Buyers, seek opportunity. Sellers, hold off.
That’s the advice from Redfin CEO Glenn Kelman as questions swirl about the real estate market amid the COVID-19 pandemic.
In an interview with Cheddar on Tuesday, Kelman said with prices going down and unemployment claims going up, it may be a good time to buy. Kelman said he bought his house at the bottom of the financial crisis — “I like being a buyer in a situation like this,” he said.
For sellers, though, Kelman said it’s best to hold off on listing if possible.
“The people who have been on the sidelines trying to buy a house forever actually have an opportunity to do that,” he said. “There are still a few bidding wars but they are much less common. My advice for buyers would be to keep on the prowl, and my advice for sellers is to wait.”
How is the coronavirus impacting the real estate market, and what may the industry look like post-virus?@Redfin CEO @glennkelman shares his thoughts on how to navigate the market. #CheddarLive pic.twitter.com/umYycaNU7x
— Cheddar? (@cheddar) April 21, 2020
Data from Seattle-based Redfin shows that home delistings spiked during the final week of March, up 148% year-over-year, though “the worst may be behind us when it comes to delistings,” said Redfin lead economist Taylor Marr.
“Sellers who had homes on the market when shelter-in-place orders were implemented were faced with a choice: Keep their houses listed or pull them off the market,” Marr said in a Redfin blog post. “Many of them opted to delist, and the market is now concentrated with folks who need to sell due to major life events or changes.”
Average asking prices decreased in March, but that has now flattened. Pending home sales were down 54% year-over-year during the week ending April 10.
The future of the housing market largely depends on how long the pandemic lasts and “its continuous effects on homeowners, buyers and sellers,” Redfin notes in a FAQ page.
“How the market shapes up through the rest of spring will depend heavily on unemployment and the availability of credit,” Marr said.
For people who lack funds for their mortgage, Kelman advised to ask for forbearance, which allows homeowners to delay their payments.
Kelman said he’s concerned with mortgage lenders pulling back as home prices dip. That prevents working class people from buying a house during an opportune time, he said.
“It drives me crazy because the only people left in the market are cash buyers, vultures, hyenas,” Kelman told Cheddar. “There is an opportunity to make sure that people who are really trying to afford home now can do so. The challenge is just that the forbearance has been lopsided — it’s let the borrower off hook, but not really assured lenders that they should keep lending money.”
Redfin said this month that it will cut 7% of its staff and furlough hundreds of agents due to decreased housing demand amid the COVID-19 crisis. The company is also making small cuts at its headquarters in Seattle, while temporarily slashing all salaries by 10-to-15% and canceling bonuses for the remainder of this year.
Redfin rival Zillow Group outlined its own coronavirus playbook last month, noting that it will slash expenses by 25% this year, freeze hiring across the company, cut nearly all marketing spend, and suspend home-buying through its Zillow Offers business. Redfin has also paused its own home-buying business, RedfinNow.
Seattle-based Zillow said Wednesday that its web traffic and agent requests have rebounded in April, suggesting a potential renewed interest in the housing market after the March dip.
“These are encouraging signals and time will tell if this interest will turn into more offers to buy and transactions,” Zillow Economist Jeff Tucker said in a statement. “The coronavirus pandemic has already cost an unprecedented number of people their jobs, which will force many to put plans for a home purchase on hold. Time will tell whether areas of the country with sharper increases in homebuyer interest see quicker economic recoveries, if consumers are feeling confident enough to consider a big purchase like a new home.”
