A month and a half into a national emergency that has shuttered the economy as the U.S. battles with the coronavirus pandemic, the real estate market is already bearing the impacts of the health crisis.
Local policies that ban in-person home showings, inspections, appraisals and document signings aside, both homebuyers and sellers have instinctively pulled away from the market ahead of what would typically be a busy spring season.
According to the National Association of Realtors, existing home sales dipped 8.5% from February to March, although year-over-year, they remained in positive territory with a slim increase of 0.8%. But these figures reflect the closing of transactions that had been initiated at least a month prior. Because of the data lag that exists in the real estate industry, the true current effects of COVID-19 may not begin to emerge in statistics until early summer.
“What we're going through right now is an induced recession,” says Skylar Olsen, senior principal economist for real estate information company Zillow. “We made this, right? We had to make it because the coronavirus was a very serious public health risk.”
While divergent from the last recession, which began with an overheated housing segment, the current circumstances – namely, the impacts of health scares on real estate – do have precedent, which could offer insights into what may lie ahead.
With its deadly toll, the coronavirus pandemic is now eclipsing past outbreaks, which did not prompt the lockdowns that are currently gripping the U.S. as well as a slew of other countries around the globe. Here is how the COVID-19-induced fallout in today’s housing market compares to the effects of the swine flu of 2009 and the SARS outbreak in 2003, which charted the first pandemic in the new millennium.
COVID-19 vs. Swine Flu
In the spring of 2009, the U.S. was the first to detect a new type of influenza virus, H1N1, which came to be known as swine flu. The Centers for Disease Control and Prevention estimates that in the first year after the initial outbreak, 60.8 million Americans got infected, nearly 300,000 were hospitalized and about 12,500 died.
As of April 29, 2020, over just a couple of months, there are more than 1 million positive COVID-19 cases in the U.S. and nearly 58,000 deaths.
“Back in 2009, the effects (of H1N1) seem to be fairly localized,” with sporadic temporary social distancing, says Javier Vivas, director of economic research at realtor.com. “It was more localized in the south. Whereas in today's situation, you really see it in almost every major city.”
The swine flu, to an extent, slowed the housing market’s recovery following the Great Recession, which ended in June 2009. In a post on realtor.com, Vivas writes that nine months after the H1N1 infection peak, existing home sales plunged double digits, a slump that lasted for five months. At the same time, inventory grew, pushing prices down.
Only about two months into the spread of the coronavirus in the U.S., home sales have dipped, but for now, prices retain their strength as sellers are taking their homes off the market – at first, to avoid inviting potentially sick strangers in.
“One of the things that is interesting is how this virus today is almost shifting the normal dynamics, even in the near term,” Vivas says. “Typically, in real estate, you see sellers react after buyers react. So, sellers wait for buyers to make the move. What's different today is that (sellers) had to pull back on the listings. The fact that sellers actually are reacting before buyers makes this a very odd time of the year.”
A decade ago, the economic consequences of the swine flu compounded with the end of the homebuyer tax credit, enacted in 2008 to spur housing activity and make properties more affordable to first-time homebuyers. Moreover, it slammed the country during its still nascent Great Recession recovery, when some indicators had just begun to rebound.
This year, the coronavirus has already purportedly halted the longest economic expansionary period in American history. While some economists had predicted a recession in late 2020 or early 2021, the pandemic has triggered the onset of what is a mandated downturn (leading to 26 million jobless claims in a month), whose length could dictate how fast the housing market bounces back.
“The recession (we were expecting) even before the virus hit, we knew it was going to be closer to what we would call a normal recession where you see a gradual deceleration in indicators,” Vivas says. “Then you see the housing market somewhat buffered, but not completely unimpacted."
He adds: “As it relates to (the coronavirus), the magnitude of the sanitary situation is much larger. But economically speaking, you could see a much faster recovery just because the fundamentals were in a better place before the virus hit compared to 10 years ago.”
COVID-19 vs. SARS
At the speed with which the pandemic has unfolded, COVID-19 prompted an economic slump that resembles the fast downturn that occurred in Hong Kong during the four-month SARS outbreak in the spring and early summer of 2003.
Caused by a coronavirus and first reported in Asia, SARS infected more than 8,000 worldwide, causing nearly 800 deaths before its containment, according to the World Health Organization. While the scale of SARS pales in comparison to COVID-19, the social measures and their impact on the Hong Kong housing market somewhat track the course of the current pandemic.
Similar to the American economy prior to COVID-19, Hong Kong’s economy in early 2003 enjoyed an expansion with dropping unemployment rates – before SARS spurred a recession. Zillow reports that during SARS – similar to what is happening in the U.S. today – home prices in Hong Kong resisted a decline, while transactions fell significantly as residents practiced “avoidance behavior” by shunning travel, restaurants and public gatherings.
Though COVID-19 and SARS vastly differ in their potency, “I think the hope is in the lesson that, from at least the Hong Kong SARS epidemic, the recession was an induced recession,” Olsen says. “It was a ‘click’, it happened fast and the recovery was fast as well.”
A streak of optimism in the U.S. housing market might already be emerging. According to Zillow, pending home sales decelerated in the second half of March and remain substantially lower compared to February, but in the week ending on April 19, they were 6.2% higher than the previous week. Moreover, while inventory has gone down, home values remain steady at nearly $250,000 in March, posting a 4.1% year-over-year growth.
Ensure a quick sale.
Selling your home quickly not only allows you to move on with your life, it also means fewer days of keeping your home in pristine condition and leaving every time your agent brings prospective buyers for a tour. According to real estate information company Zillow, the best time to list a home for sale is on a Saturday between May 1 and 15; homes listed during those times sell six days faster and for 0.7% more than the average annual home price. But how fast your home actually sells, and at what price, depends on factors beyond timing. Here are 10 secrets to selling your home faster, no matter when you list it.
Updated on March 20, 2020: This story was published at an earlier date and has been updated with new information.Pick a selling strategy.
Pick a selling strategy.
Before putting a for sale sign in your yard, it's important to pick the selling strategy that will work best for you. The for-sale-by-owner option may be best if you feel confident in your ability to market the home and negotiate. If your time is better spent on other details, a real estate agent could be best. If you need to sell the home quickly, you may want to inquire with an iBuyer, an entity that can make the deal close faster than the typical homebuyer. You should feel confident in the selling strategy you choose, and avoid switching from one to the other while your house is on the market. Buyers could be turned off by the constant changing of circumstances.Invest in a professional photographer.
Invest in a professional photographer.
According to NAR's 2019 Profile of Home Buyers and Sellers, 44% of recent buyers started their search online. Of those, 87% found photos very useful in their home search. If your listing photos don’t show off the features of your home, prospective buyers may reject it without even taking a tour or going to the open house. Hiring a professional photographer and posting at least 30 photos of your home, inside and out, is a good way to attract buyers. Photography is often free for home sellers, as shoots are often conducted at the expense of real estate brokers as part of marketing the property.Clean everything.
(People Images/ Getty Images)
Nothing turns off buyers like a dirty house. Hire a company to deep clean if you can’t do it yourself. “When the (home) is on the market, no matter what time of day or night, it should be clean and neat,” says Ellen Cohen, a licensed associate real estate broker with real estate brokerage Compass in New York City.
Key places to clean while your home is on the market include:
- Kitchen countertops.
- Inside cabinets and appliances.
- Floors and room corners where dust collects.
- Bathroom counters, toilets, tubs and showers.
- Inside closets.
- Windows, inside and out.
- Scuffed walls, baseboards and doors.
- Basement and garage.
Depersonalize the home.
Remove all your family photos and memorabilia. You want buyers to see the house as a home for their family, not yours. Remove political and religious items, your children’s artwork (and everything else) from the refrigerator and anything that marks the house as your territory rather than neutral territory. The same goes for any collections such as figurines, sports memorabilia or kids' toys that can make a buyer think less about the house and more about you. Family photos can be replaced by neutral art or removed entirely – just be sure to remove any nails and repair nail holes where any hanging photos used to be.Let the light in.
Let the light in.
People love light and bright, and the best way to show off your house is to let the sunshine in. Open all the curtains, blinds and shades, and turn lights on in any dark rooms. If the natural light situation is lacking in any room, strategically place lamps or light sources throughout to set the mood. And while your house is on the market, open all curtains and turn on lights every time you leave your house for work or errands in case you get word that a buyer would like to tour the space before you get home.Be flexible with showings.
Be flexible with showings.
Buyers like to see homes on their schedule, which often means evenings and weekends. Plus, they want to be able to tour a home soon after they find it online, especially in a hot market where they're competing with other buyers. If your home can be shown with little or no notice, more prospective buyers will see it. If you require 24 hours’ notice, they may choose to skip your home altogether. "That's one less person who gets to see the property," Cohen says. Be ready to leave quickly as well – if you're still cleaning up or hanging around outside when the buyer arrives, it can make for an awkward interaction.Set the right price.
Set the right price.
No seller wants to leave money on the table, but the strategy of setting an unrealistically high price with the idea that you can come down later doesn’t work in real estate. Buyers and their agents have access to more information on comparable homes than ever, and they know what most homes are worth before viewing them. A home that’s overpriced in the beginning tends to stay on the market longer, even after the price is cut, because buyers think there must be something wrong with it. "Pricing correctly on the lower side tends to work much better," Cohen says.Remove excess furniture and clutter.
Remove excess furniture and clutter.
Nothing makes a home seem smaller than too much big furniture. Rent a self-storage container or a storage unit and remove as much furniture as you can. It will immediately make your home seem calmer and larger. Remove knickknacks from all surfaces, pack them away and store the pieces upon which you displayed them. Take a minimalist approach to books, throw rugs and draperies, and clear off your kitchen and bathroom countertops, even removing appliances you normally use. If you can scale down the contents of your closets, that’s even better, because it makes the home's storage space look more ample.Repaint in neutral colors.
Repaint in neutral colors.
A new coat of paint will do wonders to freshen up your home, both inside and out. This is the time to paint over your daughter’s purple bedroom, nix the quirky turquoise bathroom and cover up the red accent wall in your dining room. Busy wallpaper can also turn off potential buyers. Your goal is to create a neutral palette so buyers can envision incorporating their own personal touches in the home. "You just want people to see the space for what it is," Cohen says. Rather than a stark white, consider neutral shades of gray, taupe and cream on the walls.Spruce up the front of your home.
Spruce up the front of your home.
You’ve heard it 100 times before, and it’s still true: Curb appeal matters. You don’t get a second chance to make a first impression. A new or freshly painted front door, new house numbers and a new mailbox can breathe life into your entryway. Fresh landscaping and flowers in beds or in pots also enhance your home’s first impression. Trim trees and bushes, tidy up flower beds, remove dead leaves from plants, clear out cobwebs from nooks near the entrance and pressure-wash walkways, patios and decks. Leave the outdoor lights on, too, because prospective buyers may drive by at night.Here are 10 tips to sell your home faster:
Here are 10 tips to sell your home faster:
- Pick a selling strategy.
- Invest in a professional photographer.
- Clean everything.
- Depersonalize the home.
- Let the light in.
- Be flexible with showings.
- Set the right price.
- Remove excess furniture and clutter.
- Repaint in neutral colors.
- Spruce up the front of your home.