Almost every industry has been affected by the COVID-19 pandemic, and the local housing market isn’t exempt.
According to local realtor Amy True, prior to the pandemic the real estate market in Howard County was the strongest it had been in a decade. Announcements such as Indiana Transmission Plant II being converted into Kokomo Engine Plant were event predicted to further buoy the market, but then COVID-19 hit. The pandemic exacerbated preexisting issues, such as a low housing inventory, and created new problems with some prospective buyers suddenly unable to procure loans due to a loss in income.
“The demand is still high, so that’s the good news,” said True. “Our inventory issue is 25-percent worse than it was before the COVID restrictions … From the time the local restrictions started we have decreased 25 percent on our inventory. But the good news is so far our prices are not showing a reduction. But, the true numbers, we won’t see until July because there is a lag in real estate numbers.”
True speculated the decrease in inventory could be multifaceted. Most prevalently, she said sellers were in awkward positions due to stay-at-home orders that aimed to reduce the spread of the virus. Normally, sellers would vacate their home for tours and open houses, but now they aren’t doing that.
“I think the pandemic, as far as how many houses are going on the market is definitely affecting that number,” said True. “It’s because people don’t want to leave their home, and they’re doing a good job of following our local instructions, which is to stay at home. Unfortunately, when you list your home, especially in the first weak, you’re out of your home a lot.”
Bernice Helman, president of the Indiana Association of Realtors, said the trend held true statewide.
“I’d say we’ve been battling this shortage of inventory for a few years now, but truly that will probably be our saving grace as we go through this,” said Helman. “Demand is so high due to lack of inventory that it’s keeping things moving. It’s kind of a double-edged sword. We’d like inventory to be higher, but it’s helping us move the inventory we have now.”
In addition, there appeared to be a benefit to sellers created by the low inventory. True said from Jan. 1 to April 28, comparing the same span of time this year to 2019, there’s been a 13-percent reduction in the number of homes sold in Howard County. That amounts to a decrease of 51 residential properties sold. But, there’s only been a corresponding decrease in the dollar amount sold by 8 percent.
“That tells me that our prices are actually higher than last year because you don’t have a 13-percent decrease in the quantity sold, but an 8 percent in the volume unless your prices are higher,” said True. “The average sales price is actually up 5 percent from last year for that time. So that’s all positive.”
That’s not to say there haven’t been issues for buyers, though. Wide-spread loss of employment has struck the population as the economy slowed during the pandemic. Non-essential businesses largely have closed, leaving many out of work. For those who were looking to buy, procuring a mortgage wasn’t possible without employment. Such unemployment also could create longer-term issues for buyers due to impacts on credit.
“It will be very interesting to see how it plays out,” said True. “I think, as a whole, we’ll take a little time to recover. I think the biggest factor for someone maybe being able to buy a home is were they able to pay their bills? Has it hit their credit if they didn’t? Did they take the time to call the credit card company, car financing company, or mortgage company and explain their situation and prevent things from going against their credit? I think that will be our biggest obstacle after, is who has been able to protect their credit through COVID because you have to have good credit to purchase a home.”
While those in the industry wait to see how the pandemic truly will affect the market, as the second quarter’s sales figures weren’t in yet, the process of buying a home has changed drastically. True said her showings have been limited to “essential showings” since the outbreak. These are reserved for those who need to find a new home because their lease is up or their home was sold prior to the pandemic.
But those venturing to homes for a showing likely will experience what has been dubbed a “no-touch showing.” Doors and cabinets are being left open so those viewing a home don’t have to touch doorknobs and handles. Masks, gloves, and protective foot coverings also have become prevalent at the behest of the Indiana Association of Realtors. Potential buyers also are required to sign releases stating they haven’t been in contact with anyone who has had the virus or been ill.
Virtual video tours have become more widely encouraged, according to Helman, and the industry also has taken advantage of electronic signings for documents associated with the selling of a home.
The president of the Indiana Association of Realtors said the organization’s membership also has had to grapple with those who may be viewing homes simply to get out of the house. Some, she said, were viewing homes just to have a reason to leave their home.
“We want to make sure we have serious buyers when we’re showing a house, not just someone out for kicks passing the time,” said Helman.
Aside from buyers taking a hit on their credit and potentially struggling in the future to procure a mortgage, True said she hoped the market would pick back up as soon as restrictions were lifted. After all, spring serves as the most active time of the year in real estate, with many looking to move. Hellman hoped that busy season simply would be pushed back.
“My gut is that as soon as the restrictions start pulling back and people go back to work, then we’ll see the market pick up as far as how many listings,” said Helman. “Will we catch up for the year? That’s to be seen. Normally, the year starts slowing down in July because of people going back to school. But what I’m hoping and anticipating is we’re basically delaying what we call the spring rush, and there’s a delay in that rush. We’ll see that a little later in the year than we normally would.”