Coronavirus is the housing market disrupter that no one could have seen coming. And it arrived hand-in-hand with the first look at February’s Northeast Tennessee Association of Realtors® (NETAR) market report. There are a lot of questions about the effect. Expect more in the coming weeks.
Before we get into some details, you can breathe a sigh of relief. The effect on the local housing market is almost certainly not going equal to a catastrophe like the Great Recession produced.
Home sellers, buyers, and Realtors® have and will continue making changes to how they do the business of real estate in the coming weeks. A nation-wide poll by the National Association of Realtors® (NAR) late last week reported clients were taking extra precautions.
Wall Street is taking some wild swings that get headlines but will not have a lot of effect on the local housing market. The thing to remember is the housing market is durable – even during a full-blown recession. According to research by Attom Data Solutions, home prices went up during three of the five recessions since 1980.
The effect on the Tri-Cities’ new home sector will be more pronounced since about a third of home building materials come from China, according to the National Association of Home Builders. Add to that finished products like sinks, appliances, and more.
On the demand side, most key indicators point to buyers staying in the market. NAR’s poll says Realtors® indicate “by a 3-to-1 ratio that their clients are more excited about lower interest rates than being concerned over stock market drops.” Activity may slow, but the interest and demand are still there.
On the supply side, conditions continue to be tight without a sign of significant relief. At the end of February, the local market had 3.4 months of inventory. That means that it would take three and a half months at February’s sales pace to exhaust the listings. The active listing count last month was down 32.7% from what it was last year when there were 5.7 months of inventory.%
February’s Trends Report was compiled from data before the first significant effects of the coronavirus. That report shows existing home sales equaled February last year, but there was also some average price softening. There were also about 1,000 approved contracts in the pipeline awaiting closing.
So, what should buyers and sellers do as we navigate these uncertain times?
Here are three essential suggestions:
- Stay in touch with a professional Realtor®. Contact with a local Realtor® is vital because they – not the national media or trade press – will be the experts what’s happening in the local city and county markets.
- Paying attention to local market conditions is the second most important thing. Real estate is hyper-local. Circumstances can and will continue to vary – sometimes dramatically – from one community to the next. While location, location, location is the key to success in buying and selling real estate – local, local, local is the ticket to current, reliable market conditions. Expect the reactions of the public to be fluid even though the basics of the market are durable.
- And remember, it is critical to be careful out there until this passes. Follow the CDC’s precautions advice and take care of yourself, your family, and your colleagues.
NETAR is the voice for real estate in Northeast Tennessee is the largest trade association in Northeast Tennessee. It represents over 1,300 members and 100 affiliates involved in all aspects of the residential and commercial real estate industries. Pending sales, monthly Trends Reports, and the regional market analytics are available on the NETAR website at https://netar.us/voice-real-estate-northeast-tennessee.