Massive Drop in Homebuyer Interest

Mish

Homebuyer interest is down amdid rising concerns about seemingly everything.

Can virtual tours, phone calls and video conferences replace the real thing?

Point2Point conducted a survey of real estate agents and professionals nationwide to find out.

So far, the answer is no as Real Estate Agents Assess the Post-Pandemic Future of Homebuying.

  • The bulk of the agents who took the survey (77%) stated that they noticed quite a massive drop in homebuyers’ interest, or at the very least a drop in the decision to act on it.
  • 65% of agents stated that they are either extremely anxious or very worried and concerned about the future of their business.
  • Almost half of the respondents (47%) expected at least 50% of their business to simply vanish following this period of inactivity. Those who were slightly more optimistic were, once again, a very small minority.

How Big of a Financial Loss

How Big of a financial loss

How long do you think it will take to get back on track?

How long do you think it will take to get back on track

I suspect the majority (63% at 6 months or less ) are way off base. 

From restaurants to hotels to home buying, Don't Expect a Return to Normal This Year

Mish

Comments (62)
TimeToTest
TimeToTest

I fully expect the Fed/gov to step in and buy mortgages to allow people to live in their house indefinitely.

There is a neighborhood being erected near my house that went bankrupt in 2008. They just restarted construction on it about a couple months ago. I doubt it gets finished this time either. I know a business owner that just had 4 neighborhood dirt work contracts postponed.

I live in one of the fasted growing most stable markets in America.

dlep
dlep

Let prices drop and allow young people finally be able to afford a house

tokidoki
tokidoki

Air travel will be last to recover, and by that extension hotels. Restaurants will just muddle through as best as they can relying on take out orders.

Cruise ships? ROFL. Might as well rename all their ships Titanic.

Las Vegas and gambling? Toast. But maybe not given their clientele.

Tengen
Tengen

I'm still amazed how many people I know think that housing will be just fine, or if there is a correction it will be minor. This isn't just for any one particular area, these people are in far-flung parts of the US.

Apparently in this ZIRP fueled Covid fallout era, we're still in the denial phase. Does anger come next, or will we hurtle straight into bargaining and depression?

Sechel
Sechel

Spring is peak time for real estate transactions. We won't have another one until 2021. Summer is a traditionally weak season with Autumn the second strongest. You will have some people who 'need' to sell but will be selling into a weak market. Imagine there will be a few sharks in the water to take advantage but for the most part nobody is going to want strangers in their home during a pandemic. Real estate brokerages have pared back their sales forces and they won't be rehiring soon.

In my view Spring 2021 is the earliest for an uptick, but if there's no vaccine or effective treatment who knows? It's hard to want to commit to a real estate purchase you haven't seen in person. I did so once in new construction but I knew the builder and product and could not see myself doing that with a previously lived in home. Pictures have a way of lying or hiding things.

Sequoia
Sequoia

Airbnb is pretty much all you need to know. Any future millionaires with 10 houses are hosed. Plus airbnb in some areas was probably 10-20% of the market. Those houses now need to be sold. Add in flippers and just people who thought they would be conventional landlords.

Then consider the sheer number of people who will be un and under employed. With tightening lending standards not so good.

Demand on the low end destroyed as illegal immigrants go home. They do not qualify for any government help. Their main job base construction is gutted. Their wives and girlfriends were hotel maids and worked in restaurants. The food banks and churches that help them are floundering. So I assume 6 million or more will go home

The oil industry probably not coming back for a while. Hotels and resteraunts not coming back for a while. Airlines um yeah. Retail just not coming back.

There will be uncertainty until there is a vaccine probably never, or until this runs its course.

Any one of these factors is bad. All of them combined are devastating. Housing as a retirement vehicle well Its dead Jim

Herkie
Herkie

When it comes to housing and residential RE price; I see a lot of commentary on the net and here about how this is going to kill house prices, and sales may drop by 50% or more and that is sort of a fact that fits in the DUH category of finance, but that does not mean prices will drop much, or at all, and any drop will be temporary.

First, everything is dropping in both supply and demand, people are locked up. It is temporary, after all who wants a stream of strangers coming through their house poking into every corner along with inspectors, surveyors, agents, so houses are being withdrawn from the market by about the same margin as buyers are withdrawing. They are still house shopping online just putting off going to see the houses till this situation calms down.

I shopped for a house from Oregon in Florida. I knew what I was looking for and had a specific region targeted. But, I would never in a million years dream of buying a house without a personal inspection. Photos on Zillow or RE.com are a good guide to what is available and to provide you a list of good candidate properties to see, but very few people are stupid enough to buy a house remotely. And the motivation for sellers is even lower, in Florida for example a RE contract is not enforceable if the buyer has not ever personally inspected a property, they have to at the very least have a competent representative inspect it in person on their behalf. And even then flaws in the property can be a source of dispute and cancellation of the contract if they later crop up and the buyer claims misrepresentation by either the seller or their own buying inspector.

The real problem here is people are trying to apply macroeconomic theory about supply and demand that is just not appropriate to a disrupted market under the circumstances. Yes sales are going to be seen to have dropped massively, but that is not actually a drop in demand because the underlying demand is for shelter, and people will always need that in relatively predictable amounts. This is a case where every sale that is deferred is simply pent up. Once released it will actually drive prices noticeably higher as buyers get back into the market and compete for scarce listings. And please do understand that listed properties were in falling supply when the virus hit. Add to that much lower interest rates and you have a cocktail for higher prices. Add to that Fed direct intervention in mortgage markets in "unlimited" quantities and we could see one of the biggest upward moves in price we have ever seen once the economy reopens.

US housing is on of the largest asset classes on the planet and the Fed has said that they

Majamaja
Majamaja

Do you have any data on suburbs versus cities? I am in Chicago and a few lotta gage banker friends in the suburbs have seen sales activity spike, especially below the jumbo mortgage loan level. I see sales activity in the city dropping to almost zero. Anecdotally, a lot of my friends have talked about moving. I’d be curious to see breakdowns of data between cities and suburbs as well as regionally. Personally, I’ve been surprised how easy remote working has been and I’m taking this as a sign to move out of the city to the country.

Russell J
Russell J

Here in N CA. it seems the housing market already was slowing dramatically. Who thinks its a good or fair deal to buy a fixer in a bad location or neighborhood in decline for 400k? not many. Thats about $400 a month property tax! just the property tax. that doesn't include anything else that makes your life.

Prices have to come down because incomes just can't rise that much.

Illegal immigration is a big part of the problem. If you use a ratio of 10 to a dwelling and gov cokehead admitted there's about 3,000,000 in Ca, thats 300k dwelling's not available for citizens.

If you deported just half, 1.5 million, that would free up 150k dwellings for citizens and then it wouldn't cost $1500 a month for a 1 bedroom apt.

There is no affordable housing problem here in Ca., there's an illegal immigration problem.

Euromario
Euromario

I’m looking to buy condo in SoCal. All good properties fly in couple days after listing and with above listing price. Lies,big lies and statistics. Just my two cents!

WildBull
WildBull

:-(

Jdog1
Jdog1

Artificial intervention in markets, only postpone the inevitable and make the problem worse.. I think the intervention this time will be much less than people think.

Carl_R
Carl_R

I think that some businesses will never get "back on track", while others will see fundamental increases. It's a major shift in the economy, for better or worse. I think we will see more people working from home forever; some tried it and like it, and some businesses tried it, and found it worked fine. Also, I think we'll see more online classes, and more online conferences, along with less travel.

Businesses that will see permanent declines include things related to office work such as business clothes sales, drycleaners, business lunch places, autos, gasoline, office furniture, and office real estate. Things related to travel will also see permanent declines, such as hotels, cars/auto, airlines, conventions, cruise ships, and the like.

What will gain? That's harder. Perhaps home office furniture, networking gear, teleconferencing software, and local recreation. I'm not saying it will be a complete shift, just a 5-10% permanent shift, but that's enough to make a big difference.

Since this posted to a thread about home buying another possible shift is in the types of homes people are looking for. They may want space for a home office, for example.

Casual_Observer
Casual_Observer

Expect more Chinese money to flood American real estate like it did during the last crisis.

CCR
CCR

Supply in WNY is at historic lows. Supply even in the low end prices. Real Estate is always a geography-centric argument.

CraigP
CraigP

There may be a mini boom when the lockdowns are lifted. There seems to be some pent up demand fleeing urban areas. Around me, anything that has a little property around it suitable for a decent garden and a chicken coop is selling like hotcakes. Gone within a week, no in person tour needed. I can see that trend continuing.


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