The effects of coronavirus are being felt by everyone all over the world. The duration and severity of its consequences are less predictable. The initial impact of this infection affected only our health and the ability to go on with our daily lives. Then, the secondary impact has been the global response, which is a combination of banned flights to safety in the markets; and a limitation on global trade both within and between nations. These restrictions have affected the movement of goods, currency, people, and, eventually, the country’s GDP.
The real estate industry has not been spared. In fact, the latest research has shown a reduction of input by the investors in the sector. While many influences will depend on the time it takes to contain the spread of the disease; the effect is different across various price points and investment types in the real estate market. Realtor.com recently published its latest numbers on the coronavirus impact on the nationwide residential property market. According to the data released, the month of March alone has had a significant change regarding investors listings and buyer behavior in the real estate sector.
“The month started to be a strong spring buying season, this we anticipated,” explains Danielle Hale, chief economist at Realtor.com.“The effect of COVID-19 materialized in the latter half of March. Week by week, we see decreases in new listings.”
Let’s have a look at the impact in details:
The decline of newly listed properties:
This decline was more evident by the end of last month. In the last week of March, the number of recently listed properties had decreased by 34% compared to what was experienced at the same time last year. This has been this year’s biggest drop, and experts agree that this just the beginning. The drop could be evidence that sellers are reviewing their plans to sell or suspending them as the COVID-19 crisis continue to strike.
The decline in home inventory:
Home inventory declined nationally in March by 15.7% year over year. This is a higher rate of decline than the 15.3% year-over-year decline in February. (Year over a year is the comparison of data from one period to the same period 12 months earlier.)
The decline here indicates that property buyers may be canceling their plans in response to the commotions influenced by COVID-19.
Home prices reduction:
There are also hints that home prices could reduce further from the tension surrounding the coronavirus pandemic.
The average listing price in the U.S. grew by 3.8% year over year in March. However, that was just low from the 3.9% year-over-year growth in the median listing rate in February. In the last week of March, the median listing price had only risen by 2.5% year over year. That is the slowest rate of growth since 2013, when Realtor.com began tracking the metric.
The coronavirus pandemic is having a significant impact on the real estate industry and the entire economy at large. Sellers in the industry are rethinking whether they should continue listing their property or not. Buyers, on the other hand, are not under any pressure to purchase the property; they are reluctant perhaps out of fear. There is also a decline in home inventory, which is a crucial indication that the market is slowing down.
It may make sense for some consumers and investors to put a pause on property buying or selling plans just to watch how the next couple of months play out. In the meantime, some individuals may benefit from this by using the time to analyze the market trends before making a move.