This is the final story in a multipart series on real estate and the summer market. Read the previous installments here, here, here and here.
Philadelphia Compass agent Angela Morsa had only just posted her listings when things went crazy.
“We let the showings go for three days,” she recently told Inman. “And we had 14 offers each, all of them over asking.”
The two listings in question hit the market in May, as the coronavirus pandemic was finally easing up and as the local real estate market was catching fire. And in the month and a half since, that fire has only gotten bigger, with Morsa saying that homes continue to go in the blink of an eye. She doesn’t expect that to change any time soon.
“I don’t see it calming down,” Morsa said.
Inman has recently talked to economists, company executives and other leaders about trends that will define the market over the next few months. But to get a better sense of what’s happening on the ground, Inman also reached out to members of the agent community across the U.S. Their markets differ, of course, but across more than a dozen conversations these agents have returned to a handful of ideas again and again:
- Inventory will remain low
- Restrictions on showings will stick around
- Buyers will gravitate to bigger spaces
- Rental markets won’t collapse
- The market will be really active
Here’s how agents are specifically seeing these trends play out:
Virtually everyone who spoke to Inman for this story, and for the entire series, said inventory is extremely low and could remain an issue going forward.
Morsa, for example, said her market was already low on supply prior to the pandemic, but now there is just one-and-a-half months worth of inventory.
“It’s unheard of,” she said. “We’re all trying to figure out how to get people to list their houses.”
Thomas Woolrich, an associate broker with Hub Real Estate in Durango, Colorado, is seeing something similar in his region.
“In our market we just can’t build houses fast enough,” he told Inman. “And I don’t think this is going to be a problem that’s going to go away in this area. There are so many people wanting to move here and so many people wanting to move up.”
There is an upside to this issue. For example, low inventory is keeping prices relatively stable in many markets. But it also represents a more difficult landscape for closing transactions and means some buyers simply can’t find a place to live.
“The problem is then they have no where to go,” Morsa said.
Still, while most agents believe low inventory could be an ongoing challenge, some were also optimistic that as the outbreak subsides more sellers will dive into the market and conditions should at least improve.
“I think that in the coming weeks we’re going to see the inventory come up,” Nicole Beauchamp, an agent with Engel & Völkers New York City, told Inman.
Andrea Wernick, an agent with Warburg Realty, also in New York City, agreed.
“I honestly believe there are going to be a lot of listings hitting the market this summer and fall,” she said.
Even if the pandemic and inventory situations improve, most of the agents who spoke with Inman expect the virus’ other impacts to linger through the rest of the summer.
Beauchamp said that right now buyers in her area face a host of requirements when wanting to look at properties. Some buildings mandate temperature checks, for example, and anyone entering a property needs to sign a liability form and questionnaire. Open houses are banned, and Beauchamp doesn’t see that changing any time soon.
“I honestly think that we are going to be in a by-appointment mode for quite a while,” she said.
Indeed, the majority of the agents who spoke with Inman agreed that open houses, in particular, aren’t going to return to normal in the near future.
“Our firm has put a kibosh on them,” Woolrich, in Colorado, said. “We don’t do open houses right now.”
And Wernick, in New York, said “open houses will not be happening in the coming months.”
“Unfortunately, because of the coronavirus, we as brokers are not allowed to invite groups of people to our listings,” she explained. “Moving forward, until there is a vaccine, listing brokers will be providing buyers video tours and 3D videos of the properties before they physically see the listings.”
Buyers will also probably have to continue signing waivers and forms in many markets over the summer. The forms are meant to deal with liability issues, among other things, and in some areas are also about contact tracing — or in other words potentially helping authorities track outbreaks.
John Kirkpatrick, a Compass agent in San Francisco, told Inman that waivers are currently ubiquitous in his area and speculated that “this is going to be going on for a while.”
“I think this is going to go on for longer than people predict,” he said. “I think it goes on for another month or two or three at least.”
Most agents also said that things like gloves, masks, hand sanitizer and other hygiene-related items are likely to be staples in the real estate business well into next year.
The apparent shift in consumer preference toward housing with more space has been discussed at length during the pandemic. The prevailing view is that some people who can work remotely will relocate to suburbs, exurbs or entirely new cities, and they’ll want homes with more amenities.
Many agents believe this shift will be one of the dominant trends of the coming months. Among them, Kirkpatrick said that some people are already leaving multifamily housing because they’re “fearful of living in tall, dense towers.”
Jenelle Isaacson, owner of Living Room Realty in Portland, Oregon, also told Inman that “everyone seems to want more space these days.”
“If they’re in a condo, they want a house,” she said of buyers in her area. “If they’re in a house, they want to move to the country. People are really wanting to take a step back toward a little slower lifestyle.”
The same thing is happening all the way across the country, in New York City, as well.
“I have some people who, maybe before this, might have considered a studio,” Beauchamp said. “But now they want a nice-sized one-bedroom where they can carve out a home office space. Some people might have considered a two-bedroom, but now they need a third bedroom.”
Noemi Bitterman, who also works in New York City with Warburg Realty, told Inman she’s also seeing interest in private outdoor space, and expects these trends to last.
“Many people will continue to work from home, even if it’s on a part-time basis,” she said.
The next few months could also see some evolution in rental markets. Bob Collopy is the manager and broker of rental-focused Fort Lowell Realty and Property Management. The company manages about 1,000 units in Phoenix and Tucson, Arizona, and Collopy told Inman that the “bright spot in rentals right now is single-family homes.”
“We put up three houses for lease the same day,” Collopy said. “And within a day we got hundreds of calls texts and emails. Each one, within 36 hours, got eight to 10 applications.”
Demand has lately become so high that Collopy said some owners are even doing rent increases right now.
Isaacson, whose company does property management as well as sales, said demand is similarly surging in her area as well.
“Before COVID, we had one to two applications per property,” she explained. “Right now, it’s pretty common for us to see six to eight of them.”
The takeaway is that as the summer begins, the bottom isn’t falling out of the rental market.
Still, there is cause for some caution. Collopy’s company manages numerous units for college students, and he pointed out that uncertainty about the return of in-person classes has led to uncertainty in the student housing market.
The end of government stimulus programs in July also represents something of a wildcard. Thus far, unemployment benefits have been beefed up, most Americans received a stimulus check and the majority of states imposed various eviction moratoriums.
However, those protections are now expiring, or will soon. It’s unclear what that will do to the rental landscape, and some have speculated that mass evictions are imminent.
For his part though, Collopy doesn’t envision a coming apocalypse. He said his company has collected about 95 percent of the rent its tenants owe during the pandemic, and the firm managed to dissuade owners who initially wanted to boot struggling tenants.
“I don’t see all hell breaking loose in the next month or two,” Collopy said.
While the agents who spoke with Inman generally expect things like masks and inventory shortages to linger, most were still overall very optimistic about the coming months. If nothing else, most said, the market should be active.
Wernick, for example, said the recovery may be slow at first but things should “totally pick up by the fall.”
“I honestly believe it’s going to be a great fall season,” she said. “People still want to live in New York City and the residential real estate prices are probably going to be just right to give buyers incentive to buy.”
Bitterman was similarly optimistic.
“Although everyone and everything seems to indicate doomsday, I am predicting that the housing market will be very good,” she argued. “Many buyers and investors feel that they will be able to get a great deal and they are probably right.”
While many of these agents work in very different markets — New York, Colorado, Oregon and other states are all unique — the theme that emerges from their comments is that they all expect to be closing deals over the next few months. And while that may seem like an obvious outcome now, it was far less of a certainty several months ago when the coronavirus pandemic shutdown the economy and had no obvious end in sight.
Now, however, some agents believe that instead of disaster, this year may end up as a kind of opportunity.
“I think when we look back even six months from now,” Kirkpatrick, in California, said, “People will realize this was one of the most exceptional times to buy property.”