COVID-19 and Real Estate
May 12, 2020 - Showing volume dropped 60% after the governor enacted stay-at-home orders in March. Then inventory in the mid-market (4—600k) price points dropped off and contracts paused. Two months and one flat curve later, it does appear that we’re cranking back up again. Showings are essentially back up to normal volume and every day more listings are hitting the searches. We are moving forward with new listings - we’re ready if you’re ready!
Let’s get back to work! —Hugh Grist
Grist Realty Precautionary Procedures
For Buyers
Feeling sick? Let’s wait, you should isolate. Get healthy first.
Encourage agent previews - we know your wants and needs and can make a walk through video touching on your hot buttons or live-stream a video tour.
Reduced showing times to 30 mins max. Buyers focus on the house cosmetics and functionality while agent looks for red flags/inspection items.
Ask sellers to leave all lights on prior to showing so we won’t have to touch switches.
Wipe all touched surfaces (lockbox, door handles, etc) with alcohol wipes as we tour and prior to leaving.
For Sellers
Open house activity will resume with the following procedures in effect:
Lights on, doors open to reduce touch exposure.
Groups will be staggered to allow disinfecting as needed between tours, no simultaneous showings.
Schedules will be limited to 2hrs per weekend.
Buyers will be asked to use hand wipes and wear protective shoe covering before entering.
Create a virtual walk-around or video tour for your listing in addition to photos.
We may discuss the potential benefits of using the COMING SOON status instead of ACTIVE.
Showing agents will be required to adhere to our Buyer Precautionary Procedures before scheduling an appointment.
Sellers will be required to keep disinfecting wipes or hand sanitizer available to buyers during showing appointments.
The Data
The Triangle Multiple Listing System is our inventory database, and by taking a look at sales data we can get a good sense of what’s happening in the market. We do see buyer reluctance in the $600k+ markets likely due to recent stock market performance, but mortgage interest rates have never been lower so it’s a good time to buy or refinance under that mark. Here are some important facts to consider as we prepare for the second quarter:
Mid March (Single Week)
1,126 new listings went active
126 of those were $600k+
569 active listings went under contract
40 of those were $600k+
911 listings closed or sold
55 of those were $600k+
Mid April (Single week)
814 new listings went active
57 of those were $600k+
412 active listings went under contract
20 of those were $600k+
785 listings closed or sold
53 of those were $600k+
Mid May (Single week)
794 new listings went active
110 of those were $600k+
610 active listings went under contract
46 of those were $600k+
691 listings closed or sold
43 of those were $600k+
Status changes have started to trend back up as we head into what’s normally our busiest season. It’s a GREAT time for buyers because sellers are motivated and rates are low. —Hugh Grist
Showing activity as of (5/12/20)
Buyers Start Here
The Mortgage
We asked our preferred lender Dan Woodard with Corporate Investors Mortgage Group a few questions about what he’s seeing from his desk, here is what he told us in March.
Rates have dropped significantly in the last few weeks, do you expect them to drop further?
Of course we can’t predict tomorrow’s rate. We are in an unprecedented environment with big swings in both stock and bond markets. Rates may swing half a percentage point in a day so for purchases the safe bet is to lock as soon as possible.
For refinances you have a little more flexibility on when you lock your rate, but if you choose to float my advice is to not get greedy. If you pick up an eighth in rate, take it. Holding out for a quarter often leads to losing the eighth.
With so many people refinancing, are appraisers overwhelmed? Should we be adding additional time to buyer’s Due Diligence Period for this?
Absolutely, our appraisers are managing 3 times their normal volume so I would add at least an extra week if not two to be safe.
Mandatory work from home, closures, loss of income and layoffs have to be creating some anxiety related to qualifying income. Are you seeing buyer uncertainty with regard to their income?
People are definitely talking about it. Hope for the best but prepare for the worst. I think everyone should be getting their financial houses in order.
Are you aware of any planned exceptions to income guidelines in light of the current situation?
I haven’t seen anything like this yet and it’s unlikely these guidelines will change. This is particularly true for purchases, we can’t lend without the income to qualify. Government loans, FHA, VA, and USDA have streamlined refinances that do not require income verification. Conventional mortgages do not have streamlined refis. Temporarily adding a conventional version might be a form of stimulus for the economy but that hasn’t happened yet.
Have you seen anything from the credit bureaus that would indicate assistance or exceptions to missed payments during this crisis?
Not yet so do your best to manage your budget. A congressional relief package may assist with paying bills but late bills will still be reported. At least for now.
Have you noticed a slow-down in new buyer applications in general over the last two weeks?
So far no, we don’t know what to expect over the next few weeks but for now the volume of new applications is actually much higher than normal for this time of year. February and March have been the busiest I can remember. People have an underlying belief that this too shall pass. The congressional relief package will help by providing some make up income to those who have lost their jobs, other stimulus programs are being debated as well.
For those with income security it’s a great time to buy or refinance under the $600k mark, but you’ll have to be patient as the workflow channels are starting to clog. Remember to stay local! Contact our preferred lender for any other questions dwoodard@cimginc.com. CIMG is locally owned and operated.
Buyers Start Here
Due Diligence
Generally speaking, tradespeople are still taking appointments. Inspectors, appraisers, surveyors… they don’t interact much with the public in the course of their business so their risk of exposure is lower but we need to be respectful of their exposure and limit contact. Buyers should not attend inspections but will have a chance to review the findings in person with agent afterwards. We also expect supply chain delays for imported building materials such as some flooring, cabinetry and hardware so buyers will need to plan for their renovations accordingly.
The Closing
The “closing table” is the one physical space were everyone will come together during a transaction so it’s important to take precautionary measures to limit exposure. In March we asked our preferred team at Weathers Law Firm what trends they’re seeing in the market and what steps they’ve taken to limit exposure.
What precautions have your office taken to help reduce the risk of exposure?
We are asking that family members that are not required to sign stay home.
If sellers choose to attend their closing we are encouraging them to sign downstairs apart so that our buyers are only with one or two extra people (attorney and agent).
We are also regularly disinfecting all touched surfaces, we removed all shared signing pens and eyeglasses, we’re using disposable closing table coverings, and we are asking all parties to reduce off-topic discussions to shorten the time in office.
Have you noticed a slow-down in new contracts coming in over the last two weeks?
It’s hard to tell but we haven’t noticed any drastic changes.
Do you think we’ll see the Wake County Register of Deeds office close at any point?
It would not surprise us if the Register of Deeds went to online recording only at some point but we are taking steps to prepare for this, just in case.
Are mail-away closings an effective way to reduce exposure?
In limited circumstances, like when a client is relying on public transportation to get to our office, doing a mail-away closing may decrease their overall risk of exposure. Otherwise, since clients still have to sign their documents in the physical presence of a Notary Public they are better off just coming to closing and signing with the attorney because of the additional expense requirements associated with this method.
What if unforeseen closures and shutdowns related to COVID-19 make it impossible for us to close by the contract date?
The standard contract automatically provides an additional 14 days to execute the closing, however as long as both parties are working towards performance in good faith, 14 days ultimately means “any reasonable time.”
If the buyer is truly concerned about potential delays beyond 14 days they could choose a date that allows more time and can always close sooner, or the “fourteen (14) days” in section 12 on the contract may be crossed through and replaced with “any reasonable time.”
The NC Association of Realtors has published a COVID-19 addendum to the standard purchase and contract agreement that extends performance deadlines and should help put buyers at ease when it comes to deciding on a closing date. Click below to download a PDF copy of the addendum for reference.
Final Thoughts
Stay safe! Follow the CDC guidelines that help limit exposure so we can get through this quickly. Coronavirus.gov is a direct link to the CDC website on COVID-19 that provides up-to-date information on the virus, containment and other helpful resources. If you feel sick or think you may have been exposed take immediate action to protect yourself and others.
Stay positive! We are going to get through this so have faith in that and we are prepared to help you using precautionary procedures. While you’re distancing at home find positive ways to occupy your new-found time. We’ll leave you with some safe and fun social distancing activity ideas.
Go outside - walk or bike a greenway, visit a lake, go fishing (but avoid crowds - six feet!)
Build your summer garden - Logan’s Garden Shop is open for online orders and pick-up.
Write letters of thanks or love to your people.
Play on social media without judgement .
Take a Google Earth trip.
Organize your digital photos or music.
Order takeout - your favorite restaurants are open with pick-up lanes (Thank you City of Raleigh) and need you now more than ever.
Try an online yoga class.
Create a home exercise routine to stay fit.
Try an art project or draw.
Re-stage your home - always a fun one.
Read a book or three - Apple iBooks has a free section right now.
Brainstorm business plans for when the world reopens.
Reach out to someone who lives alone or is feeling anxious.
Join an online community of likeminded people.
Trophy Brewing + Pizza - Morgan St, open for take out (clock for link)
Logans’s Garden Shop - Seaboard Station (click for link)
“The only way we can get back to normal quickly is to have 100% participation in social distancing practices. We will do our part.”