While the direction of the 2020 real estate market still remains a big question, experts do say that buyers and sellers are simply taking a breather and shifting their timing down the line. No one can yet determine how long economic lockdowns and how persistent the effects of the COVID-19 pandemic will be. Things continue to change month-to-month, making it hard to make a solid forecast for the housing market. The only bright spot in all this is that home prices appear to have stabilized and are expected to stay firm for the rest of the year. As states begin to open, many are hopeful for a quick rebound.
The housing market continues to navigate uncharted territory as COVID-19 brings changes to how the real estate industry operates. So far, the spring season has seen rock-bottom mortgage rates and a decrease in home sales—but will these trends continue into the summer season? With the unpredictability and uncertainty that mark these present times, top real estate agents in Atlanta continue to speculate how the Coronavirus will dictate trends in the real estate market for the next quarter—and possibly for the rest of the year, as well:
Pent-up demand will increase pending home sales
In Atlanta and most parts of the Southeast, new pending home sales increased in number in the last week of April. In fact, according to MarketNsight, year-on-year pending sales figures from January through May 2020 rose by 6% even as buyers held off on finalizing home purchases.
Pending home sales in the state started registering higher numbers as early as January. There appears to be a silver lining in the proverbial cloud cast by COVID-19 and sheltering-in-place orders: the situation has generated a huge six-week surplus from pent-up demand in April and May.
With Georgia opening again, the market is bouncing back quickly. Interest in houses for sale in Atlanta is strong, largely due to home buyers who were already actively exploring their real estate options pre-pandemic. Added to new buyer entrants, this has yielded an increased sales rate of 30% year-on- year.
Actual sales may dip
Despite a recent rise in listings and historically low mortgage rates, however, actual home sales could very likely continue to decrease. For one thing, with a whopping 75 percent of the country being asked to shelter in place, the home buying and selling process has become exponentially more difficult. Then, too, the economic effect of the pandemic can’t be denied: in March alone, a record 3.3 million Americans filed for unemployment. The combined impact of mass layoffs across industries and the newfound difficulty in the entire home buying and selling process is already forcing potential homebuyers out of the market.
Moreover, experts say that not only potential homebuyers working in the most hard-hit industries will be affected. Even workers who’ve always counted on a regular paycheck as well as the higher-earning population may be inclined to put off home buying decisions. Financial markets are just too volatile right now, given the uncertainty about the future.
As it is, there was a decrease in home buying during the spring season. Experts predict that this slowdown will last all the way through to the third quarter, despite an increase in listings in states that have begun to open back up. As a chunk of the American populace opts to play it safe by continuing to shelter in place, the housing market is expected to slow down further— the longer the shutdowns last, the more that the number of applications for home loans are bound to decrease.
Property values will depend on the length of the pandemic
Throughout the years, homeowners have commonly seen a steady rise in their property values, a fact that has allowed them to amass record levels of home equity. Given the current crisis, however, home owners across the country are beginning to wonder whether property values will rise or at least continue to hold steady.
Experts unanimously agree that the answer to this question will depend on the length of the pandemic. Prices are certain to flatten in the short term, but the long-term effects will depend on just how deeply shutdowns will debilitate the national economy.
If infection levels continue to drop in the next four to six weeks, a dip in home prices will likely be limited. Should the pandemic extend further, however, and home buying remain depressed, homeowners should expect a noticeable decline in home prices. Fortunately, a full rebound isn’t totally lost. Pent up demand and limited inventory across the country should lead to home price appreciation and a strong recovery once economic momentum is regained.
Real estate companies need to embrace remote technology
Social distancing protocols, rising unemployment rates and the widespread fear of a recession have already led the real estate industry to operate differently. Closings now happen virtually, and companies are relying on remote technology options to keep business afloat.
Virtual tours, contactless technology such as e-signatures, digital documentation, remote online notarization and the like are the measures being widely adopted by real estate companies who wish to continue to do business during the crisis.
If you’re interested in scouting out the homes for sale in Atlanta or Decatur, GA, reach out to us here at Natalie Gregory & Co. You can also contact the team at 404.550.5113 and natalie(dotted)gregory(at)compass(dotted)com — let us know how we can help you!