“It’s just bothering me — the cavalierness of the agents around me,” said Wittman, a real estate agent who planned to open his own brokerage, NextHome Reach, in early March but instead is sheltering in place because of the coronavirus outbreak. “There are too many [real estate agents] to count bragging about touring houses, their lame protective gear, or their prowess for sales during this crisis.”
Normally, spring is the busiest time of the year for the housing market, with buyers coming out in droves.
Now, as nonessential businesses are shuttering to wait out the pandemic, some real estate professionals are carrying on as usual — albeit with masks, gloves and hand sanitizer. Agents were holding open houses until they were prohibited by local officials. Nearly 200 open houses were listed last weekend and more than 600 open houses the week before in the D.C. region on the area’s multiple listing service. Mayor Muriel E. Bower (D) banned open houses as of Saturday; Maryland Gov. Larry Hogan (R) and Virginia Gov. Ralph Northam (D) forbid them as of Monday.
Home appraisers and inspectors are donning masks and gloves. Settlement companies are putting buyers and sellers in separate conference rooms and opening a new box of pens for each client who comes to a closing.
“It’s very, very surreal,” said Joe Gentile, president of Federal Title & Escrow in the District. “We still have people sending us contracts and buying homes despite what’s going on.”
With tens of millions of Americans on lockdown and working from home to try to stop the spread of the virus, states have taken different approaches to the spring ritual of house hunting.
Illinois, despite being hit hard by the coronavirus outbreak, has said that real estate is an essential service, and therefore is not required to close like retail outlets and restaurants.
But California, New York and Pennsylvania have said it is not. Seattle’s multiple listing service no longer allows agents to post open houses.
When Hogan ordered nonessential businesses to close in Maryland, he did not include real estate in that directive. The Maryland Realtors Association issued guidance that brokerages should close but that real estate agents could still make appointments, meet with clients and finish pending transactions.
And sheltering in place could have an unexpected benefit to the housing market.
“Now more than ever you realize what your house is like, some of things are great and some of the things are not so great,” said Jeff Kottmeier, a market research adviser for John Burns Real Estate Consulting. “People are spending a lot more time in their houses and thinking, ‘Okay, if I can trade up for something newer, something bigger, something different, there’s that possibility.’ They are saying they want a new home and they start looking online.”
Some buyers who have been frustrated by a lack of properties for sale are throwing caution aside in hopes of snagging a home while other buyers are sidelined.
“We still have the underlying problems we had before, which is not enough homes for people to buy and we’re not building enough homes,” said Bonnie Casper, a real estate agent with Long & Foster. “Those haven’t gone away. But if the buyer pool has shrunk, that does give a buyer a bigger opportunity.”
Real estate agents are turning to technology to replace the in-person experience. The number of 3-D home tours created on Zillow went up 326 percent on March 20. Matt McCormick of TTR Sotheby’s International Realty is offering virtual showings of his listings using FaceTime. Dana Rice of Compass uses Facebook Live. Her team also showed five to seven properties in person last week, mostly vacant homes.
“It’s certainly not a typical spring housing market. However, we continue to be insanely busy because in these uncertain times, clients want to talk through all of their options,” she said. “My phone is ringing off the hook and there is no shortage of options if clients are still feeling motivated to buy or sell a house. We continue to conduct virtual open houses on Facebook Live. We are accepting offers on listings.”
Although many aspects of buying a home can be done online, certain parts of the process — inspection, appraisal, closing — typically are done in person. And that’s maddening for those involved, not to mention it goes against the advice of health officials.
“Our frustration is running high,” Gentile said. “The biggest frustration is the industry’s unpreparedness for this situation.”
In some ways, business is booming at Federal Title because so many people are refinancing their mortgages because of the low rates. But because most lenders require that documents be signed in person, the company has had to figure out ways to maintain social distancing.
“It just feels eerie,” Gentile said. “You could tell [the clients] don’t really want to be there. They just want to get this done. The whole thing feels strange.”
What bothers Gentile the most is that it didn’t have to be this way.
“The highest level of frustration stems from the fact that there is a way to do this, even if we were closed down or shelter in place, if remote online notarization legislation had been passed,” he said.
According to Todd Ewing, chief executive at Federal Title, Fannie Mae and Freddie Mac are reluctant to buy loans without legislation that allows for remote online notarization.
Some states, including Virginia, permit remote online notarization, but others such as the District and Maryland, do not. Federal legislation was introduced on March 18 that would allow it in all states.
“It’s been a symphony of dysfunction among all the players — secondary market, lenders, legislators and title companies,” Ewing said. “All players are responsible for the lack of progress in this space. Instead of performing closings in a sterile online environment, we are confronted with business as usual, hosting borrowers in office or dispatching a closing attorney to the borrower’s residence.”
Although title companies can file most deeds and mortgage documents electronically with local jurisdictions, Montgomery County does not allow it. Right now, although the office is closed to the public, an official is at a designated door three times a day to accept documents from title companies and lawyers.
Settlement companies aren’t the only ones that are struggling to do business during this time. Home inspectors also are trying to navigate the new norms.
“We don’t allow anyone in the house” with the inspector, said Greg Patti, who owns All-Pro Services, a home inspection service in Fairfax, Va. “We go in with masks and gloves. We’re trying to minimize human exposure.”
Patti, 67, is part of the population thought to be most vulnerable to the coronavirus — people age 65 and older — but that hasn’t slowed him down.
“I’m not prepared to simply discontinue interfacing with the world, but I am exercising some caution,” he said.
Patti, who started his business in 1994, survived the Great Recession but said he isn’t sure he’ll make it through the pandemic. He has laid off his clerical staff and he and his son are not taking paychecks.
“We’re trying to maintain enough income to meet the bills you just can’t avoid,” Patti said. “We’re trying to stay alive enough so there’s a business to come back to.”
Like Patti, appraiser Ed Schmidt is taking precautions. He wears gloves and masks. He removes his shoes before he enters a house.
“What else can I do?” he said. “It’s hard to know what the right thing to do is.”
Despite social distancing, he has plenty of work. Many borrowers need an appraisal to refinance their loans. Because of all the refinances, “I have done more appraisals in the last month and a half than I’ve done in the 16 years prior,” he said.
Schmidt said that a few homeowners have been taken aback by him wearing a mask, but that almost everyone is glad to see him.
“A lot of people are thanking me that I’m actually coming to the house,” he said. “They’re like, ‘Oh, thank God you’re still going to come.’ ”
The pandemic hasn’t slowed sales at eNvy, a 127-unit condominium complex in Southeast Washington developed by Jair Lynch Real Estate Partners and marketed by Urban Pace. The building, which overlooks Nationals Park, had its best week since its grand opening nearly a year ago, with five units going under contract the week of March 16. It had five showings last week — one in person, four virtual — and is waiting to receive two contracts. The building is ahead of projections for March and halfway to its goal for April.
Urban Pace thinks its investment in technology — specifically virtual reality that allows buyers to see not only what their unit will look like but also what the view will be — has allowed it to continue to do business. Nonetheless, the company is taking precautions. It stopped holding open houses and went to one-on-one appointments. It sales offices are now closed to the public.
“We increased safety protocols for consumers and our agents to make sure everyone was safe,” said Clint Mann, president of Urban Pace. “I think through the use of FaceTime, virtual sales appointments, go-to meetings, video conferencing, we’re trying to connect with our buyers.”
Ali Wolf, director of economics research at Meyers Research, which analyzes real estate development and new home construction, says builders should weather this downturn better than they did during the Great Recession.
“It’s a different environment where builders had a fire sale in the last [down] cycle. They don’t need to have a fire sale,” she said. “I think [builders’] balance sheets are in better position today than they were during the Great Recession.”
Right now, builders are continuing to build. They are staggering shifts for workers or having one worker inside and one outside. The Department of Homeland Security announced over the weekend that residential construction is an essential business.
“Housing, usually with the exception of the Great Recession, helps us get out of recession,” Wolf said. “I think we’re still in a place that it can help us get out of [a] recession. But I do think there’ll be a short-term blip. There’s going to be some pain felt in the housing sector.”
How great the pain will be remains to be seen.
“It is too soon to tell exactly how it will play out,” said Jeff Tucker, an economist at Zillow. “This is really uncharted territory for the economy, for the housing market, for public health. It makes it challenging for all of us to forecast or even speculate about the future.”
Zillow has looked at early data in China, where the coronavirus pandemic began, and its housing market, and also at what happened during the influenza pandemic of 1918. What it found is that although the number of homes sold decreased, home prices didn’t drop as much.
“One interesting thing we’ve seen — and it really depends on the duration and severity of the pandemic and any associated recession with it — but one thing we have seen in the past is that prices were not as affected as the volume of transactions,” Tucker said. “The reason for that seemed to be that both buyers and sellers were really clamming up at the same time. . . . To the extent that buyers and sellers both pull back sort of equally — that would mitigate any price impacts. That definitely suggest the possibility of a downside risk for prices.”
Wittman, a real estate agent, wants to be ready when buyers return. But in the meantime, he’d rather they wait.
“I still keep seeing [ads that say], ‘It’s a great time to buy,’ ” he said. “No, it’s a great time to take a breath.” [Source: Washington Post]