The novel Coronavirus, or COVID-19, is affecting life in our coutry and around the world in unprecedented ways. Every aspect of life is changed and little remains the same, even after only a few weeks of self-quarantine and government imposed shut downs.
Many industries are struggling to plan for a future that is uncertain, at best, and the sad truth is that even with government loans and grants, it will be difficult or impossible for many of them to survive.
At no other time in our recent history has it been more important to buy local and support your neighbors as much as you are able.
I am hopeful that this global disaster will bring out the best in people and will foster a renewed sense of community – something that has diminished during the fast-paced, digital age in which we live.
I see social media posts from those asking neighbors if they need anything at the store. I see businesses like nail salons buying up masks and donating them to their local hospitals. And more than that, I see people coming together and appreciating each other as the world forces us each to reassess our priorities.
“Have a nice day” has been replaced by “Stay Safe” and though we are physically further apart than before, the world is coming together to fight a common enemy.
On an individual level, some of us are lucky enough to have the financial stability to weather the storm, while others live paycheck to paycheck. Relative wealth is not necessarily the only indicator, as many in the middle class struggle to keep up with mortgage payments, credit cards, medical bills and the like, but still, we must first tend to those who have the most immediate need – those who are not worried about the mortgage, the car payment, or the rent, but rather who worry about what they will feed their children tomorrow.
The grim truth is that, as a society, we should have been thinking about this all along, but a robust economy and economic growth tends to blind us to these issues.
Although I didn’t intend to write an op-ed piece, it is hard not to touch on the fear and uncertainty we all share as well as the undeniable growth of community and caring. I, personally, have not felt this sense of solidarity since 9/11 and while it makes me sad that tragedy is what brings us together as a nation, I am glad that this time, at least, we are united across the globe – the entire human race as one against a faceless enemy.
If you are reading this piece, you probably have some interest in how all of this affects the real estate industry. Whether you are a buyer, a seller, a realtor, a mortgage broker, a title agent, a home inspector, or one of a multitude of other people reliant on this sector, the changes that are coming down the pike are going to be huge – at least until the end of the pandemic and that could realistically be 12-18 months from now.
I’m not going to go into detail about the various relief programs available as they will differ greatly from place to place and by the time this is published, some of the facts might already be outdated, but here is a general guide based on how things look today.
real estate in PA - classification of sector and new rules
Here in Pennsylvania, real estate and the associated businesses were first classified as “non-essential” and were asked to stop providing services to the public on a mostly voluntary basis.
Most of us started practicing social distancing as much as possible. We brought disinfectant wipes to showings, tried not to touch anything we didn’t have to, and substituted the “elbow bump” for the more traditional handshake.
Soon after that, a more strict implementation of that same idea was rolled out and the governor issued a stop order for all businesses classified as “non-life sustaining”. Again, real estate fell into that category.
All in person real estate transactions were ceased and until that order is lifted, it is not legal at this time to meet in person with a client or clients regardless of how small the group may be. In the beginning, many wondered whether it was ok to meet with one person or to show properties that were vacant, but this rule has been restated very clearly and any business that cannot be conducted remotely shall stop indefinitely.
Since some part of almost all real estate transactions happen in person, the business as a whole is effectively halted until the ban is lifted or until a modified approach to our day to day business can be implemented.
How employees of the sector will be affected
Real estate agents, brokers, and many others in the real estate world are self-employed, which comes as a surprise to many. Although we are affiliated with a company or brokerage, such as myself with Berkshire Hathaway HomeServices Choice Properties, most of rely 100% on commissions and receive no additional salary. In the past, those who were self-employed could not apply for unemployment.
The good news is that these rules have been temporarily changed and those self-employed persons affected by the stoppage can apply for unemployment.
The not so good news is that real estate transactions take time and with all in person business halted, even after the ban is lifted the sector may be slow to start back up.
Couple that with the instability of the market and the way real estate practices will change and we’re going to be in for a bumpy ride.
potential changes to the industry
Real estate has become more and more digital over the years and the need for social distancing is going to push us even further into the future.
Contracts and paperwork can already be filled out and signed electronically and many buyers finance a home purchase without ever meeting their mortgage broker in person.
Many high end properties already feature a virtual tour and I anticipate this will be applied to more and more properties across the board as we slowly come out of this pandemic.
Open houses with large groups of people may be a thing of the past. Real estate agents will need to become comfortable with public speaking and will have to learn how to host a virtual open house.
Individuals in the sector will have to get more creative in their marketing and clients may ask their realtor to show them properties virtually via Face Time or other social apps before they visit in person, thus limiting the number of people exposed for any given property.
It is unlikely that most buyers will be comfortable purchasing a home sight unseen, and a home inspector literally cannot do his or her job without physically visiting the property in question, so some face to face human contact is always going to remain.
But we must remember that we are responsible as an industry, as members of our communities, and as neighbors to do what we can to limit the spread of the virus even after we get back to work. We’ll take every precaution to change our practices and policies to fit into this new world and help keep the spread of the disease to a minimum.
what should I do if I want to buy or sell right now?
The answer to this question is not a simple one, nor is it likely one you will want to hear if you were hoping to buy or sell a home this Spring.
If you are a buyer, inventory is probably going to be limited for some time. Sellers who would have listed this Spring or who previously had their homes for sale may put their listings on hold temporarily if it is financially feasible for them to do so. .
Those sellers will not want to chance buyers bringing the virus into their homes and so listings will be limited to those who are forced to sell or to properties that are already vacant. Couple that with the fact that inventory in the Lehigh Valley was already extremely low and this is going to be a tough time to find a new home.
Sellers, on the other hand, will face some of the same problems as buyers. While some buyers may still be willing to preview new homes, a portion of the available buyers will only want to view vacant properties, again due to fear of the virus. Many of the most time-tested marketing techniques, such as open houses, will no longer be allowed if we, as a society, must avoid crowds.
And to make matters worse, even though the Federal Reserve will almost certainly maintain the current low interest rates, lenders may not have the capital or liquidity to provide as many loans as before. Less money for loans means tighter controls on who gets that limited amount of funds. For many buyers, this may mean they no longer qualify for financing. That is equally as bad for sellers. No financing means no offers.
So what is the answer for buyers and sellers?
Wait…If you can. Wait to sell or buy until things start moving a little bit more normally. This could mean one month or two or it could be longer. No one really knows for sure.
As a real estate agent, I do not dispense that advice lightly because it is detrimental to my own capacity to make a living. Nevertheless, it’s the right advice.
I believe the value of a realtor lies in their ability to give sound advice and to loyally advocate for their clients and we must do this most especially when the best advice is such a bitter pill to swallow.
We shall persevere
Though many aspects of the future look bleak, we must always maintain hope and look at things in a positive light.
We must look to those loved ones we hold dear and keep safe through our hardship and vigilance and to the gift of time we now have to spend with them.
As responsible citizens of a global society, we must do our best to bolster the economy by spending when we can instead of hoarding out of fear.
Though our budgets will be tight, we cannot forgo charity and common decency.
For those who cannot give financially, the world will have dire need of volunteers in the coming months and I, personally, plan to do what I can to improve the world in which we live – from a distance of 6 feet.
Be safe, stay strong, and we will persevere.
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