After surveying thousands of real estate agents and brokers over the last three months, the California Association of Realtors is shedding light on how Covid 19 is impacting the market. Use this information to help you construct a great business strategy moving forward.
“If we don’t get a second wave in the Fall, we will see good growth numbers in Q4,” predicts Leslie Young, CAR Chief Economist.
CAR’s data shows the market reached its lowest point in April, and since then, the market has really been moving up. Sometimes it’s two steps forward, one step back.
April saw many buyers and sellers hesitating with moving forward, but that is changing for the better as we move closer to the middle of June.
When it comes to changes in behavior, 13% say last month, they have had buyers buy sight unseen. They are showing more vacant properties to be in compliance with the “stay at home” orders. Agents say they are comfortable still showing properties. They plan to return to doing it as soon as the orders are relaxed.
When asked, are your buyers expecting lower prices? 90% said yes in April, but by the end of May, only 79% said yes. The data is showing the market is still competitive. Many agents say they are being pressured by buyers to get homes for lower prices.
Effects on Brokers
Brokers seem to be very concerned when the pause button was hit in March. A majority of them think it will take three months or longer to reset the economy. They expect their profits to be off 28% by the end of the year.
48% of larger brokerages expect to lose agents this year. Smaller brokerages think they will retain more of their agents over the larger brokerages.
57% of brokerages are extremely confident they will be around in 2021. 63% of larger brokerages will be reducing their footprint by getting rid of their brick and mortar offices.
Only 44% of agents are comfortable with doing things virtually.
“It’s critical they get trained. They have to get more comfortable with virtual transactions. Zoom is our new platform. Half of agents are using it regularly to communicate with their clients,” says Young.
Meanwhile, 59% of buyers are ok signing e-docs, and 70% of buyers comfortable touring a home virtually.
When agents were asked what do you think will be the biggest change to the industry, one agent replied:
“I think we will lose about a third of the currently licensed agents when it comes time to renew their licenses and pay Association dues. I expect some will use the lessons about working virtually and continue to apply them. I am hopeful that we will be able to continue to enforce getting a pre-approval before allowing showings since it’s what we should have been doing all along.”
Agent’s Thoughts
When asked what is the most important thing we’ve learned:
“To take nothing for granted, and of the importance communications plays into client relationships and retention. To let clients know they are cared about, no matter the circumstances, and that we are here for them.
And to remain flexible and open to changes, as well as maintain and spread a positive and can-do attitude with both the staff and the clients. There is beauty in everything, and there will be good that comes out of the last 30 days of the world being “on pause”.”
CAR believes their survey shows the post Covid consumer to be more about saving money rather than spending it. A home will also be looked at as a place where you both live and work. It will also be seen as being your gym, your school, your restaurant, and it is multi-generational. People will value more open space.
Who will the winners be?
· Residential Real Estate
1. Pent-up demand and supply
2. New space requirements
3. New geographical requirements
4. Low rates
5. Summer is the spring “home buying” season
· The relationship centered agent
· Housing supply: re-use commercial & retail space
Key Take-aways
· Buyers & Sellers took a time out mid-March – April
· Sellers cancelling open houses and listings
· Buyers postponing search, canceling escrow
· Financial distress is chief reason for canceling escrow
· Financing is the chief bottleneck in closing delays
· Buyers expecting prices to drop, seller not so much
· Share of discounted listings has not budged
· Agents are adapting: more virtual tours, e-signing etc.
This presentation can be found on: www.car.org/marketdata.
