Impact of Covid-19 on StL Real Estate Market
Today our lives are upside down with uncertainty and forced change. We are having groceries delivered or going only twice a month. We are wearing masks. We are practicing social distancing. We are working from home and/or have lost our jobs. We are cooking. Yikes.
The uncertainty in buying a home right now is complicated by a volatile stock market, historic unemployment, and fears of a widespread recession. Hopefully some of this information will help you.
St Louis City and County
In the St Louis Metro area, Real Estate offices are considered “essential businesses”. In NYC, they were considered “non essential” until April 1, but in most states they are rated essential.
At first, I was totally opposed to the thought of showing homes during this pandemic. Putting myself and my clients at risk as well as not contributing to the nation trying to flatten the curve seemed irresponsible. But now we have put updated procedures in place and I recognize that there are some people who really need to sell, i.e loss of job, salary cut, etc.
In the event of a “shelter in place” order or a state’s COVID-19 mitigation initiative, the distinction between “essential” and “nonessential” is crucial in assessing what options are available to a business: whether it may maintain its business operations (adjusted for COVID-19 risks), or must reduce operations except for specified activities necessary to preserve the business and allow remote working (commonly referred to as “minimum basic operations”), or close for a period of time.
So even though uncertainty defines every aspect of our life, real estate is still being conducted in the St Louis Metro area. However, there are ever changing guidelines in the way it is being conducted.
Members of the St Louis Realtors have been practicing social distancing for a couple of weeks now. In response to updates by the CDC in social distancing rules and regulations and in an effort to promote safety for clients and agents, the MLS (Multiple Listing Service) will no longer allow scheduling of Open Houses until further notice. In lieu of this avenue for showing homes being removed, ShowingTime (agents tool for scheduling appointments) has created a means for advertising and promoting listings with Zoom appointments and virtual tours.
Currently the guidelines for showings are: Everyone should wear a mask. All parties should maintain 6 ft Social Distancing. Sellers – open all doors prior to showings, including closet doors, and a few cabinet doors. Protect yourself by wearing gloves. Use sanitizer wipes to wipe down any doorknobs prior and after use. Practice Social Distancing and maintain a 6 foot distance between yourself and any other parties. Do NOT touch anything in the home.
The St Louis Board of Realtors, St Louis City and County governments and our office are staying on top of the changes and they are happening hourly. This link to St Louis County’s resources may be helpful to you and/or a neighbor. The page at St Louis County on coronavirus also gives this helpful advice about symptoms:
Staying informed can alleviate some of the anxiety of the uncertainty we are facing. The St Louis County website updates these statistics on a regular basis. Click here to access their site.
Also available on the St Louis County Website to keep you informed is the locations of testing sites.
For the week of April 2 through April 9, in St Louis City and County there were 298 new listings posted in the MLS. The even better news is that 357 went under contract in that same period of time. The metro area numbers represent a sellers market for sure. The previous week of 3/25 to 4/2: 235 new listings and 381 went under contract.
To give this even more perspective ShowingTime has shared that in recent weeks showing activity has fallen off from the same period in 2019. Through mid-March, year over year, showing activity was higher nationwide. Shown here is the activity for the state of Missouri. Click here for updates.
More Personal Impacts
Much of this past week has involved discussing with clients the impact of COVID-19 on housing values. Should we list our house now? Are prices going to go down? Are there buyers now or do we wait until the shelter-in-force restriction is lifted and brings more buyers into the arena?Once again the uncertainty of everything in our lives makes this answer conjecture at this point. Perhaps, the information below will put things in better perspective and relieve a little of your anxiety.
Our most recent 2008 recession was an anomaly in that the 2008 recession didn’t cause the housing market to go into freefall. The housing market going into freefall caused the recession. In contrast the probable recession coming as a result of COVID-19 will be induced by cities going into lockdown. This basically puts the market on pause.
Prior to the pandemic, the housing market was experiencing low inventory and in many areas multiple offers were common. Part of this was due to the millennials entering the market. Millennials made up the largest share of home buyers at 38 percent in 2019 and that trend is continuing. They are going to be here when the “housing pause” is over. In addition, the Federal Government has a moratorium on foreclosures that will last at least through April. This will stop a rash of foreclosures coming on the market.
A coronavirus-induced recession is difficult to predict because of the uncertainty of all the parts. However, Zillow looked at housing markets during previous pandemics and concluded that while the volume of housing transactions dropped dramatically, prices fell only a little, if at all. For more detailed information, click here.
I almost forgot to include the protective clauses and contract addendums that have been added by the St Louis Realtors: an amendment to protect the buyer and seller if the coronavirus impacts the contract closing or being delayed and an amendment covering the governmental inspection. For more information, contact your real estate agent.
It seems that the bottom line is we are all going to have a huge shift in our daily lives. This pandemic isn’t going to go away for a while. The we sell and buy homes is going to change. We are going to need to be creative to keep it viable. I have been in the industry for over three decades. The changes I have seen are phenomenal. Never would I have dreamed that I would tell a seller they didn’t need a sign in the yard. As of last year I was telling them it was their decision.
I am looking forward to the positive changes this life shift is going to make in my life and in my business. Be safe and stay home as much as possible.