Will coronavirus kill local open houses and home sales?
Some sellers are taking their homes off the market, while others are canceling open houses to avoid contact with potentially infected home shoppers. But record-low mortgage rates are luring home shoppers to the market.
Ramifications of a global pandemic are starting to ripple through the Southern California housing market as virtual home tours replace in-person showings and homeowners cancel open houses to avoid coming face-to-face with potentially infected home shoppers.
On the one hand, all-time low mortgage rates are spurring buyer interest.
But on the other, calls for “social distancing” are changing business customs, with lower attendance at some open houses, hand sanitizer rather than handshakes and doors left open to avoid touching knobs.
Two big Realtor events have been canceled in San Diego and Los Angeles. And both state and national Realtor associations issued advisories about when and how agents can decline to show a home.
Economic uncertainty overshadows the housing market just as it’s poised for its best spring home-buying season in at least two years.
That uncertainty is bubbling up across Southern California.
A recent survey by the National Association of Realtors showed one in three California homes sellers are changing how their home is viewed due to the coronavirus outbreak, with some sellers canceling open houses or insisting buyers coming through their homes wash or sanitize their hands.
So far, just 4 percent of California agents have reported homes being taken off the market, and 21% said buyer interest had decreased due to coronavirus, the survey showed. Numbers were higher in California and Washington than in the nation as a whole.
Guidelines for agents
Both NAR and the California Association of Realtors issued guidelines advising members on how to screen potential clients for the disease and discussing the pros and cons of holding open houses or driving clients around in their personal vehicles.
To avoid accusations of discrimination, the guidelines said, agents must screen all their clients equally or not at all. For example, they can’t ask clients if they traveled to an area affected by COVID-19 or have a respiratory illness simply because they are Asian, the guidelines said.
Agents should consider “video tours and other methods to virtually tour a property” as an alternative to open houses, NAR suggested.
Homebuilder stocks also are being affected. Bank of America downgraded stock recommendations and price targets on several homebuilders because of the outbreak’s “inevitable” impact on the U.S. housing market.
Little impact, so far
So far, information on how the housing market has been affected by the outbreak remains anecdotal. CAR and CoreLogic housing data aren’t due for at least a week or two.
But interviews with nearly two dozen industry professionals show, for the most part, this year’s spring homebuying season hasn’t been severely affected.
Apart from fewer handshakes, the biggest response has been to record-low mortgage rates, said Tanner Brown, a Hollywood agent and chair of the Greater Los Angeles Realtor Association’s public relations committee.
“With interest rates so low, we’re seeing people jumping on that,” Brown said. “Yesterday we did a broker’s open house, and it was filled with agents all day.”
Traci Sadler, an agent for HomeSmart Professionals in the Coachella Valley, had a similar view. The market “is still going strong,” she said. For example, one buyer flew in from Washington state, checked out a home she was selling, made an offer, then flew back to Washington.
Falling mortgage rates are juicing buyers’ purchasing power, market analyst Steve Thomas wrote this week. For example, payments on a median-priced Southern California home are down $231 a month or almost $2,800 a year from March 2019.
“The impact on affordability is astounding,” Thomas wrote.
Meanwhile, more buyers are competing for fewer homes. The four-county L.A.-Orange County-Inland Empire region had just 27,031 homes for sale in the first week of March, or 29% fewer than a year ago, according to Redfin.
While all that buyer competition likely will lead to higher home prices, a handful of industry professionals are seeing changes in client behavior. In some cases, sellers are pulling their homes off the market and buyers are putting off buying a home because of economic uncertainty.
A Whittier agent said a title company dropped off face masks at his office for salespeople to distribute at open houses. A staging company said it’s providing hand sanitizer and paper towels at its open houses and doing extra cleanings.
“Even if there’s no presence of the virus in the homes, the buyer today is hypersensitive to cleanliness,” said Matt Nolan, director of client services with Laguna Staging, which stages homes throughout Southern California.
“We’re making sure (our homes) are both physically clean and as germ-free as possible,” he said. “They’re following protocols you might see in a hospital. … They’re wiping down doorknobs, light switches, sliding glass doors, anything people are touching.”
Agents and clients now are avoiding shaking hands and are keeping their distance from one another, Nolan said. Attendance at the company’s design seminars are down 50%, and visitations to the company’s online listings and virtual tours are up about 10% from a month ago.
“It’s an indication to us that buyer behavior has converted more to online,” Nolan said. “Maybe they’re being more particular about the homes they see personally. They’re screening their homes more than they did in the past.”
Corona del Mar agent Pamela Howland said one couple she’s working with decided to lease a home rather than buying because cancellations are up for the Airbnb rentals they manage.
“They’ve had to refund $20,000 because they’ve had so many cancellations,” Howland said.
Another client, she said, canceled a second open house in January because they didn’t want any more people coming to their home. A third client planned to cash out stock in June to increase his purchase price.
“I don’t know if that’s going to happen now. He probably has lost money on his stocks,” Howland said.
Real Estate Legends agent Patti Gregory said a client pulled his four-bedroom home in Irvine off the market after just eight buyers showed up for an open house last weekend.
“We had a horrible showing, and nobody wanted to sign in. They didn’t want to touch the pen,” Gregory said. “My seller decided to hold off for at least a month until things die down.”
Roula Fawaz, a Surterre agent who calls herself a “hugger,” said she has yet to see any changes in client behavior. But she is rethinking her practice of embracing clients.
“I want to be cautious. I don’t want to put people in a position of not feeling comfortable,” Fawaz said. “Two weeks ago it was like, coronavirus? What is it? Who cares?, Now everybody’s buying toilet paper at Costco.”
Marcyan, the North Tustin agent, said two of her clients who don’t want open houses are seniors. But a young family in Yorba Linda also said they also don’t want open houses to avoid the hassle of being quarantined and missing work.
A couple selling a five-bedroom Laguna Niguel house for $1.2 million even asked Marcyan to prequalify potential buyers to limit the number coming for private showings.
“I like the exposure of open houses, but I don’t believe open houses actually sell the house,” Marcyan said. “It’s their listing, they’re in charge, so I’ll do what’s most comfortable (for them).”