The Covid-19 pandemic has affected a multitude of industries and markets, changing the way companies do business as well as how consumers choose to shop. The effects on the real estate market are quite interesting — real estate professionals have had to adapt to changing consumer needs and initiate new ways to show houses, collect earnest money deposits and closing costs, and even manage the socially distant closings.
Real estate sales in general have been in a state of flux in some markets, going strong in others, and reawakened fears of a housing crisis in others. The most noticeable change was in the spring months, when real estate sales experienced a downturn across the nation as many would-be potential home buyers instead chose to stay at home amid health concerns and government orders. Metro areas were most affected, bringing real estate sales down to their lowest levels in April and May, matching the sales level not seen since 2007.
In the early months of the nationwide shutdown, Forbes reported on a study that found 80% of prospective home buyers delayed their housing search or stopped it altogether. Even web traffic of people searching for homes on Zillow or Redfin slowed by almost 40 percent.
Thankfully, real estate sales rebounded in the summer months, bringing it nearly back in line with pre-pandemic levels. However, while sales increased, the available supply has not increased to equally match the demand. This has caused home prices to rise rather than falter, as many originally expected to happen as a result of the pandemic.
The Covid-19 pandemic has also caused a slowdown in the amount of new homes being built, further contributing to the low supply of available housing in many markets. This slowdown was temporary, however, and construction seems to be moving steadily on track again.
But while the real estate sales seem to be returning to normal, the way in which many sales are now occurring have changed drastically.
For starters, showing homes was also an obstacle — homeowners didn’t want strangers in their home, and home buyers didn’t want to enter a strange home. Technology allowed for virtual showings, enabling real estate sales to not only continue, but to gain further momentum as spring led into summer and fall. In fact, many agencies have chosen to go completely virtual, avoiding many of the risks and precautions that need to be taken when showing a home in a Covid world.
Another fear expressed by both real estate professionals, buyers, and sellers in the early months of the pandemic was that real estate sales would drop as closings were postponed or canceled by parties that did not want to appear in public in close proximity with one another. But this fear was alleviated as real estate agents, working in conjunction with closing attorneys, developed socially distant methods of closing on a home, including virtual closings.
And even the way in which home buyers are paying earnest money deposits, closing costs, and other fees have undergone a change — ACH electronic money transfers, in lieu of cashier’s checks or wire transfers. Making a payment via cashier’s check or initiating a wire transfer typically means a trip to the bank for the home buyer, followed by a meeting with the real estate agent to hand off the check. But this meant going out amidst stay-at-home orders, and many banks were closed anyway.
So instead, many real estate professionals are now choosing to utilize an electronic money transfer system such as paymints.io, which allows for home buyers to make payments from the convenience of their own home using a simple-to-operate app. An added benefit of using this ACH transfer system as a solution for real estate sales is that it offers additional security and protection in an industry encumbered by real estate fraud.
The Covid-19 pandemic also created a change in what consumers are looking for in a new home, and lower mortgage interest rates are encouraging more people to enter the housing market in search of the perfect new home.
Millennials, in particular, as the current largest demographic of home buyers, are seeking homes with additional bedrooms, open floor plans, and modern kitchen styles. But perhaps more important than that, rooms that could serve as a home office, since a significant portion of the workforce is now also working from home. Commute time to work was once an important consideration for home buyers, but a remote workforce is focused on other needs, such as an active neighborhood community.
Searches for multigenerational housing are also on the rise as families seek to have a home that provides space to care for aging relatives. Purchasing multigenerational houses is also a cost-effective solution in a market where real estate prices are steadily rising across the nation.
The Covid-19 pandemic has certainly caused some concern with real estate sales and will continue to do so as shutdowns and stay-at-home orders persist in many areas of the country. And there is likely to be even more changes in how real estate sales are conducted as well — virtual closings and home showings may become the norm, and prospective homebuyers may sacrifice once desired features for others that are more feasible and functional given the new state of post-pandemic world.
The current economic climate, lower interest rates, the scarcity of homes in many markets, and changing preferences for home buyers also all play a major role in how real estate sales will shift in the future, leaving many experts guessing as to what Covid’s final impact will actually look like.
Keep up to date with the latest happenings in the real estate market and how the Covid-19 pandemic is affecting real estate sales when you visit industry-related online forums and blogs.
To learn more about how using paymints.io can be safer and more secure than a wire transfer, as well as especially convenient for both the real estate professional and the home buyer, schedule a free demo today!