The real estate industry has suffered a heavy blow caused by Covid-19. Just in a few months, new listing volumes have fallen, mortgage credit standards have been tightened, and buying demand have been reduced.
When the US entered lockdown in mid-March, both buyers and sellers gradually withdrew from the market, abandoning the market completely in a month’s time.
U.S Pending Home Sales in 2020
In March, on the seller side, there were 3% of homeowners who decided to postpone the plan to sell their houses and the ratio dramatically jumped up to 27% a month later. In only seven days from April 11 to April 18, 2020, US pending home sales were decreased 40% compared to last year. Explanation for the situation, shortage of buyers is considered one of the main reasons. In addition, statistics indicate 52% homeowners expressed concern that they may not able to get a fair price, currently and even after the pandemic. As a result, sellers tend to hesitate to list their homes.
On the buyer side, things are also pretty undesirable. At the start of the pandemic, buyer demand stayed constant. However, 40% of buyer gave up buying in just a month. One of the first reasons is there are fewer buying options due to the cancelation of the open houses and the number of listings. Certainly, the other reason is financial circumstance. According to surveys have been conducted, 56% had revealed that there is a high chance that their savings would run out before the pandemic ends, 51% had concerns about the ability to pay for their daily bills, and 33% had been worried they cannot make their mortgage payments.
Overall, financial experts predict that the real estate market will get worse before it gets better. Analytical data show that house prices will only drop by 2-3% by the end of 2020 (compared to a 30% decrease in house prices during the 2008 economic crisis and will most likely be back to normal by 2021.
Babich, L. (2020, June 11). COVID-19 Real Estate Trends Agents Should Understand. Real Trends. Retrieved from https://www.realtrends.com/blog/covid-19-real-estate-trends-agents-should-understand
Wedlake, N. (2020, May 4). Real Estate in a Pandemic: How COVID-19 May Impact Today’s Housing Market. Retrieved from https://blog.thomvest.com/real-estate-in-a-pandemic-how-covid-19-may-impact-todays-housing-market-d94581594988