How Did the Coronavirus Impact Homebuyer Sentiment?

Mish

A survey by Point 2 Point Homes indicates a huge change in homebuyer sentiment.

Please consider the Point2Point Flash Survey on Homebuyer Sentiment.

Key Points

  • 19% percent are still determined to find a home.
  • 18% are searching but not as actively.
  • 22% have stopped until the outbreak is over and another 6% stopped searching for the time being. That's a postponement rate of 28%.
  • 35% claim to "not know" while "keeping an eye on the market".

The other 6% is a mystery.

The Point2Point article title says "U.S. Still Optimistic Despite Outbreak" but that is certainly not my takeaway from those stats.

How Soon?

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​That question does not tell us how the coronavirus impacted their timelines. The next question is better.

How Has Your Home Buying Process Changed?

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Key Points

  • 42% say no changes
  • 27% want a cheaper home
  • 19% expect delays and a slowdown in all aspects
  • 10% are paying attention to health hazards
  • 2% may need financial health

​That totals 100% which indicates survey flaws.

Clearly, someone might want a cheaper home and expect delays at the same time. That same group could also be paying attention to health hazards.

I see no indication that Point2Point allowed for multiple responses. One indication would be a total in excess of 100.

What is the Main Change in Home Selection Process?

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Only 35% say their process has not changed.

Curiously, only 12% say they are putting the process on hold.

That is inconsistent with a 28% postponement rate (22% who stopped looking plus another 6% who stopped looking "for the time being").

That is not necessarily a polling flaw but it is a logical flaw in answers vs the first question.

Methodology

The 5-question survey was posted on the Point2 Homes website between March 23rd and 26th. There were 2900 usable answers. All percentages were rounded.

The answers are interesting but I question whether the approach constitutes a statistically valid, random sample.

Mike "Mish" Shedlock

Comments (61)
No. 1-16
thimk
thimk

I predict a movement towards residential purchases located in rural areas (less dense, red states ) as opposed to urban environments . small town usa might see a resurgence.

wootendw
wootendw

I bought a 3-bedroom brick home in Oklahoma last summer for $120k. I added a tornado shelter for $2700. I expect my house to decline to what I believe is its 'natural' price - the 20% down payment. About $24k for this puny job.

In about 3 1/2 years I shall have take Required Minimum Distributions on my IRAs. This will result in a tripling of income (and taxes) and I expect to be looking for a more expensive home for a tax break. (I might have to get remarried and have a few more kids). The way things look, I'll have to spend about $200k but get something 3-4 thousand square feet with an acre lot. Don't know what I'll do with this house.

In the mean time, as the Depression sinks in, there should be some good deals on things people want but don't need - like musical instruments, pool tables, RV trailers, etc.

The fun cruise industry is dead but I am hopeful there will still be some European river cruises I've always wanted to take. There's at least one starting in Rotterdam, proceeding up the Rhine, 'canaling' over to the Danube and ending at the Black Sea after visiting 16 European capitals. I'll top it off with clandestine trip to Crimea.

Greggg
Greggg

I didn't know anyone that has this till tonight. My son is on 14 day quarantine. They didn't test him because he did not have a temperature 102 or over, and he is young (39). Told him to come back if his temp rises. I figured he'd be prime for the virus. Goes to City-County building in detroit with lot of people in crowded conference rooms and uses elevators to get there. So far symptoms are flu like aches that lasted a couple days, low grade fever, also shortness of breath that comes and goes. The shortness of breath comes and goes in waves was the tell tale for the medical staff.

lol
lol

this Coronascam is a dry run for martial law,it's a war game,a drill,a test to see how quickly they can corral the populous,why? Simple.....the federal govt has collapsed or danger close to collapse.The one fly in the ointment is.....all the guns....that's next!

Greggg
Greggg

Casual_Observer
Casual_Observer

I think there are more important matters right now than whether some economic statistic is statistically valid because of sampling technique. We will look back on March as the calm before the storm.

Sechel
Sechel

Open houses are not occurring during the pandemic and many jobs are uncertain. Frankly I discount the entire survey and very much doubt its accuracy.

Herkie
Herkie

The virus will one day peak then decline and people will basically forget about it. They will not have a lot of choices because the economy will be severely disrupted.

I found a house on the net in Florida I really wanted, enough to bid full price sight unseen at least in person. That was January before we had an epidemic. Yesterday I signed the closing summary and close next Monday. I did go there super bowl weekend and it was even better in person than on the web.

Because I am on a fixed income my primary concern is with monthly affordability. The house is less per month than rent on a borderline hovel in Southern Oregon, yesterday I left for the move. It is not easy, some motels are closed, all restaurants are either closed or doing delivery only. Drive throughs are working but I can't use them because the moving truck with car carrier is too large. I had pizza noght before last but nothing since other than some pepperoni sticks from a gas station.

Have to drive through Los Angeles today, not looking forward to that so waiting in hopes of missing the worst of traffic, but traffic is still relatively heavy in spite of quarantines. Some spots along interstate 5 are in such bad condition that the right lane should be cosed, and speed limit reduced to 45. But, I saw the right lane with trucks as far as you can see basically bumper to bumper headed south. It should have been 4 lanes in both directions south of Sacramento 20 years ago and it is still two lanes each way, but I should be on I10 by noon.

My attitude about buying a house is I plan to live in it till I croak, so I am not viewing it as an investment upon which I may lose money.

People might think they can hold out for a lower price in a devastated economy,maybe yes maybe no. In the GFC banks took houses and sold them for a fraction of what they sold for just prior to the GFC. That is true. But then banks started sitting on the houses till they rotted into the ground. Prices went up not just a little but into a larger bubble than they were even in 2007. Demand is out there. And will be damaged for a while but then roar back as pent up demand kicks off bidding wars again.

I actually believe that deflation is not going to happen aside from a short period of depressed demand, but, the vast and TOWERING money printing will have to trigger inflation as we come to the other side of this later this year. And that inflation could be as staggering as some of the other nightmare economic data we are seeing now.

RSM
RSM

Here's my anecdote, take it for what it is worth:

With three young kids, this 1500 sq foot starter home is feeling smaller by the day. We had been looking over the last year for a larger home, and in the last few months had become very serious. Current home is prepped to sell, and we were targeting a May-August move. Our budget was 50% over our current home's value, which would nearly triple our square footage and get us a larger, wooded lot. In terms of mortgage to income ratio, payments were going to be at around 28% of take home. A little on the high side, but the plan was to stay in this home for a while and income will increase once all the kids are in school and SO returns to the workforce.

Everything has been put on hold indefinitely. It makes me sick thinking about spending that much on a house right now, and I'm so glad we didn't. There is too much uncertainty right now, and the house we're in would be manageable if I lost my income. If we had already moved, that wouldn't be the case.

In terms of the market, I'm seeing less homes go on sale, I'm already seeing prices tick down slightly, and days on market tick up. I have no doubt that continues for the next few months and beyond. I'm not sure when we'll be ready to buy again.

KidHorn
KidHorn

Is home closing an essential job? I wonder if places that are quarantined even have home transactions.

Tony Bennett
Tony Bennett

"How Did the Coronavirus Impact Homebuyer Sentiment?"

...

Too early to tell.

They need to ask these people in a few months when many don't have jobs and home prices become "unstuck" (to the downside).

Zardoz
Zardoz

We're still running on air like Wyle E. Coyote. The unpaid bills haven't had time to really snowball yet. That 1200 dollar check will buy us a week, maybe, backfilling that hole, but when it's gone and people realize there isn't any more coming, the looting will start.

Our government just threw 40% of the population under the bus with gift card, and that's too big a pile for the bus to get over. The bus will stop.

Casual_Observer
Casual_Observer

@MishTalk Goldman sachs upped their unemployment number forecast. What say ye?

Flyoverstate
Flyoverstate

I live in Nebraska & have 2 young kids looking to buy houses. We are using a local home builder/realtor to help our middle one look for properties. The current average time a home is for sale in 1 of the "larger" populated towns is approx. 36 hours. I asked the realtor/home builder if he was surprised that things weren't slowing down due to the economy/covid-19 and he said somewhat, but the housing market in these areas has been red hot for the last 5 years or better. He told me he just sold 5 new builds in the last 2 weeks, took on 2 huge remodels and just purchased 4 more lots to begin construction on new houses on them. He said he can't keep up at the moment, with the low interest rates, anyone with collateral is looking to upgrade. He also noted that he's been getting interest from buyers on the coasts looking to move to his area, which is a suburb of around 20K people outside of the area where my daughter is looking for a house.

Mike6712
Mike6712

Would be interesting to find out if covid has caused ppl to reconsider living in a large urban area? More than a few NYC ppl are hunkering down away from the city in much less populated areas.

kpmyers
kpmyers

Real Estate sentiment is meaningless right now. According to Realtors, it's always a good time to buy. Many of the Real Estate experts are clueless about what drove the demand in the last 10 years. They all sound like Lawrence Yun...some how Real Estate won't suffer the same drops as all there other asset classes.

Look what's going on in the MBS markets; everyone is selling the bonds and nobody is buying. Nobody wants to buy a bond secured by tenants that don't need to pay rent or a home owner that doesn't need to pay a mortgage. The moratorium on rent and mortgages will create some major issues of the Financial industry. This is what happens when low interest rates turn basic necessities into an asset class.


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