Listing Impossible star says coronavirus could crush real estate market

With more than 92,000 coronavirus cases and at least 1,380 deaths in the United States that have been linked to COVID-19, the United States currently has the most reported coronavirus cases worldwide, claiming the lives of millions of Americans waiting. This, while the number of unemployed Americans jumped to 3.283 million Thursday.

Not surprisingly, among the last sectors that stopped stridently: real estate.

According to a flash survey by the National Association of Realtors on March 16 and 17, real estate agents across the country are canceling their open days, and half of agents have reported declining buyer interest, the percentage having tripled in only one week. Today, that percentage is almost certainly much higher.

The survey polled a random sample of 72,734 members on March 16 and 17. For 96% of respondents, the majority of their business is residential. Seventy-seven percent of the respondents are in a state that has declared a state of emergency. Fifty-six percent of members work in a local market where there are suspected or confirmed cases of COVID-19.

Aaron Kirman, superstar real estate agent and host of CNBC’s “Listing Impossible”, thinks that this pandemic could devastate the real estate market. “Real estate is a mentality, and people don’t buy when they’re scared. … The longer it lasts, the worse it gets,” Kirman said in an interview with CNBC.

Buying or selling a home has become much more complicated, according to Kirman, who has seen a drop in the number of visits since California issued a “ stay-at-home ” statewide on 19 March.

If you are looking to buy a home right now, Kirman says to be ready for a long process. “We are almost at a standstill,” says Kirman. Many state home orders only allow essential businesses to operate during the pandemic. The real estate industry and many companies that support it, such as home appraisers and building suppliers, were found to be non-essential. Valuations are down about 80%, according to Kirman.

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Kirman also warns that some buyers and sellers should expect to renegotiate the offers. “Some closings took place, but they were 90 days old. I saw offers on the table renegotiated by 20 to 30%.”

While technology, like the Zoom video conferencing platform and delivery apps, has a moment in the sun, Kirman does not believe that technology can stimulate the real estate market. “Buyers are bored of looking online. I don’t think technology will sell a house through Zoom, but I hope I’m wrong.”

Mortgage rates are volatile right now. The Federal Reserve lowered its interest rate twice in 2020. Although this resulted in lower interest rates on credit cards and savings accounts, it did not same effect on mortgage rates. “The situation we find ourselves in right now is unprecedented and rates are constantly changing due to market volatility. Although rates are going up today, they could go down tomorrow,” said Beatrice de Jong, a consumer trends expert at Opendoor.

The total volume of mortgage applications fell 29.4% last week, according to the Mortgage Bankers Association’s seasonally adjusted index. Despite this, Kirman has seen a hike this week in apps. Kirman noted that mortgage loan applications are generally correlated with consumer confidence in the markets.

Although the lasting effect of the coronavirus pandemic is still unknown, Kirman believes that when the pandemic ends, it will be a buyer’s market, saying, “The gains of the past 13 years will be wiped out.

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