By far the largest and most demanding topic of conversation in the world right now is the COVID-19 or Coronavirus. Our Flagstaff community seems to be responding well to the advice given to limit social gatherings and practice sanitary practices, recommended by the CDC. With that being said, we now have our first confirmed case in Coconino County (city not provided yet) and will most likely see more confirmed cases in the near future, as the county has recently opened a drive-thru testing site at Fort Tuthill.
We have numerous clients, both sellers and potential buyers, who are asking for our professional opinion on the Flagstaff real estate market during the Coronavirus (COVID-19) pandemic. While we do not possess a crystal ball, we do want to share with you what real estate industry leaders are saying about real estate and COVID-19. Here are some of the questions we have been asked and many of you may be wondering about the impact on the market:
Will real estate prices go down because of the coronavirus (COVID-19) pandemic?
For property owners, this is one of the most important questions on their minds right now. While it is still too early to quantify the impact on the prices for homes, the National Association of REALTORS® (NAR) published (3/19/2020) the results of a NAR member survey where they asked if buyer interest has decreased during the Coronavirus (COVID-19) outbreak.
48% of REALTORS® surveyed said buyer interest decreased. Another question was related to changes in inventory available for buyers. When asked, 69% of agents responded there was no significant change in available inventory. This is down from an 87% response a week ago.
Chief economist for NAR, Lawrence Yun, gave his thoughts on the current market predictions for how the real estate market will react after the current quarantine:
“The decline in confidence related to the direction of the economy, coupled with the unprecedented measures taken to combat the spread of COVID-19 which include major social distancing efforts nationwide, are naturally bringing an abundance of caution among buyers and sellers. With fewer listings in what’s already a housing shortage environment, home prices are likely to hold steady. The temporary softening of the real estate market will likely be followed by a strong rebound once the economic ‘quarantine’ is lifted, and it’s critical that supply is sufficient to meet pent-up demand.”
What about the Flagstaff real estate market?
We believe the sentiments Yun states are spot on with the Flagstaff market’s response to concerns amidst COVID-19. Our supply of homes has been low for many months and continues to be our largest challenge in the Flagstaff real estate market. As of 3/19/2020, there are only 60 single-family homes on the MLS under $500,000. Several of these homes are new construction and have not been completed. We anticipate a strong market once the quarantine is lifted and we begin to go back to a, somewhat, normal way of life. The demand for housing should still outweigh the supply.
One thing we have seen during the quarantine period is a decrease in showings, however, this is to be expected during the quarantine period. Some buyers are strictly adhering to the quarantine practices and many out of town buyers are postponing their planned trips to Flagstaff. They are, however, still actively looking on the internet for that special home.
We have had out of town buyers ask us to do showings via live videos or videos that we can share later. This gives these buyers the opportunity to pursue the homes that do hit the market during this time. There are many buyers that have been waiting for our, statistically, busier season to hit and are ready to purchase if the right house comes along.
Sellers who choose to list now will have the advantage of low inventory levels in Flagstaff, with the known buyer demand. Eager buyers are still actively looking for homes to buy and keeping abreast of the current market conditions. While some buyers have put a halt on making a purchase, they are still keeping an eye on the inventory. A well-prepared seller who has staged their home nicely, and is priced competitively, will likely find that buyer who is eager and ready to purchase.
For those buyers and sellers who are still ready to proceed during these times, the Arizona Association of REALTORS® has guided us on how we can revise our current contracts to address the current issues. This allows both buyers and sellers to be protected from the uncertainty that the virus spread may bring. There are new clauses that we will be adding to new contracts and amending current escrows.
However, some clients have decided to postpone listing their home for sale, simply because they do not feel comfortable opening their home to showings for numerous buyers, and did not want to risk any possible interaction with COVID-19 that a showing may bring. If you do decide that listing your home is in your best interest, there are steps you should take in order to reduce risk as much as possible.
At a minimum, sellers can do things like provide hand sanitizer at the home entrance for anyone that may visit. Simple things like opening all doors, including kitchen cabinetry, can reduce any contact that buyers may need to have while viewing your home. If weather permits, open windows a bit to allow ample ventilation, and if possible, provide shoe covering “booties” for buyers and buyer’s agents to use before entering your home. Of course, cleaning the home before and after showings can also minimize the risk of exposure. We are happy to provide sanitizer and booties at all of our listings, upon request.
For us as local Flagstaff agents, we can tell you that we made the decision to temporarily close both our office downtown and on Riordan and work remotely. This is a relatively easy process for us as our industry has been remote for many years. We all have our phones and laptops and are well-prepared to answer questions. We are still showing houses to our clients, making sure to follow the recommended safety protocol by the quarantine guidelines. This includes limiting exposure to large groups, practicing proper hygiene and keeping safe distances when possible. NAR has also provided us with a Coronavirus (COVID-19) guide for REALTORS®. We are taking the necessary precautions to help protect ourselves, clients and families. Many of our listings have a virtual tour or Matterport video of the home. This allows you to virtually walk through the home and see the layout without ever stepping inside.
Is the real estate market going to crash?
The current instability of the situation makes this a very difficult question to answer. While many buyers have been considering delaying shopping for a home, so far most have done just that: postpone. The current sentiment isn’t that buyers are exiting the market altogether, but are simply pausing to ascertain what will happen as a result of COVID-19. It’s quite possible that demand will remain high, and simply be delayed until the situation stabilizes, and normal life resumes. If that holds true, there could possibly be a large surge in activity once the situation normalizes, with buyers still needing to find homes, and wanting to take advantage of historically-low mortgage rates. We could also see an impact on new construction, with global trade at a near standstill, and contractors unable to obtain the materials needed. This could also cause the price trajectory of existing homes to continue upward, as buyers simply have less supply.
It is really too early to tell what will happen to our market until the uncertainty of everything minimizes.
We are here for you, Flagstaff
In closing, we hope that all of our clients know that we are taking this situation very seriously and are watching things very closely. As residents of our awesome Flagstaff city, it has been so inspiring to watch our town come together. All residents are doing what they can to follow the quarantine rules, as well as help our fellow citizens do the same. People are delivering goods to others that can’t travel. We are frequenting the small businesses that are offering take-out services and pick-up services. We have businesses that are offering home project tutorials and gyms that are offering at-home videos.
We, at the Elite Team at RE/MAX Peak Properties, are here to help also. We hope that our clients know that we consider you all friends and family, and our relationships with you go way past the closing date. If you need anything at all, please don’t hesitate to give us a call. This outbreak has been such a hardship on our normal lives, but it is so inspiring to see all the good that is in our amazing town of Flagstaff, AZ.