Real Estate Market Pulse: The Beginning of a Buyers’ Market?
Email to clients on 23 March, 2020.
Dear Clients and Friends,
I wanted to reach out to share an update of what’s happening in the real estate market. These are obviously strange times riddled with uncertainty that only time will tell if this develops into a full blown recession.
Nevertheless, tides are turning. As an Agent on the ground, I felt it necessary to share the things that I’ve heard and observed so that I could help you with an honest, educated decision about real estate.
Sellers,
be prepared that this might be the beginning of a Buyers’ market.
I had just yesterday, received my first call from an Agent who reached out to find new Buyers for his listing. His existing Buyer has unfortunately lost his job as a highly-paid Regional Manager for a gym who is responsible for opening new physical locations. There is no certainty that the Governor's advisory to stay-at-home will cease 2 weeks from now, and unemployment will cascade into failed mortgage loans. They already have- speaking to my loan officer contact today, I’ve learnt that 10% of her contracts that are Under Agreement have failed due to a job loss; 20-30% are at risk.
If you have been looking at real estate for a while, I’m sure you’d have looked at Redfin and gotten auto-notifications based on search history. What are you seeing? I see a good number of “Back on Market” and “Price Drop” listings.
In such a time of uncertainty, there will also be a group of Buyers who would rather “wait and see”.
All in all, expect a shrinking Buyer pool.
And if we do receive an Offer, I hope you lean on me to do my due diligence for you. It wouldn’t just be a call to the Buyer’s loan officer asking about financial strength; I’d clarify exactly what kind of job does the Buyer hold.
Buyers,
be very certain of your purchase ability; plan to own for 7-10 years.
You may still be feeling the excitement from early spring activity; that rush to attend an open house in the weekend and place offers by noon on Tuesday. I think it’s only right that I say let’s have a grounded assessment of your job security and forecast the impact on your job industry. Will you be impacted by a tighter quarantine, or one that stretches for a longer period of time? Say, 6 months? Because I don’t wish to be your Buyer’s Agent today, and your Seller Agent a year from now. I really don’t.
If your answer is “no”, then boy, let’s continue house hunting!
Policy and tools that enable transactions to continue include:
Governor Baker’s Order for the deferment of smoke/CO inspections. Read my expanded blog post here.
Fannie Mae’s guidance on allowing desktop and exterior-only appraisals. That, is a game-changer. The valuation of a property is going to be hugely dependent on the presentation of other seller's homes.
Power of Attorney (PoA) given to your Attorney so that you don’t have to attend closings in person. PoAs need to be notarized, but that can be done online.
Plan to own for 7-10 years. If a recession hits and real estate prices dip, we need time for property values to recover. That recovery will happen sooner for towns with a strong public school system, but for the others, the exit timeline would be a longer wait.
Those who’d rather “wait and see”,
join me in social distancing.
Here’s also an interesting article by former astronauts on coping with social distancing and isolation that I like! Some ideas:
Stay busy and keep your mind active: start a new project, challenge or learn a new skill. I’m a huge fan of Korean dramas so I plan to learn Korean via Coursera.
Exercise, take walks. I recommend Hager Trail in Boxborough. I also recently gotten at-home workouts through the Mirror and highly recommend them. I used to be an internationally competitive athlete; after not exercising for 7 years, the Mirror slowly bringing some semblance of my former self back to life.
Keep your area clean and comfortable. My husband and I have started a deep house cleaning project and completed the toilet. We’re tackling a room a day (or three). :)
Above all stay smart, stay hopeful, for this too shall pass.
Rooting for you,
Joan
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