Welcome to another special weekly update from the MAR Research corner, where we cover the latest major market metrics and how they’re impacted by the new Coronavirus. The latest showings numbers updated through 3-29-20 illustrate a significant decline in activity. In fact, showings volume is now consistent with early-January levels. It appeared as though activity was preparing to level off at the 3,000 mark around March 23 and 24, but the declines persisted as the concerns compounded.
As many are aware, activity can often vary dramatically by price point. In fact, we often see distinct sub-markets (condos, new construction, lakefront property) or price ranges (<$250K vs. $1M+) move in opposite directions based on a number of different metrics. For example, days on market can be shrinking for homes under $300K while increasing for homes over $750K. Prices or absorption rates can be increasing for existing properties while decreasing for new homes. Because of those variations and other market complexities, it’s important to examine activity by price range. Showings were down 43.6% for homes priced between $750K and $1M, but down 21.0% for homes between $350K and $500K. This is on top of changes from the preceding weeks. Some segments were reluctant to slow down at first ($250-$350K), perhaps reflecting unquenchable demand in that segment combined with ongoing under-supply challenges and historically attractive mortgage rates. Meanwhile, other segments (i.e. $1M+) pulled back sharply and quickly.
We’re debuting a few new charts this round that compare 2020 trends to the prior 3 years. One important piece to be mindful of is the fact that 2019 was also a unique year—beleaguered by extreme snow and a fast melt that surely affected the market. That’s why both new listings and pending sales figures appear suppressed for 2019. Additionally, the 30-year mortgage rate was on its way back down from 4.5% in early 2019. So both the supply and the demand side of the market were impacted. Sellers listed fewer properties because of wet basements and other issues; buyers may have been slightly less eager to get qualified and house-hunt after rates had “spiked” (to 4.9% in November 2018).
Even so, the recent decline in seller activity as measured by new listings is impossible to ignore. In recent days, new listing activity in 2020 fell below already-suppressed 2019 levels, which could be related to the Governor’s order or its impact or simply a reaction to less demand, foot traffic and offers or growing concerns around contagion. Two other factors are worth noting here. First, the 2020 trend was looking quite promising up until a few days ago, suggesting we were off to a great start. And second, despite a slight downtrend since early March (same as 2017), new listings were still performing relatively well through Thursday the 26th. The 2020 new listing trend went from “first” place on Thursday to fourth (last) place just a few days later.
Pending sales activity behaved somewhat similarly, but with key differences. First, pending sales (an early measure of demand and likely to transition into a closed deal) grow more smoothly at the beginning of the year than new listings. Listing activity tends to be higher at the beginning of the month and heading into weekends. Second, pendings began declining around March 18th or 19th and the decline has continued but hasn’t accelerated downward. Third, 2020 pending sales activity was also trending ahead of all 3 other years for several weeks but also now finds itself in fourth (last) place compared to past years.
There are still homes on the market, there are still showings and there is still sales activity. There’s just less of it, for the time being. But real estate activity isn’t usually cancelled outright, it’s usually displaced sooner or later than originally planned (usually later, in this case–definitely later). That typically leads to pent-up listing or sales activity, meaning agents who are prepared and equipped to capture that on the other side of this pandemic will be best-positioned for success.
For other news, information and resources, please visit our COVID-19 response and resources page.