The number of days that have passed since the beginning of the New York on PAUSE (March 23, 2020)
In my last post I asked you to weigh in on the impact of the pandemic on the local real estate market. Your answers and my notes are below.
There are rules and then there are interpretations of rules. Ask three real estate agents about how the “NY on PAUSE” rules apply under a given set of circumstances and you will probably get three difference answers. Even the local and state real estate trade associations don’t appear to agree. How does this affect the our real estate market? Should differing opinions about the rules change your decisions? See below.
The number of new property listings continues to rise but the number of accepted contracts remain low. I’ve added a new calculation: “Success Rate”. I’ll give you the numbers and explain Success Rate below.
As always, I am available to talk privately with you about your particular real estate situation.
Call, text or FaceTime: 585-732-1767. Email: firstname.lastname@example.org
I'm hosting a Zoom meeting to answer your general questions and talk about the local real estate market.
Monday, April 20, 2020 at 7:00 pm - CLICK HERE TO JOIN THE MEETING
Meeting ID: 585 732 1767
Survey Responses: 39 responses out of 97 (40% response rate)
Question #1: Roughly, when do you think real estate agents will once again be able to meet their clients in person (even if social distancing is still required)?
Summer, 2020 - 30 - 77%
Fall, 2020 - 6 - 15%
Spring, 2020 - 3 - 8%
Winter, 2020-2021 - 0 - 0%
A few notable comments sent by clients: “...my optimistic hope is that we'll be back to some amount of normalcy for small groups by the end of June.” — “Based on what we're seeing in local Covid cases and what the county health commissioner is saying, we think the county might advise lifting local restrictions in mid to late June. If that's the case, presumably agents could start seeing clients in July.. If local cases start rising sharply, obviously that date would move to fall – or later.” — “This will depend on availability of tests for immunity.”
My take: I agree with the majority view on this one. Unless the rate of infection begins to rise again real estate agents are likely to be able to meet clients in person (small groups only) sometime this summer. If I had to guess when? Late June or early July.
Question #2: Are real estate transactions too much of a health risk for society right now?
No - 28 - 72%
I don’t know - 7 - 18%
Yes - 4 - 11%
A few notable comments sent by clients: “With strict social distancing protocols I think it should be allowed. People can feel free to opt out or use video if they prefer that.” — “There are ways to protect those involved, if diligent.” — “i beleive remote real estate transactions are no problem, but meeting in person still carries a huge risk” — “If practiced with all proper caution, they are less risky than grocery shopping.” — “We know the proper procedure. How long can we live in a bubble?“ — “I am 'post 65' and have a history of chronic pneumonia, I am concerned. I am also a client who was to list my home the first week of April ... I, hopefully, am planning to sell my house some time this year, when is really out of our hands and in the hands of the virus and societies ability to deal with it. I do feel this will not extend to the creation of a vaccine, more likely a development of a therapeutic that allows this illness to be less lethal. Then we have more or less a severe flu event.”
My take: Again, I agree with the majority view. Frankly, as long as real estate professionals conduct their business remotely/responsibly and encourage their clients and the public to do so as well, I do not think the real estate transactions under the current rules present a significant risk to individual or public health.
Question #3: Overall, what will happen to property values in Monroe County in 2020?
Down - 22 - 56%
Same - 17 - 44%
Up - 0 - 0%
A few notable comments sent by clients: “I would imagine there is going to be higher demand for rental properties as investors worry about recession and a possible depression of our economy, lasting many months or perhaps 1-2 years.” — “on average i expect properties to stay about the same, but this heavily depends on hopw long this pandemic and PAUSE rules stay in place, as well as how many people stay employed” — “Pure hunch here; unless unemployment AMONG HOMEBUYERS rises, or Covid lasts a long time here or returns in the fall, etc., I think the real estate market will settle down.” — “I think they will go down temporarily as people recover from their losses. I feel it will rebound in the spring of 2021 if we can keep this virus at bay. With a little luck we may see a resurgence in the early Fall.”
My take: This is a tough one. First, here’s what I would bet on: the overall number of transactions year-over-year will be down by a greater amount than I’ve seen in the 40 years I’ve been practicing. I don’t see how we can catch up to the shear volume of last year’s transactions.
I’m not sure a lower number of transactions necessarily results in lower property values. Lower values will result from too many houses for sale compared to the number of buyers. Clearly, if you loose your job, you probably can’t buy a home. Losing your job doesn’t necessitate selling a home though - at least not right away. We saw this in 2008-2010. Remember, not every house that’s listed MUST sell. Some will try and if they aren’t successful, owners may just pull their property off the market and wait. Only properties that actually sell are counted towards the property value calculation.
I suspect we are in for a modest recession lasting one to two years or so. A modest recession will probably balance the market between buyers and sellers in rochester giving buyers more leverage then they’ve had in a number of years and that will tend to reduce the rate of growth in values if not cause values to actually decline. Interest rates will probably drop so that should help keep the market rolling. Even so, many buyers will tend to step down to somewhat lower priced homes dragging the median price in that direction. Sellers may have to work harder to get their property ready for the market. Average homes in Rochester will linger on the market a little longer than they have in recent memory.
If we dip into recession I’m willing to bet there will still be pockets in our area that will continue to do very well. Properties that may have attracted many offers may only get several. Instead of selling right off the bat it may take some properties a bit longer. Nothing about a modest recession will change the underlying market appeal found in those hot areas.
On the other hand, if we enter a major/protracted economic recession or a depression, property values will come down. The same is likely to be true if we experience a second wave of COVID-19 in our area or across the state/nation and the economy shuts down again.
Question #4: If a friend or family member wants to sell AND buy property NEXT YEAR, what should they be concerned about?
B.) Not getting a high enough price for their current property - 13 - 33%
None of the above. These issues shouldn’t be concerning NEXT YEAR - 10 - 26%
C.) Coronavirus/COVID-19 (personal illness or contributing to a second wave of COVID-19) - 7 - 18%
Answers A & B - 6 - 15%
A, B & C - 3 - 8%
A.) Paying too much for their new property - 0%
A few notable comments sent by clients: “I do not have high hopes for the future economy. But I am typically a pessimist.” — “next year is so far away it is hard to tell from a pricing standpoint, but a second wave of COVID-19 is very likely to effect next year if we are not careful” — “I suppose it would depend on whether the market gets flooded with listings when we're give the all clear. And whether people will continue to buy. A very low interest rate would certainly stimulate the housing market.” — “We were in a 'tired' bull market nationally this year anyway but our real estate market was strong. ...But if anyone says they are certain about what is going to happen I would say they are smoking something ...”
My take: My goal with this question was to gauge respondents attitudes about the future. Well, it turns out most of the people who answered were pretty worried. Only 26% of respondents were feeling optimistic about next year’s real estate market. The truth it, there’s a LOT to worry about, right? Maybe 26% is actually a high number given what were facing!
Rules and the interpretation of rules.
I guess I should have expected this but I didn’t. The NY on PAUSE rules - as they apply to the real estate market - haven’t changed since last week and yet I have observed a variety of real estate trade associations and real estate companies offering seemingly contradictory advice on how to apply the rules. All this is resulting in differences in how agents are behaving in the real estate marketplace. Some are interpreting the rules to allow for more freedom of action and some are restricting their actions severely as a result of guidance given by their companies and trade associations.
Is there any agreement at all? Yes. I have not personally witnessed a real estate agent put another person directly at risk by meeting with a client or consumer in person under the current rules. I have not heard a real estate agent even suggest including a client/consumer on an appointment. There appears to be nearly universal agreement that meeting anyone in person is not permitted.
I can tell you from personal experience a seller-client ask me to be present while an “unaccompanied” buyer walks through their property - at a safe social distance. (“Unaccompanied” appointments by buyers are permitted under very limited circumstances.) I declined to be present in the property with the buyer citing widespread agreement that it may be unsafe for all parties and that I was not permitted to do so under NY on PAUSE. I ended up driving out to the property but I did not leave my car. I wanted to provide moral support to my client even if I could not fully accede to their wishes. It is precisely this sort of situation along with a disagreement on the interpretation offered by real estate trade associations that creates pressure to interpret the rules at variance from their strictest application. When a client asks we WANT to provide the service they request and expect.
Providing client service is not the only situation leading to variable behavior in the marketplace. The financial pressure agents are under is also likely leading to behaviors that don’t strictly abide. And, as you might expect, I’m certain that are some agents who see their own interests as paramount. Those agents interpret the rules in any way necessary to support their personal benefit. Nothing short of enforcement will stop those agents.
The most common and significant area of disagreement appears to be around real estate agents going into properties on their own. If the seller gives informed consent and no one is present in the property, can a real estate agent look inside a property alone? Can an agent go to an empty property alone to take photographs or conduct a virtual tour using FaceTime, Zoom or another similar video conferencing service with the seller’s informed consent? Some say yes. “What’s the harm?” Some say no. “NY on PAUSE says we can’t.” Does it? The experts we rely on don’t agree. It depends how you interpret the language.
It should be remembered more people traveling around, more people coming and going from properties all over our area, more activity drives more spread of the virus. If we were talking about one real estate agent looking at one property, the risk to society would be negligible. If we’re talking about HUNDREDS of real estate agents going in and out of HUNDREDS of properties, that’s another matter, right?
Until a penalty is levied and then litigated there probably won’t be a definitive answer. Chances are good the rules won’t be around long enough to be litigated. Frankly, I’m doubtful any but the MOST fragrant violations will be enforced. It’s quite likely lesser violations will be tacitly allowed.
This is no small matter. Visiting a property in person can make all the difference on a buyer’s decision to submit an offer. No one wants to cause any harm. My sellers and buyers - YOU - want to conduct business, right? I hear it time and time again. The question now becomes what are WE going to do? Indeed.
You and I will have to talk through your particular situation to to determine the best course of action with the understanding that there is only so much we can do under these extremely unusual circumstances. In addition to looking at market conditions we will consult the rules, assess the risks and calibrate our actions. We will work together to identify the right path to keep you safe, abide by the rules and accomplish your real estate goals. I give you my promise I will provide you with the highest level of service allowable under the law.
Key real estate numbers in Monroe County for single family homes, townhouses and condominiums:
The real estate market in 2020:
The real estate market in 2019:
Over the last couple of days the number of new listings and the number of properties under contract ticked up. The 2020 numbers also ticked up as compared to last year over the same period. Still, the number of homes listed is DOWN by more than 55% and the number of properties under contract is DOWN by nearly 75%. Dramatic.
In terms of the shear number of transactions, it’s very hard to believe our area will catch up to last year’s totals. Many people who would have liked to purchase and/or property this year will be disappointed. But, just because the number of transactions fall doesn’t necessarily mean property values will fall. It depends on how the supply of available homes compares with the demand. Simple economics.
You’ll notice I’ve added a new calculation to my watch list: “Success Rate”. The Success Rate looks at the number of sales divided by the number of properties listed for sale. That calculation results in a percentage. I’ll compare the success rate in 2020 to the success rate in 2019 from now one.
The Success Rate in 2020 compared to 2019 is much lower. Translated that means the supply of homes has been out pacing sales as compared to 2019, at least for now.
Our Personal Status.
I will continue to post updates related to the metro Rochester real estate market during the coronavirus. The situation is changing rapidly. You deserve the most recent information about our real estate market from a source you trust.
I wish you and your loved ones good health and good spirits during this unfortunate crisis!
RE/MAX Realty Group | 10 Grove Street | Pittsford, New York 14534 | 585-248-0250