If you followed my last article in the Washington Blade entitled “Home sales in the time of coronavirus” (April 10, 2020), you may have noticed I wouldn’t commit to a full scale panic due to the effects of coronavirus, and the resulting lockdown, on the housing market. In fact, I mentioned a mixed bag of effects: showings were down almost 71% from last year, lending was a little tighter and open houses were made illegal, and yet, prices seemed to be holding steady.
One month later, these effects seem to continue, with one exception: prices actually seem to be rising as a result of coronavirus and the government response.
Thursday’s article in UrbanTurf explains this as well: while sales are down 20% in the region and 25% in D.C. proper, new listings are also down by even more—as much as 55%. The simple laws of supply and demand prevail in housing, and this sharper reduction in inventory—down to a supply of less than a month and a half—has only one outcome: higher prices.
Certainly, each house is different, as is every block, neighborhood and jurisdiction, so the effects may vary slightly. But just as all boats rise and fall in the harbor with the changing tides, the effect can be felt generally throughout the region.
Our group found this to be the case, even just in the past five days alone. Three listings of ours, ranging from $1,050,000 to $3,250,000 in Dupont Circle and Mount Pleasant, received no inquiries for a solid three weeks following the lockdown in mid-March. In April, showings were at a trickle.
Last Saturday, we had four showings between two of the properties, and as of today we have one of the two under contract, one is receiving two offers and the third and most expensive has received two inquiries this morning with an offer possible by this afternoon.
It seems coronavirus is doing exactly what I had hoped and predicted: delaying, but not eliminating, the typical spring market rush.
If you are considering a home purchase now and may be concerned about the long-term impact of the virus and government response policies, it may be a good idea to weigh the facts involved. First of all, interest rates, as I’ve often said before and can say even more accurately now, have never been lower, averaging right around 3% for qualified buyers. Lending is not a challenge for most borrowers: while lending has tightened for developers and some investors, it is free-flowing to purchasers of owner-occupied homes and condominiums.
If your concern is with the effects of the virus itself, remember that even if the virus were to spread unabated, it may not directly impact a large percentage of buyers in most of the D.C. area, since prices are high and there are not a lot of senior communities in our area. In addition, most buyers of higher-price properties in our region have been able to maintain their incomes even while businesses are temporarily closed. In fact, because so many in our area are government employees, there is not the same financial distress that is so prevalent in other parts of the country. As a result, just as in 2008, our area seems to be shielded from more volatile housing price shifts that other parts of the United States, and even the world, might feel. As a buyer, that should give you confidence that you are not buying in a falling market, and indeed, that if you wait, prices may only be higher when you’re ready.
As a seller, you should know that the availability and affordability of lending, combined with the pent-up demand of homebound (and home-cramped) buyers, and most importantly, the greatly reduced housing supply, makes it an ideal time to list your home for maximum results.
Asking a Realtor if it’s a good time to sell, you’ll often hear a hearty “Absolutely!” But with this information in hand, you’ll know that the answer, at least this time, is based on undeniable facts.
David Bediz is the 15-year veteran leader of Bediz Group, LLC, a boutique real estate team at Keller Williams Capital Properties in Dupont Circle. He is licensed in Maryland, Virginia, Delaware and the District and can be reached at bediz.com, firstname.lastname@example.org and 202-352-8456.