the case in any market it’s important to be prequalified and ready to make an offer. Speaking with a lender is critical right now as guidelines are changing and the lending industry is adapting to the changes occurring the world.
You may have to be a little more patient than normal. With fewer listings hitting the market, finding what you want may be a little trickier than normal. With some patience though you will likely find a house that has less competing buyers than you’ll see once this all ends.
The Arizona Department of Real Estate has issued several clauses and is working on an addendum for us to use to help protect buyers in the event of shutdowns, closures, etc.
Looks like the government is going to be sending most Americans a check for thousand(s) of dollars. There is also word that they may also be allowing for one to pull from their 401k penalty free. This added access to cash can help make a huge difference to a first time home buyer or even buying a bigger home or avoiding mortgage insurance. That combined with incredibly low rates means many people will be in an ideal situation to purchase real estate.
As long as you are not currently effected in a way that prevents you from qualifying this may be a great time to look a purchasing a home!
If you’re looking to buy or sell I’ll be working and available to help in any way I can! Call, email or text me. 928-225-9333!