By Drew Burchette, April 16, 2020
By Drew Burchette, April 16, 2020
It has been a wild couple of weeks in just about every aspect of all of our lives. I was reflecting back on the entire Spring this morning and just wanted to get a few thoughts down on paper to share. Most of this about the Portland Real Estate market, but that spills into our everyday lives in a lot of ways especially now that we are stuck a home. It is more important than ever to Love Where You Live!!
The whole COVID-19 situation got real for me on Wednesday, March 11th when the NBA suspended the basketball season. The next day Portland Public Schools announced that classes were cancelled staring the following Monday the week before Spring Break. I was at the coast for a solo day trip the following Tuesday and grew concerned when I saw that the general public hadn’t quite got the memo: nobody was social distancing and I saw lots of folks shaking hands, etc. In retrospect, perhaps I hadn’t gotten the message either by virtue of that fact that I was at the beach to surf. In the public sphere these days it appears that everyone is doing a really good job of following the rules.
From that week up until about a week ago, the situation in the real estate market was very fluid. My opinions on what was happening and how to advise on any particular situation was evolving almost hourly. Rules were changing, operations were closing down and sometime opening back up….we all really had no idea where things were heading. Sitting here today, Thursday, April 16, 2020, I feel like we as a company and as an industry have a pretty good handle on where the market stands. Below are a couple of discussion topics. If you have any questions or want a further explanation, please don’t hesitate to reach out to me.
Real Estate as an Essential Service
Sometime in late March, the state of Washington suspended Real Estate services as a part of their total state shut down. In Oregon, we were looking to WA for guidance because we knew we where just a few weeks behind them. Buyer and sellers that were in contract (pending) would be allowed to close, but now new listings or buyer tours would be allowed. If you were a casual buyer or flexible seller, this would not be a big deal; you could put plans on hold and resume when the dust settled. If you just closed on a new house and needed to sell the old one…it is a REALLY big deal! Personally, I had two clients in that exact situation. For those two listings, we quickened the timeline on photography and for the first time in about a decade I advised that the sellers do all the home inspections. The thought was that if we got it on the market before the anticipated shut down…there might be an opportunity to get them under contract immediately and, with that, there was a chance that buyers would have to purchase their home sight-un-seen. Hence the extensive photos, video tours and inspections.
As it turned out, Real Estate services were deemed essential by the Fed so it looks like the industry will remain open for business. I haven’t checked back about WA, but my assumption is that they are back open too. Internally, at Living Room Realty we’ve had a few discussions about this and the conclusion is that: most people don’t move for fun. There is usually a job change, family addition, divorce or some other bi-picture change that forces a move. Hence, RE is essential. I know personally…my house is feeling a little small the last few weeks. Ha!
Home Values and Inventory
It will take several months before we’ll be able to look backwards with any clarity to see how home values have been affected by CV-19. This whole thing hit right about at the peak of the selling season and I can say that, anecdotally, real estate activity has dipped slightly to moderately. We are still seeing multiple offers on hot properties, but one difference I’ve noticed is that buyers are not bidding up as much as past months and years. The concentration is more on the terms: inspection timelines, access limitations, closing dates, etc. This is still anecdotal territory, but it seems that the volume of listings coming online is only slightly less than usual for this time of year. My personal experience has been that the total volume of buyers in the market it lower; I think a lot of them are sitting on their hands until the dust settles at least a little.
For pricing listings, here is how I am looking at it:
-If the house is a challenging listing (busy street, rough condition, tough layout, etc.) I’m advising to price on the lower end of the spectrum so that you are not chasing a falling curve as we get into a slower market.
-If the house is a hot property (nicely updated, solid location/lot, has some pop, etc.) then I’m advising a price at the higher end of the spectrum. Since we cannot count on buyers bidding up, then better to start high; there are still buyers out there and they appreciate not having to compete as much on price.
In Portland we have had essentially zero housing inventory for about as long as I can remember. My instinct is that we are going to accumulate some housing stock in the next few months and there will be a lot more choices for buyers. This could have some negative pressure on pricing, but it remains to be seen.
Loans and Closing
Congratulations, your offer was accepted! Now we have to navigate the lending + escrow process. This has proven to be the biggest pinch point of the real estate market. Escrow is having to work the front lines of safety and they have been doing a stellar job at keeping themselves and all of our clients safe! Lenders are also under a huge load in recent weeks because 1) everyone is refinancing their homes because of the low rates 2) appraisals a more challenging than usual because of access issues and volume 3) loan programs are changing constantly. A week or so ago many originators pulled their jumbo loan packages (loans over $510,400) and I’ve heard that some VA and FHA programs may be running short in the coming weeks. Some loan underwriting standards have become more stringent. These things are always in flux, even in a “normal” market, but the changes we’ve seen recently have been more abrupt and conservative.
The bottom line is that loans are still funding and escrow is still filing new deeds with the county. The process has just become a little slower and more complicated. Again, I’ve been amazed by the dedication and professionalism of these folks!
Touring and Safety
Touring homes these days is a borderline-surreal experience. The idea now to rule out the house as much as possible prior to going inside. Review the pictures and virtual tour with a sharp eye. Do a drive-by and check the permit history + disclosures. If you still like it, then be prepared to don gloves, a mask and don’t touch anything as we walk through.
REALTORS® as a group in Portland are mostly on the same page when it comes to safety: nobody wants to endanger anyone in the process. We’ve all just had to change the norms a get settled into the new reality.
I’m writing this from my conversion van which has become my mobile office. I’ve only been to the actual office once or twice a week for the past month to print or scan documents. My kids are home from school and home-schooling is proving to be a challenge and an opportunity all at the same time. I really want to be out in the world doing all the things that I love, but I’m feeling a strong pull to do the right thing and stay home. It is hard, but I’m finding a lot of joy in playing guitar, catching up with old friends on Zoom and trying on new things like meditation. I hope you are doing well and staying safe in your world too! I’m always here for you for any real estate talk or a pep talk :-).