The Impact of COVID-19 on the Real Estate Market
July 06, 2020
We’ve made it through the record-breaking lows of spring and are now seeing signs of a small recovery this summer. But there is some uncertainty ahead, especially as some states consider rolling back reopenings. We have analyzed our real estate market data and would like to share our insights on some new trends to help our customers adjust their sales and business decisions.
As expected, COVID-19 had a negative impact on the real estate market. There was a drop in new listings available after mid-March when cities and states implemented stay-at-home orders and Coronavirus policies. The new listing counts in April were the hardest hit: 39% below April 2019’s counts. There was a slight recovery towards the end of May, but May counts were still down 22% from last year.
Realtor.com found that the total number of listings on their site in the first week of June was still down by 25% compared to last year. However, reviewing our data shown in the graph below, the number of new listings in June recovered with 3% more new listings than June of last year.
The quantity wasn’t the significant spike the industry was hoping to make up for the previous dip over the spring months, so the overall number of listings available this year is down 7.8% compared to last year. Based on the data, if states return to stay at home orders, it is highly likely that there will be another dip below the previous year’s listing quantities during the late summer and early fall months.
Days on Market
With fewer homeowners listing their homes for sale this spring, there is now pent-up demand from buyers this summer, affecting the days on the market. The national average days on the market in June was 72 days, up 25% from last year.
Days on the market can vary significantly between different regions. Now, especially in states that have just started opening or are reversing the reopening stage, homes might spend a long time on the market. For example, in Boulder, Colorado (which is open) homes were on the market for an average of 33.5 days last month, while New York City averaged 244 days. Simply Googling “average days on the market (your area)” should provide a link to resources like Redfin’s housing market report for your area.
Days on the market only provide information about the homes sold, so it is helpful to see what percentage of the listings added in 2020 are still on the market. As shown in the graph below, 51% of the national listings added in May were pending or sold by the end of the month. With half of the homes going off the market in a matter of weeks, movers should act fast to advertise their services.
Asking Price Increases
Low inventory and high demand have resulted in price increases. From the data at FMAdata.com, the national median asking price of properties that were still on the market by the end of May was $339,000. This median is comparable to Realtor.com’s May median asking price of $330,000, which they found to be an all-time high. As shown in the graph below, nationally, the majority of the home asking prices were below $500,000, but asking prices will differ depending on your location.
Buyer Demand Changing the Market
The pandemic also shifted the types of homes that buyers are looking for. Since there were fewer existing homes on the market this spring than usual, motivated buyers purchased new construction homes. Consequently, new home sales were up 12.7% year-over-year in May. This demand could drive an increase in new homes built in the future.
Additionally, because of the necessity and accessibility of remote work, many homeowners are considering relocating to the suburbs or more rural areas. Similarly, homeowners are looking for properties with more amenities, so luxury and vacation properties have started selling quicker than usual.
Another driver of buyer demand is the record-low interest rates. The industry predicts rates to fall, possibly under 3%, which will motivate people to buy and also drive more purchases of larger homes.
We hope that your staff, family, and friends will continue to stay healthy and safe. We thank you for partnering with us. Even during these trying times, we know that good data will continue to help you navigate the new trends and make important decisions for your business.
If you have any questions or need more information, please visit FMAdata.com or call 303-443-2070 today.