To accurately measure how your market is shifting, here are some strategies on pricing properties in a post-COVID-19 market, plus a few scripts to help you discuss changing prices with your clients.

As the states begin lifting stay-at-home orders, how will prices from the pre-COVID-19 market compare to those post-COVID-19 market? More importantly, how can you determine exactly how much prices are changing in your local market? 

Supply and demand drives price. Before COVID-19, we were facing a serious housing shortage. What no one knows is whether the factors below will drive the post-COVID-19 market into a full-blown downturn. 

  • Increased unemployment, divorce, business losses or people being forced to downsize due to loss of income.  
  • Lack of jumbo financing, especially if this situation continues for any length of time.  
  • A much smaller foreign buyer market due to border closings, international lockdowns, economic losses and limited legal immigration to the U.S. 
  • Limited access to home equity (HELOC) loans due to lenders temporarily suspending these programs. 
  • An increased number of distressed property owners due to the factors above. However, this number may be mitigated if a large percentage of consumers take advantage of lender forbearance programs. 
  • Investors liquidating properties due to nonpayment of rents coupled with “do not evict” orders.

My personal prediction is that the entry-level market will continue to be strong. However, limited financing in the nonconforming loan/luxury sector will result in price declines in that market segment.   

A March 2020 COVID-19 surge?

At the beginning of March, news coverage indicated lockdowns in California were imminent. Throughout March, Realtors were reporting an increased urgency among their clients to place properties under contract and to close prior to a lockdown. 

When Greg McDaniel and I were prepping for today’s show, he checked the number of new listings and pendings in Walnut Creek and Danville in California for February, March and April. 

Here’s what he found for Walnut Creek:  

  • February: eight new listings, two pending
  • March: 24 new listings, 19 pending
  • April: two new listings, 14 pending (as of April 20, 2020)

For Danville: 

  • February: 14 new listings, four pending
  • March: 17 new listings, 23 pending
  • April: zero new listings, one pending (as of April 20, 2020)

The California Association of Realtors (CAR) research also seems to suggest a similar urgency among buyers and sellers in early March. 

The CAR statistics also illustrate how quickly new inventory was absorbed. The first week in March, there were 1,068 listings taken statewide and approximately 70 percent (744) went pending. The next week, there were fewer listings taken, but close to the same number of properties were placed under contract. 

As Jim Dalrymple II observed in his recent column, many agents see a booming market ahead. If that indeed turns out to be the case, we can expect a huge surge as stay-at-home orders are lifted.  

How much is your market increasing or decreasing?

To quickly assess potential changes in your specific market, you need two sets of data: the months of inventory on the market and a price-per-square foot analysis based upon pre-COVID-19 prices and post-COVID-19 prices.

Regardless of market shifts, months of inventory is still the best predictor of future price shifts. The reason? Price changes lag six to 12 months behind inventory changes. 

To illustrate this point, in 2006, both the inventory and prices were increasing simultaneously. As the inventory continued to grow in late 2006 and early 2007, agents began to complain about the bad market. Even so, serious price declines didn’t appear in most areas until 2008.  

Consequently, to tell how prices will shift in various parts of your market six to 12 months from now, track the months of inventory on the market. If the number is five or less, you’re in a seller’s market. If that number hits six to seven months, your market is transitioning. Eight months or more is a buyer’s market where price decreases are likely.  

How to determine pre-COVID-19 versus post-COVID-19 pricing

Most MLS vendors provide price-per-square-foot listing data. To see how the market is trending pre-COVID-19 versus post-COVID-19, follow these steps:

  1. Determine pre-COVID-19 prices based upon the date your area went under quarantine or lockdown. (If you don’t have a specific date, use March 15, 2020.) Do your calculation as if you were creating a CMA based on closed sales from Dec. 15, 2019 to March 14, 2020.
  2. Search your MLS for the specific subdivision, location, price and square footage you want to predict. (Remember to follow the “10 Percent Rule.” All properties selected must be within 10-plus percent of the improvements and the lot size. For a 2,000-square-foot house on a 5,000-square-foot house, you would select properties with improvements of 1,800 to 2,200 square feet and lot sizes from 4,500 to 5,500 square feet.)
  3. Calculate the average price per foot for the properties that went under contract and/or closed prior to March 15, 2020. (You can go back 90 to 180 days depending on your market.)
  4. Repeat the process for properties that went under contract after March 15, 2020, and compare the two numbers.
  5. Assume you find that local properties were selling for $200 per square foot pre-COVID-19 and $190 per square foot post-COVID-19. This tells you that your pre-COVID-19 comparable sales will be 5 percent higher than current values.
  6. By the same token, if the prices post-COVID-19 had increased 5 percent from $200 to $210 per square foot, you would know pre-COVID-19 comparable sales were too low by 5 percent.

How to discuss changing prices with your clients

Because we will have very few closed post-COVID-19 sales to work with initially, focus primarily upon the months of inventory. If that number is increasing, prices have probably peaked. If there is six to seven months of inventory, prices are flat or transitioning. When there is eight months of inventory or more, you can expect price declines to follow. Here’s what to say if months of inventory are climbing:

Mr. and Mrs. Seller, prior to COVID-19, we only had three months of inventory on the market. Today, that number has increased to six months of inventory. What this means is that the pricing curve has flattened and the seller’s market with peak prices is history. 

If the inventory continues to grow, price declines are on the horizon. Consequently, it’s extremely important that you price your property right at or slightly below the comparable sales. This is the best way to maximize your price and avoid chasing the market down as prices start to decline.  

Here’s how to explain the size of any price decline: 

Mr. and Mrs. Seller, the average pre-COVID-19 price per square foot in your area was $200 per square foot while the average post-COVID-19 has dropped to $190 per square foot. In other words, prior to COVID-19, your 2,500-square-foot house would have been valued at $500,000. Its current value today is $475,000. If this trend continues, prices may decline even further. To obtain the maximum price right now, it’s important to price your home at today’s market value.  

If they resist continue by explaining: 

Your property values have already fallen by $25,000, but there’s another important factor to consider. Your mortgage payment, taxes, and insurance are about $4,000 per month. To calculate your true holding costs, you must add the amount your home declined plus your monthly carrying costs for each month you continue to hold the property. 

No one knows for sure how prices will change post-COVID-19. To accurately measure how your market is shifting, track the months of inventory and whether price per square foot prices are increasing or decreasing post-COVID-19. 

For three more scripts plus additional strategies on how to price properties in a post-COVID-19 market, check out this week’s video. 

Bernice Ross, President and CEO of BrokerageUP and, is a national speaker, author and trainer with over 1,000 published articles. Learn about her broker/manager training programs designed for women, by women, at and her new agent sales training at

After 25 years, Inman Connect is coming to you. We’re transcending our legendary events in a live digital event, Inman Connect Now. Get ready for the top industry leaders plotting the path forward, new business ideas and opportunities, networking like you’ve never imagined it, and tons of exciting new magic, all straight to you. It’s all part of an epic new Inman experience, Connect Now, June 2-4, 2020. Click here to save your seat.

Bernice Ross
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