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April 13, 2020

Will residential emerge from COVID crater?

HBJ File Photo
By Michael C. Bingham

No realistic residential real-estate pro sees anything but rock bottom for the housing market for the rest of the spring. Where there is less consensus is the answer to the question of not which way is up, but when?

According to the latest survey from the National Association of Realtors, a majority of residential brokers are confident that both buyers and sellers will return to the market as delayed transactions following the end of the health crisis. Nearly six out of 10 members (59 percent) agreed that buyers are delaying home purchases for at least a couple of months, while a similar share of members (57 percent) said sellers are also delaying home sales for now.

“Home sales will decline this spring season because of unique economic and social consequences resulting from the coronavirus outbreak, but much of the activity looks to reappear later in the year,” said NAR Chief Economist Lawrence Yun. “Home prices will remain stable because of a pandemic-induced reduction in inventory coupled with less immediate concerns over foreclosures.”

Conducted April 5-6, the NAR’s latest Economic Pulse Flash Survey asked members how the coronavirus outbreak has impacted both the residential and commercial real estate markets.

Some highlights of the member survey:

  • Due to the outbreak, 90 percent of members said buyer interest declined, and 80 percent cited a decline in the number of homes on the market.
  • Home prices were seen to hold steady after rising robustly before the pandemic. Almost three in four members (72 percent) said sellers had not reduced prices to attract buyers. Conversely, 63 percent of members said buyers were expecting a decline in home prices as they sense less competition in the current environment.
  • Residential tenants are facing rent payment issues, but many delayed payment requests are being accommodated. Nearly half of property managers (46 percent) reported being able to accommodate tenants who could not pay rent, but just 27 percent of individual property owners said the same.

The recently enacted Coronavirus Aid, Relief & Economic Security (CARES) Act includes provisions on eviction prevention and small-business loans and grants that are critical to keeping the rental market steady.

View the entire NAR Economic Pulse Flash Survey report here.

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