Agents are hungry to know what’s going to happen to their businesses and the industry as a whole. Leslie Appleton-Young, the vice president of the California Association of Realtors, shares a real-world, data-driven snapshot into today’s realities.

Agents are hungry to know the truth about what’s happening due to COVID-19. At the onset of the pandemic, the California Association of Realtors (C.A.R.) quickly pivoted to provide a steady stream of market data and survey research assessing exactly what their members were experiencing. 

Greg McDaniel and I recently interviewed Leslie Appleton-Young, the chief economist and vice president of C.A.R. When we asked her about what issues their members were most concerned about, she explained that agents always ask her: “Tell me the truth! Tell me what’s going on!”

She said that while they’re hungry for the truth, they’re often asking questions that can’t be answered. These concerns include: How long is the pandemic going to last? Will there be a flood of foreclosures? What should we be telling our clients who want to wait and see? What is the market going to be like?

Rapid shifts that requiring constant monitoring

Because conditions are changing so rapidly, C.A.R. began daily tracking of new listings, pending listings and closings from every MLS statewide.

As Appleton-Young observed, “If we’re going to wait for our usual markers of monthly data, it’s way too late. I mean, that’s looking in the rear-view mirror.” Switching to a weekly format enabled them to see what their members were experiencing in the field. 

They are also conducting weekly membership surveys. Notable findings include: 

  • The percentage of members seeing buyers withdraw their offer has remained steady in the mid-40 percent range.
  • Nine out of 10 members had at least one client hold back from buying. Eight out of 10 had one seller hold back.  
  • One out of 4 members with a transaction closing after March 15 reported having at least one transaction fall out of escrow. 
  • Approximately 9 out of 10 buyer cancellations resulted from financial reasons: a job loss, being furloughed, a stock market loss or no longer qualifying for a mortgage. 
  • About 3 out of 5 members reported closing delays due to difficulties related to obtaining appraisals, doing inspections, funding loans, etc. 

Are the underlying market fundamentals still there? 

According to Appleton-Young, the fundamental issue of lack of supply has not changed. Unsold inventory (months of inventory on the market) is still the best indicator of what is going to happen in local markets once shelter-in-place orders are loosened and ultimately removed. While there are fewer buyers, there are also fewer sellers. 

Inventory statewide is down from about 3.6 months a year ago to 2.6 or 2.7 months today. Furthermore, new and pending listings seem to have bottomed out and have improved slightly. 

“The impression that the industry is not able to transact is wrong,” Appleton-Young said, adding that even though it is transacting at a much lower level, there are still buyers and sellers who are motivated today to take that step. “There are Realtors out there that can help them do that, and we’re seeing it in the data.” 

The impact of staying at home

Appleton-Young explained that not only have we learned that we can work from home and be productive, but also many homeowners are learning to enjoy their homes in new ways. 

“People have been confined to their homes now for at least six weeks,” she said. “And what a better testing ground for what it’s like to be home, and what it’s like to really enjoy your home?”

As they work, live and cook in their homes, people might be re-evaluating their new lifestyle, and that may or may not involve reconfiguring or even changing their house.

Will transaction activity bounce back? 

Appleton-Young anticipates a major drop in activity for April and May, but after that, no one knows what’s ahead. 

“We did do our Match data, and we were down 11.5 percent from February and down about 6.1 percent from March of last year,” she said. “That’s really the beginning of what I think is going to be a much more significant drop — probably 30 to 40 percent in April and May.”

She also noted: “If we start lifting shelter-in-place and have — what sounds like is going to be — a phased-in approach with testing available and so on, we can see the engine getting started and accelerating again. If that doesn’t happen, we’re still going to be in this much smaller level overall of transactions. Nobody knows at this point, but I think we’re hopeful that, by the time we get to the summer, that we’ll really see a change in the environment.” 

Part of the challenge has been getting relief into the hands of those who need it most. The CARES Act was developed and pushed out quickly to provide relief for people who have lost their jobs and businesses that have been forced to shut down due to COVID-19. 

“Unfortunately, you’re doing it in the context of a federal government that has been unable to respond to the challenge,” she said. “The [Paycheck Protection Program] is a perfect example. One of the things I read is that they’re being asked to process a volume of loans in one day that they used to do in a year, and their systems are outdated. It’s just a real challenge.”

The effect on mortgages

While Appleton-Young expects mortgage rates to remain low for the foreseeable future, there are other notable problems in this sector. She noted that the Federal Reserve and D.C. are doing everything they can to provide liquidity, having learned from what happened in 2007, 2008 and 2009. 

“They’re buying bonds, they have reduced rates, they are supporting corporate bonds and mortgaged-backed securities — anything that is insured or supported by the government, right? So, Fannie, Freddie, FHA, the VA.” she said. “The challenge is the jumbo market, the non-conforming market, the riskier market. Investors have no appetite for those assets at this point.”

The servicers in the mortgage business are in a particularly precarious position. As Appleton-Young mentioned, they don’t know how many borrowers will ask for forbearance or how long they will be under it.

They also don’t know whether they will continue to pay the mortgage when they do come out of it on the other side. The investors are still owed their money on a monthly basis, but the revenue stream is dropping, and no one as of yet is bailing out the servicers.

Some lenders have raised standards even for conforming loans with 20 percent down payments and higher FICO scores. “There is a real flight to safety even though the Fed is providing all this liquidity,” she said. 

The challenge for investors

What’s happening to small investors is especially troubling. As Appleton-Young noted, homeowners are getting mortgage relief, but when tenants can’t pay their rent, their landlords are unable to evict them during this time. Besides, the courts aren’t open in many places anyway. California also recently passed rent control, which was another blow to landlords and the housing supply. She said that all of these changes have made property ownership as an investment much more difficult. 

Although Appleton-Young didn’t comment on this, these challenges could lead investors to liquidate their single-family rentals. This in turn could result in some of this inventory shifting back to being owner-occupied. 

What are the ‘new world’ opportunities?

According to Appleton-Young, the COVID-19 situation is more akin to a natural disaster than it is to prior economic recessions that emerged from the mortgage market, manufacturing or tech world. Prior to March 15, we were still in the “old world” and virtually overnight, we were forced to pivot to the “new world.” 

Appleton-Young observed how the COVID-19 pandemic is accelerating trends we were already experiencing. With more people working from home, the number of empty office buildings and empty retail spaces in malls and strip centers will increase, she noted. These spaces can be repurposed into affordable housing and small villages where people can live.

When asked about her final takeaway, Appleton-Young said that the big winners will be the tech-enabled agent and the agents who take relationships seriously. Agents need to use this opportunity to connect with their clients and their sphere and ask how they’re doing, as one human being to another.

“I think real estate is going to come out of this in a very strong position,” she said. “I think we all need to be ready to service the buyers and sellers that are on the sidelines now because they will be back.” 

This week’s show has a wealth of information not covered in this article. Be sure to check it out for a more in-depth discussion of the C.A.R. findings. For additional C.A.R. COVID-19 research click here

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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