As some uber-wealthy homeowners stock up on hand sanitizer and hire cleaners for every showing, others are giving family members power of attorney to ensure a sale in case of quarantine.
The impacts of the coronavirus, the novel respiratory disease that began in China but has spread into an international pandemic with over 140,000 cases around the world confirmed, are just starting to reverberate across the real estate sector. Brokerages have had to close for deep cleaning after some of their agents became exposed to the virus while people in some of the hardest-hit parts of the country are isolating themselves voluntarily and holding off on all buying for the time being.
According to NAR Chief Economist Lawrence Yun, 11 percent of agents surveyed earlier this month saw less buyer traffic while 7 percent reported lower seller traffic thus far.
Luxury real estate, which is generally considered to include homes worth between $5 million and $30 million, follows different rules. In 2018, high-end homes sat on the market for an average of 506 days compared to only 80 for an median-priced home. That said, this segment of the industry has not been immune to the fear and financial impact surrounding the novel disease.
Senada Adzem, a Douglas Elliman broker working with homes worth as much as $30 million in Boca Raton and other parts of South Florida, said some of her wealthy clients are especially hesitant to hold showings and require much more detail about who is coming into their home.
“We had to convince the seller to allow us to show and register every person who was coming in,” Adzem, whose eight-agent branch has cancelled all open houses until the outbreak stabilizes, told Inman. “After we were done, they had a cleaning team come in and wipe everything down.”
As a result, Adzem’s team has had to screen whom they show houses to not just by the standard ability to afford the property but also by travel history and whether they are showing any visible signs of illness, such as coughing or a fever. Adzem, who fled the war in Bosnia during the 1990s, said that crises like these cause people of all financial and social classes to panic.
She has been striving not only to reassure her clients but work around their fears. In the most extreme example, some clients with private jets have begun asking her about buying homes on islands and in other isolated areas that they can flee to in case of disaster.
“When people are in a panic mode, they think differently and make a different set of decisions,” she said. “As agents, we have to take it seriously and not just pretend it’s not going to impact our business.”
Still, the outbreak is not impacting all parts of the country equally. Raj Qsar, the CEO of the Boutique Real Estate Group in Orange County, California, said members of his team have held 20 open houses last weekend and have seen them packed with people each time. They have another 15 open houses scheduled for this weekend and do not expect a lot of changes in traffic due to the coronavirus.
This could be due to Orange County being a particularly hot market. In the area, median sales prices rose by 7.2 percent year-over-year in December while sales inventory is down 36 percent. According to Qsar, many people are so desperate to invest and tap into the market that a national pandemic hasn’t slowed them down — particularly when the stock market is responding to the cancellation of flights and adjustments to the typical workday.
“If people have funds in a 401K and those funds go down, those funds may not be there anymore,” Qsar said. “This is a 30-year opportunity for a three-month incident.”
The California Association of Realtors expects the virus to have some impact on the luxury market as people hold off on buying second homes and investment properties in the face of uncertainty. Qsar has seen both buyers and sellers who are in the escrow process and need to travel transfer power of attorney to a family member or other trusted person. Rather than the fear of contracting the virus, some fear a quarantine, not having access to WiFi and allowing a sale to fall through their fingers
“They may put their masks on, they may bring hand-sanitizer with them but they’re still going to walk into that open house,” Qsar said, adding that he does not expect serious buyers to be deterred by the coronavirus.
New York City real estate has been particularly responsive to market effects from the virus — the state has seen more than 200 cases of coronavirus and, subsequently, 13 percent of open houses had no traffic at all last weekend. According to CNBC, average open house attendance fell 27 percent in the last week alone — from an average of 5.6 people to 4.1 people per event.
McKenzie Ryan, a Compass agent working on high-end properties in Manhattan, said that the New York real estate market is particularly affected by daily headlines. And while that’s having real-world effects, some wealthy buyers are also capitalizing on the situation. She’s seen billionaire clients who normally spend a large portion of their time traveling get landlocked in New York and, as a result, use the extra time to arrange private showings.
“I think people are going to stay focused on their long-term goals and take precautions to keep themselves safe in the interim,” she said.