We read a lot about what the so-called ‘experts’ think will happen to the real estate market as a result of COVID-19, but what do homebuyers and sellers think?
Transactly conducted a market survey among 400 homebuyers and 400 home sellers who planned on buying or selling a home in 2020, prior to COVID-19, to hear their opinions.
- Should real estate be considered an essential service?
- Are homebuyers and sellers deterred during ‘stay-at-home’ restrictions?
- Are homebuyers willing to purchase a home without seeing it?
- What would entice a homebuyer to purchase a home during the COVID-19 pandemic?
- Are homebuyers and sellers concerned about appraisals?
- What are home sellers biggest concerns about listing during the COVID-19 pandemic?
- What do homebuyers and sellers think will happen to home prices?
- What do homebuyers and sellers plan on doing once ‘stay-at-home’ restrictions are lifted?
- What would discourage homebuyers once ‘stay-at-home’ restrictions are lifted?
- What would discourage home sellers once ‘stay-at-home’ restrictions are lifted?
- What do homebuyers and sellers think will happen to the housing market?
Here’s what we learned.
Buyers and Sellers Split on Realtors® as Essential
The world is facing trying times right now. No one can ignore the stay-at-home restrictions, social distancing guidelines, and countless business closures. It seems that even with drastic measures in place, buyers and sellers are still split on if real estate agents should continue business as usual.
The study shows that 54% of sellers and 56% of buyers have this belief. While that is only a slight majority, it is surprising, and encouraging, that so many individuals are willing to continue their real estate business dealings in spite of the current pandemic.
About Half Still Plan on Moving Forward During COVID-19
Buyers and sellers alike were anxious for springtime to bring the real estate busy season this year. With the state of the current pandemic though, many needed to turn to resources from experts to help determine if they should still move forward with their plans.
Our survey shows that most have decided the coronavirus won’t be delaying their plans to buy or sell. 59% of sellers are still willing to list their home even when stay-at-home orders remain in place. While 56% of buyers have also decided to continue to move forward with the process of purchasing a home during this period of increased social restrictions.
Many people may have the intention of continuing their previous real estate plans, but it is only a slight majority. Meaning the industry will undoubtedly see a drastic drop in inventory, as well as demand. This trend can already be observed, and for most states stay-at-home orders will not be lifted immediately, forcing the trend to only continue.
41% of Buyers Willing to Purchase a Home Without Seeing It
The survey determined that 59% of buyers would not feel comfortable making an offer on a house they could not see in person. This is a very understandable, and expected concern for buyers to have. Even with virtual tours and pictures available to them, nothing will replace physically being in the house. However, we still found it very interesting that a whopping 41% are willing purchase a home without seeing it in person.
In most states social distancing is only a strong suggestion, not a law. Meaning that it is possible for many buyers to still tour homes in person. Even though technically it is still an option, it is unlikely that both the buyer and seller would be comfortable with that arrangement. So chances are with the continued reinforcement of social distancing guidelines, having the experience of touring a home in person won’t be an option for a while – and, many homebuyers seem to be okay with that.
Low Interest Rates Could Keep Buyers in the Game
Remember the 56% of buyers who were still willing to buy a home during stay-at-home restrictions? Well the favorable interest rates the industry is offering right now may be why. Even with historically low inventory, and high competition in the market, favorable interest rates are keeping buyers active. Lending incentives serve as a strong motivator for buyers even through these trying times.
This is news that should excite sellers. Keeping them optimistic for their prospects in the industry directly following the lifting of stay-at-home orders. As long as lending incentives continue, buyers are ready to take advantage of them. Even if it means buying a home during, or directly following a pandemic. In turn, sellers should be prepared with the inventory they have to offer.
Sellers Seriously Concerned with the Accuracy of Appraisals
Appraisals are now being done on online platforms instead of in-person due to the stay-at-home order. This is being done for the health and safety of everyone involved, but buyers are concerned about the accuracy of appraisals done this way. In fact 80% of sellers said they would not be willing to participate in an appraisal conducted virtually. Appraisals significantly affect the value of one’s home. Therefore you want your appraisal to be as accurate as possible, and favor you price wise. Considering how recently virtual appraisals have been introduced, it is not surprising sellers are hesitant about using the service.
If virtual appraisals were to gain in popularity and use though, this statistic would most likely turn around. Uncertainty makes people extremely cautious. If people were confident they would get a favorable appraisal, the opinion on this method of appraisal would undoubtedly change.
Sellers are Worried About Low Ball Offers
Sellers have an obvious concern of possible exposure to COVID-19 directly following, or during stay-at-home restrictions. Although only 24% of sellers stated that as their top concern if they were to list their home directly following the lifting of restrictions. Sellers identified that they are much more worried about the state of the market they would be entering. 38% of sellers said their top concern was an influx of low ball offers that would be unacceptable for the value of their home. While another 29% of sellers are anticipating low buyer interest. Which would inevitably decrease competition for their homes.
Overall it is clear that the primary concern of sellers is low offers that discourage them from engaging with buyers.
Many are Expecting a Decrease in Home Prices
The survey showed that 43% of buyers hold the opinion that the price of homes will decrease following the lifting of social restrictions. Whereas sellers are more split. 49% of sellers are predicting prices will decrease, while 46% believe prices will increase. Truthfully since this situation has no precedent, there is no way of accurately determining which way housing prices will swing. Only time will reveal the true effects the pandemic has had on the real estate industry.
This statistic does reveal that sellers could have more reservations about entering the market directly following the lifting of restrictions. If they believe the market will not favor them price wise due to the effects of the pandemic, it is possible they will wait to enter it.
Buyers and Sellers are Eager to Jump Back In
A majority of people are planning to resume their original real estate plans within 6 months of social restrictions being lifted. If this were to be the case it would show strong promise for the industry. Setting it on the right track to start recovering from the negative effects of the current pandemic. Buyers and sellers alike have expressed many relevant concerns with entering the market too quickly. It seems many are willing to set aside those concerns though in order to jump back into their original plans for the year.
Some Buyers Remain Hesitant Due to Uncertainties
This is a time of uncertainty for everyone. Social contact is being severely restricted, people are losing their job security, and school’s have been dismissed for the near future. Home buyers are not immune to this uncertainty. Many are anticipating it still affecting them even after stay-at-home restrictions are lifted. 41% of buyers are worrisome of possible COVID-19 exposure when going to open houses immediately following the lifting of restrictions. Additionally 37% of buyers worry about their financial means to buy a home with uncertain job security plaguing them.
Optimistically the survey shows that specific real estate factors such as home valuation, and inventory availability is not a concern for a vast majority of buyers.
Sellers are Concerned About a Lack of Buyers
Sellers were asked about what reservations they had when it came to immediately listing their home following stay-at-home restrictions. Most revealed their highest concern was a potential lack of buyers in the market, and there is substance to that concern. From the previous question you can clearly see that buyers have their own concerns when it comes to entering the market directly after restrictions are lifted. This combination could result in a continued stand still of the real estate market for months after restrictions end.
Sellers are also reporting a high concern of possible exposure to COVID-19 if they were to allow showings shortly after stay-at-home orders were terminated. This is a concern they share with buyers, who ranked possible exposure as their number one concern.
Most Agree Housing Will Recover Within a Year
Even though people are reporting a strong hesitation to enter the market quickly following the current pandemic, they are still showing eagerness to begin their real estate dealings. 37% of buyers and 52% of sellers believe the housing market will return in only 6 short months after stay-at-home orders are lifted. This is quite optimistic considering the uncertainty that surrounds the current situation in the world.
An even more optimistic statistic shows that 92% of buyers and 87% of sellers believe the market will return to normal within a year of all restrictions being lifted.