How do you sell a home in the epicenter of a pandemic?
The outbreak of coronavirus has left many in the real estate industry asking the key question as the normally robust spring market kicks into gear.
Low interest rates, a decline in new home listings and sellers’ willingness to come down on price have allowed the market to pick up some steam in recent months.
But concerns over coronavirus are causing people to limit their exposure to large gatherings and strangers, such as open houses, even amid favorable market conditions for buyers.
Real estate experts face unprecedented challenges as New York state declared a state of emergency last week and the National Guard deployed to a one-mile containment area in New Rochelle due to coronavirus.
Yet the experts so far maintain that it’s too early to tell how these events will affect people’s ability to sell their homes in the spring market.
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Those interviewed by The Journal News/lohud say the outbreak came to Westchester County during a bull run for the single-family real estate market. And while it is too soon to tell the true effect of the virus, sellers and buyers are already taking safety measures.
“When consumers process uncertainty — just like they did with the [state and local tax deduction cap] — is (when) we see a slowdown in activity,” said Jonathan Miller, of real estate appraisal firm Miller Samuel. “The problem is that you have consumers that are motivated by the drop in rates and then you have others that want to wait until they’re comfortable. So it’s not a sure thing.
“What we’re seeing in the city … is a slowdown in inventory coming to the market,” he said.
As a result of coronavirus, Miller said the local real estate market may see a slowdown similar to 2017 when the Tax Cuts and Jobs Act limited state and local tax deductions to $10,000.
But the CEO of Miller Samuel said coronavirus and the low interest rates may prove beneficial to buyers this year.
Sellers in Westchester, he said, have had to come down on pricing in recent years to meet the new market expectations. And the potential reduction in inventory due to the virus, coupled with favorable interest rates, may push sellers already in the market to consider further discounts.
Leah Caro of Bronxville-based brokerage firm Park Sterling Realty said new listings have slowed in the county, but the coronavirus frenzy has been offset by an early start to the spring market this year.
“Normally, we see the uptick in the listing inventory beginning in February but really peaking in March and April, which we still may see,” Caro told The Journal News/lohud. “But people weren’t waiting in the wings to bring their properties on.
“We have had one seller who was scheduled to bring her home onto the market next week push that back because of her concern about corona,” Caro added. “She’s planning to sell, but she just wants a couple more weeks to see where this goes because she doesn’t love the idea of having multiple strangers in her property. And she does fit one of the demographics of being more vulnerable.”
New Rochelle a different tale
The single-family market in New Rochelle tells a different story.
Michele Silverman Bedell of Silversons Realty said she’s hopeful the containment zone will not be active after March 25.
Silverman, the seller’s agent for a 2,300-square-foot home within the containment zone, says her listing at 15 Ranger Place is still drawing potential buyers.
However, concerns over coronavirus have led her to cancel an open house for the property this Sunday.
According to the Hudson Gateway Association of Realtors, five homes within the containment zone are still planning to host open houses this weekend.
Kate Mercado, a resident of New Rochelle and a broker for Julia B. Fee Sotheby’s International Realty, said the city’s single-family market is experiencing a drop in casual buyers while seasoned buyers see an opportunity.
“We’re seeing people who know that they want to be in New Rochelle,” she said. “It could be a great time for them to sort of take advantage of other people who may not be coming out to explore right now if they’re nervous about, you know, the virus being sort of centered near us.”
The New Rochelle market experienced a drop in median sales price, new listings and closed sales in 2019. The market saw a reduction in new listings of 12.5% over 2018, while median sales price decreased 1.5% to $675,000, according to HGAR.
The association of realtors reported condominiums and co-ops in New Rochelle saw a growth in median sales price by 21.7% and 4.6%, respectively. The median sales price for condominiums was $522,000 while the median sales price for co-ops in the city was $160,000.
Tailwinds for mortgage banking
The Federal Reserve’s cut of interest rates last week is expected to prop up the local real estate market despite concerns of coronavirus. Experts interviewed by The Journal News/lohud said the cut to interest rates will help drive some traffic even while sellers and buyers are wary of open houses.
According to the Mortgage Bankers Association, mortgage applications increased to the highest level since April 2009 last week.
The association said it expects the cut in interest rates to increase overall mortgage and refinances this year to $2.61 trillion — an increase of 20.3% over total originations in 2019.
“Market uncertainty around the coronavirus led to a considerable drop in U.S. Treasury rates last week, causing the 30-year fixed rate to fall and match its December 2012 survey low of 3.47%,” Joel Kan, MBA’s VP of Economic and Industry Forecasting said. “Prospective buyers continue to be encouraged by improving housing inventory levels in some markets and very low rates.”
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
