The real estate market was dealing with its own challenges heading into 2020 – including affordability and limited inventory – but there are concerns the coronavirus crisis may deal a heavy blow to the sector.
In March, preliminary data showed the situation has begun to negatively affect both buyer and seller behavior – though not yet to a serious extent.
A flash survey conducted by the National Association of Realtors of more than 70,000 residential members showed that about 78 percent of respondents said the situation had not changed homebuyer interest in their markets. That compares with 13 percent who reported a decline in interest – numbers that were higher in California and Washington specifically.
Eighty-seven percent said seller behavior hadn’t changed, though 9 percent said the number of homes on the market had declined – a figure that was also higher in California and Washington, two states hit hard by the initial U.S. outbreak of the virus.
Very few reported seeing sellers remove homes from the market due to the coronavirus situation.
The survey was conducted on March 9 and 10.
Hovnanian Enterprises Inc. chairman and CEO Ara Hovnanian noted similar trends during a recent interview with FOX Business’ Liz Claman. On Tuesday, Hovnanian said home sales have been “robust” over the past two weeks, which he admitted was surprising.
“We have been selling a lot of homes,” Hovnanian said, adding that he was cautious moving forward considering how rapidly the national situation is changing.
The National Association of Homebuilders appears to have a more wary outlook. On Tuesday the group sent a letter to President Trump asking for support for the housing sector.
“We are hopeful the solid underpinnings of the national economy can weather this national emergency; nonetheless, the federal government must take decisive action to support the housing sector, both for the homebuyers who power housing markets across the country and for the small businesses that build 80 percent of the new homes in America,” the letter read.
The group also proposed measures to prop up the sector, including mortgage forbearance, a payroll tax cut and properly funding federal rental assistance programs, among many others.
The potential good news for prospective buyers, however, is that mortgage rates could decline. The Federal Reserve cut its benchmark interest rate to zero over the weekend, and mortgage rates tend to mirror moves in interest rates – though the impact can be delayed.
However, the NAR survey showed that about 50 percent of people said recent declines in the stock market offset the decline in mortgage rates, in their financial perspectives.
Prospects of a looming recession as a result of the economic effects of the virus may also push homebuyers onto the sidelines. While the administration looks into ways to shore up Americans’ financial situations, about 18 percent of American households have already reported that someone in their family has either been laid off – or had their hours reduced – as a result of the coronavirus spread.
As previously reported by FOX Business, the luxury real estate market, particularly in states like New York and California, has already begun to decline. Softness started when the virus broke out in China, since a large proportion of buyers in this sector tend to be from China.