Seller to Sell Faster, Market Changes

The coronavirus pandemic initiated several shifts in America’s housing market over the past eight months. Changes in the behaviors of home buyers and sellers were especially notable as buyers’ usual tendencies altered, and the urgency to sell accelerated.

This is according to new data from the National Association of Realtors®’ 2020 Profile of Home Buyers and Sellers,1 a yearly report which discusses demographics, preferences and experiences of buyers and sellers across America.

Those who completed their transaction after March were more likely to purchase a multi-generational home. Multigenerational home purchases accounted for 15% of sales after March, compared to 11% for those who closed before April. In light of stay-at-home orders, instituted within the early weeks of the pandemic, 14% of buyers who bought after March said their transaction was delayed because of COVID-19.

“The coronavirus without a doubt led home buyers to reassess their housing situations and even reconsider home sizes and destinations,” said Jessica Lautz, vice president of demographics and behavioral insights at NAR.

“Buyers sought housing with more rooms, more square footage and more yard space, as they may have desired a home office or home gym,” she added. “They also shopped for larger homes because extra space would allow households to better accommodate older adult relatives or young adults that are now living within the residence.”

Among other updated statistics, this year’s report includes two new sections on active home buyers and sellers during the COVID-19 pandemic. Purchases and sales that closed in April 2020 or after are considered transactions that occurred during the pandemic. The survey evaluated buyers’ and sellers’ behaviors prior to the virus taking shape and then assessed consumer and seller patterns in the midst of the outbreak.

Buyers who purchased after March were more likely to relocate to the suburbs and were more likely to pay more for that home – regardless of its location – paying an average of $339,400 compared to $270,000 for those who purchased before April. Findings show those who bought a home  during the pandemic are expected to remain there for 10 years. That is compared to 15 years for those who purchased prior to the COVID-19 outbreak.

Five percent of buyers who purchased after March did so without physically seeing the home in-person, compared to 3% of buyers who purchased before April. Those who went to closing after March were less likely to be denied by a lender – 2% compared to 5% for pre-April buyers. This group also had higher household incomes – $100,800 compared to $94,400 for pre-April buyers.

Lautz notes several additional, significant behavioral changes among home sellers due to the pandemic, including a desire from many to accelerate their transactions.

“So many sellers were eager to get out of their old home and move to something bigger that would better meet their needs during quarantine,” she said.

The NAR report reveals that owners who sold in 2020 were more likely to say that their need to sell was “at least somewhat urgent.” Those who closed in April or later were more likely to sell because their home was too small – 18% compared to 13% of those before April.

Sellers after March were more likely to use incentives to help sell their home, and they sold for 98% of the list price compared to 99% for those before April. However, those homes sold after March ultimately had higher selling prices – $300,000 compared to $270,700 for those that sold before April.

Fifty-six percent of homeowners who sold after March sold in the suburbs, compared to 48% who sold before April.

Other Shifts in Buyer and Seller Behaviors

The average buyer age of 55 was an all-time high, according to the NAR survey. The average first-time buyer was 33 years old. There was a slight rebound in single women buyers – 18% from 17% in 2019. A record-low 33% share of buyers with kids at home under the age of 18 was recorded – a drop from 58% in 1985.

The proportion of first-time buyers dropped to 31%, down from 33% in 2019. This is the lowest share since 1987’s recording of 30%. Twenty-two percent of first-time buyers moved from a family member’s home directly into ownership. This is also a lower share than last year’s.

The NAR study found that 97% of buyers searched for their home online. This is the highest percentage for an online home search and is a jump from last year’s 93%. The time spent looking for a home declined to eight weeks from 10, which is the shortest search since 2007.

“Some buyers purchased their homes before ever physically seeing them in person,” said Lautz. “They researched, viewed photos online and did virtual tours from their computers and phones, and ultimately made an offer through their agent.”

On average, buyers looked at nine homes in person, and an additional five homes via virtual tour listing online only. Fifty-three percent of buyers said finding the right property was the hardest step in the home buying process.

The market changes and so do we. We’re watching the market closely and grow with all changes.

For all of your Real Estate needs, Talk To Tammy 636.931.9100!

COVID-19: Landlord FAQs

Must a landlord consider unemployment assistance as a form of income?

  • In most cases, no. Owners are under no federal requirements when it comes to counting unemployment assistance as income in connection with lease applications. In addition, the one-time $1200 check received by many taxpayers was a tax rebate or credit and should not be included in calculating a tenant’s income. If you are in a state or locality that has “source of income” provision in its discrimination laws, owners should check with legal counsel to determine how to treat unemployment compensation to avoid discrimination claims.
  • If you participate in HUD-assisted housing, the amount of assistance a family receives may be affected by the amount of income they receive and so it is important to know how to count unemployment assistance.  Recent HUD guidance says that different types of unemployment assistance is treated differently in calculating a family’s “annual income”:
    • Regular payments of unemployment insurance are treated as annual income.
    • Pandemic Unemployment Assistance (“PUA”, CARES Act §2102): this is unemployment assistance for individuals who are self-employed, seeking part time employment or who otherwise would not qualify for regular unemployment assistance. HUD says PUA payments are included in annual income.
    • Federal Pandemic Unemployment Compensation (“FPUC,” CARES Act §2104): This is the payment of $600 that supplemented regular unemployment compensation and that ended at the end of July 2020. HUD has determined FPUC payments are “temporary income” that is not included in annual income.
    • Pandemic Emergency Unemployment Compensation (“PEUC”, CARES Act §2017): This program provides up to a 13-week extension of unemployment compensation (from 26 weeks to a total of 39 weeks). HUD has determined that PEUC payments are included in annual income.

Communications with residents

What is the best policy for communications with residents?

If they have not done so already, housing providers should communicate frequently with residents, providing them with regular updates about the steps they are taking to maintain a healthy environment. Signs and posters should be placed around the property to encourage personal hygiene (wash your hands!) and other steps individual tenants can take to make themselves and the property safer. Examples are available on the CDC website (cdc.gov). If they have not done so already, housing providers should explain to residents that the COVID-19 virus is still spreading rapidly through the population and that they should assume that other people – including other residents at the property – may be carrying the virus and take appropriate precautions. Residents should be reminded that if everyone takes precautions to protect themselves from the virus, it will improve the health prospect of all residents.

What should I do if I learn that a resident or staff person has tested positive for the COVID-19 virus?

First, do not respond to rumor or gossip. A verbal report from one tenant that another tenant is sick or has suspicious symptoms is not sufficiently reliable to take action.

The situation is different if a housing provider receives a reliable statement from a tenant that he/she has tested positive, or a similar report from a public health official. Although the law varies greatly from place to place, as a general matter, a landlord has a duty to warn tenants of known hazards at their property. While there is no case law specifically with respect to COVID-19, reliable information that someone at the property has tested positive for the virus could be deemed to constitute knowledge of a hazard that should be shared with other tenants. At a minimum, disclosing that information will encourage other tenants to redouble their efforts to avoid the virus, which will make the housing provider’s job easier. But, as discussed below, you should not disclose specific resident or employee names or information. Better to communicate the issue generally and steps taken to protect residents and staff so they are not exposed. Both HUD and the CDC have advised that housing providers can inform residents that a staff member or another resident has tested positive for the virus.

Be aware, however, that some local public health agencies have urged housing providers not to disclose this information, largely to protect the privacy interests of persons who test positive. Before notifying other residents, even generally, that someone at the property has tested positive, you should try to determine if your local public health agency has published guidance.

If I decide to disclose that someone at the property has tested positive, can I disclose who that person is?

No: Medical information is subject to a variety of state and federal privacy protections, and providing personally identifying information about someone who has tested positive would likely violate these principles. And employees may also be protected under privacy and labor laws. Given the widespread presence of the virus and the many asymptomatic people who may be spreading the virus, information that a particular person has the virus may not provide really useful information. As a practical matter, it also may create issues for that resident or employee that will only complicate dealing with other residents: disclosing this information would make it much less likely that another person who tests positive would disclose that information to you. Housing providers should politely discourage any request to share personally identifying information about a person who tests positive, explaining that they treat all residents’ privacy seriously and reminding residents that if they tested positive, they would want the housing provider to treat their personal health information similarly.

A resident has tested positive for the COVID-19 virus. Can I ask them to vacate their unit or evict them?

Except in extraordinary cases, no: HUD guidance is that in most cases, persons who have tested positive can successfully isolate themselves in their unit until they recover. If a person who has tested positive for COVID-19 refuses to self-isolate, however, the housing provider should consider taking additional action. Housing providers should check with their legal counsel to determine whether their lease form and applicable landlord/tenant law allows additional action against non-compliant tenants. While it does not expressly discuss grounds for eviction, the Fair Housing Act does not protect persons from discrimination claims who present a “direct threat” to the health or safety of others. Conceivably, someone who fails to comply with direction to self-isolate may present such a direct threat. But courts advise that each “direct threat” claims must be based on an “individualized assessment” of the specific facts of each case, including whether some action less than eviction may persuade the person who has tested positive to follow self-isolation guidance. In serious cases, it may be appropriate to seek advice from local public health or law enforcement officials.

Cleaning

What additional cleaning procedures should housing providers adopt?

Since the beginning of the pandemic, the CDC has urged constant cleaning and disinfecting of public spaces. In a multifamily housing property, this will include disinfecting door handles, counter surfaces, elevator buttons, handrails, light switches, and laundry rooms, including controls for washers and dryers. Making extra efforts to clean and disinfect the property is probably the most visible way to demonstrate your concern for keeping your property virus-free and to encourage residents to make their own anti-virus efforts. Cleaning and disinfecting operations should happen multiple times each day – of course, whenever a surface is touched, it may become contaminated, but multiple cleaning will eliminate at least some possible exposure. Where possible, hand sanitizing stations and disinfecting wipes should be made available near doors, elevators and other “touch points” for residents’ use. Even during this re-opening phase, it is best to continue this cleaning process vigilantly until it is clear there are no or minimal reported cases in your state or region.

Disinfecting contaminated apartments.

Professional cleaning companies are gearing up to provide this service. The apartment should be treated as if it has exposed to a type of toxic substance. Cleaning protocols should be consistent with CDC guidance. For example, if an apartment is vacated by a sick resident, CDC recommends that the windows should be opened for at least 24 hours to allow ventilation that may help remove the virus. It also would be reasonable to leave the unit vacant for two weeks (considered generally to be the maximum incubation period reported for people with the virus). Cleaning personnel should still wear gloves, goggles and masks as appropriate and should scrupulously follow all warning labels on products they use.

Stay informed and stay healthy! If you’re ready to list your house or want to find your new dream home, Talk To Tammy636.931.9100

Existing-Home Sales Climb RECORD 20.7%

June 2020, Existing-home sales rebounded at a record pace in June, showing strong signs of a market turnaround after three straight months of sales declines caused by the ongoing pandemic, according to the National Association of Realtors®. Each of the four major regions achieved month-over-month growth, with the West experiencing the greatest sales recovery.

Total existing-home sales,1 https://www.nar.realtor/existing-home-sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, jumped 20.7% from May to a seasonally-adjusted annual rate of 4.72 million in June. Sales overall, however, dipped year-over-year, down 11.3% from a year ago (5.32 million in June 2019).

“The sales recovery is strong, as buyers were eager to purchase homes and properties that they had been eyeing during the shutdown,” said Lawrence Yun, NAR’s chief economist. “This revitalization looks to be sustainable for many months ahead as long as mortgage rates remain low and job gains continue.”

The median existing-home price for all housing types in June was $295,300, up 3.5% from June 2019 ($285,400), as prices rose in every region. June’s national price increase marks 100 straight months of year-over-year gains.

Total housing inventory3 at the end of June totaled 1.57 million units, up 1.3% from May, but still down 18.2% from one year ago (1.92 million). Unsold inventory sits at a 4.0-month supply at the current sales pace, down from both 4.8 months in May and from the 4.3-month figure recorded in June 2019.

Yun explains that significantly low inventory was a problem even before the pandemic and says such circumstances can lead to inflated costs.

“Home prices rose during the lockdown and could rise even further due to heavy buyer competition and a significant shortage of supply.”

Yun’s concerns are underscored in NAR’s recently released 2020 Member Profile, in which Realtors® point to low inventory as being one of the top hindrances for potential buyers.

Properties typically remained on the market for 24 days in June, seasonally down from 26 days in May, and down from 27 days in June 2019. Sixty-two percent of homes sold in June 2020 were on the market for less than a month.

First-time buyers were responsible for 35% of sales in June, up from 34% in May 2020 and about equal to 35% in June 2019. NAR’s 2019 Profile of Home Buyers and Sellers – released in late 20194 – revealed that the annual share of first-time buyers was 33%.

Individual investors or second-home buyers, who account for many cash sales, purchased 9% of homes in June, down from 14% in May 2020 and 10% in June 2019. All-cash sales accounted for 16% of transactions in June, down from 17% in May 2020 and about equal to 16% in June 2019.

Distressed sales5 – foreclosures and short sales – represented 3% of sales in June, about even with May but up from 2% in June 2019.

“It’s inspiring to see Realtors® absorb the shock and unprecedented challenges of the virus-induced shutdowns and bounce back in this manner,” said NAR President Vince Malta, broker at Malta & Co., Inc., in San Francisco, Calif. “NAR and our 1.4 million members will continue to tirelessly work to facilitate our nation’s economic recovery as we all adjust to this new normal.”

According to Freddie Mac, the average commitment rate(link is external) for a 30-year, conventional, fixed-rate mortgage decreased to 3.16% in June, down from 3.23% in May. The average commitment rate across all of 2019 was 3.94%.

Single-family and Condo/Co-op Sales

Single-family home sales sat at a seasonally-adjusted annual rate of 4.28 million in June, up 19.9% from 3.57 million in May, and down 9.9% from one year ago. The median existing single-family home price was $298,600 in June, up 3.5% from June 2019.

Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 440,000 units in June, up 29.4% from May and down 22.8% from a year ago. The median existing condo price was $262,700 in June, an increase of 1.4% from a year ago.

“Homebuyers considering a move to the suburbs is a growing possibility after a decade of urban downtown revival,” Yun said. “Greater work-from-home options and flexibility will likely remain beyond the virus and any forthcoming vaccine.”

Regional Breakdown

In a complete reversal of the month prior, sales for June increased in every region. Median home prices grew in each of the four major regions from one year ago.

June 2020 existing-home sales in the Northeast rose 4.3%, recording an annual rate of 490,000, a 27.9% decrease from a year ago. The median price in the Northeast was $332,900, up 3.6% from June 2019.

Existing-home sales increased 11.1% in the Midwest to an annual rate of 1,100,000 in June, down 13.4% from a year ago. The median price in the Midwest was $236,900, a 3.2% increase from June 2019.

Existing-home sales in the South jumped 26.0% to an annual rate of 2.18 million in June, down 4.0% from the same time one year ago. The median price in the South was $258,500, a 4.4% increase from a year ago.

Existing-home sales in the West ascended 31.9% to an annual rate of 950,000 in June, a 13.6% decline from a year ago. The median price in the West was $432,600, up 5.4% from June 2019.

The National Association of Realtors® is America’s largest trade association, representing more than 1.4 million members involved in all aspects of the residential and commercial real estate industries. Talk To Tammy, and see what the best options are for you with selling your house or finding the right home. 636-931-9100, Tammy Fadler

REALTORS® Say Market Is in Recovery Phase of Pandemic as Buyers Return

After enduring months of setbacks brought on by the coronavirus pandemic, a new survey from the National Association of Realtors® shows that more than nine in 10 of its members believe they are in the process of recovering as many states start to reopen their economies.

NAR’s 2020 Market Recovery Survey polled agents about their respective residential and commercial real estate markets, finding that 92% of respondents stated that a portion of their buyers have either returned to or never left the market. Among those members, 18% reported that their buyers never left the market at all, and 9% said that all of their buyers have already returned to the market. Small towns and rural areas were more likely to report that there had been no pause in buyer activity and were also more likely to report a stronger return of buyers to the market.

“The residential market has seen a swift rebound of activity as numerous states have begun to ease mandatory stay-at-home orders,” said Lawrence Yun, NAR’s chief economist. “Many potential buyers and home sellers were kept at bay in the initial stages of the coronavirus outbreak, but Realtors® nationwide were able to quickly pivot, embracing technology and business practices to ensure the home buying process continued in a safe manner.”

In terms of seller activity, 89% of Realtors® said a share of their clients have either returned to the market or never delisted their property. Roughly one-quarter of respondents, or 24%, indicated that their sellers never left the market. Suburban and urban markets are more likely to have reported fewer sellers returning to the market compared to small and rural markets.

While the housing market as a whole was understandably caught off-guard by the pandemic, the NAR survey found that many members are now prepared should another surge of the coronavirus occur. Thirty-nine percent of those polled said they are at least somewhat prepared for a second wave of the disease, with 19% reporting they are “very prepared.” Moreover, of those who believe there might be a resurgence, 30% said they are more prepared now, as they know what to expect. Twenty-seven percent indicated that they are concerned enough that they have changed their business practices in some form in order to be prepared for another bout of the virus.

Of those who are currently working with buyers, 54% said that their buyers’ timelines to find and purchase a home has remained the same, while 27% report that their clients now express more urgency about buying a home.

Among NAR membership currently working with sellers, two-thirds said that their sellers’ timelines to sell have remained the same. Twenty-three percent reported sellers who feel more urgency to sell their property. Less urgency was cited more frequently in urban areas and in suburban areas or small towns and rural markets.

“A number of potential buyers noted stalled plans due to the pandemic and that has led to more urgency and a pent-up demand to buy,” said Yun. “After being home for months on end – in a home they already wanted to leave – buyers are reminded how much their current home may lack certain desired features or amenities.”

In some cases, respondents reported changes in their buyers’ preferences. Twenty-four percent of Realtors® indicated having buyers who shifted the location of where they intend to buy a house due to the coronavirus. Among those who noted having buyers change their intended location, 47% stated that their buyers prefer to purchase housing in the suburbs, 39% cited rural areas, and 25% cited smaller town markets.

Thirty-five percent of NAR members surveyed said buyers have modified at least one home feature that is important to them because of the coronavirus outbreak. The most common home features cited as increasingly important are home offices, spaces to accommodate family members new to the residence – older adult relatives, newborns or new pets – larger homes with more personal space and bigger yards that would allow for growing foods.

Also, in response to the pandemic, 13% said that homebuyers changed their home type of choice from multi-family to single-family. This shift is highest in urban markets at 16%. Thirty-three percent answered that buyers have adjusted commuting needs since the pandemic began, with 22% less concerned with their commute and 7% wanting to live close to bike trails that connect them to work. Just 5% responded that they now have a greater concern about parking and more concern for a location that affords the ability to drive to work.

On the commercial real estate front, some members indicated that they are contending with hardships, as only 19% of property managers said they have been receiving all rent payments on time, and only 36% of individual landlords have received timely payments.

Seventy-four percent have reported that leases have been terminated or said tenants have needed to delay rent payments, with the greatest shares (56%) happening in non-essential retail establishments, followed by the office sector at 38%. However, grocery stores are faring well, the least cited of the commercial properties at 4%.

“Consumers have been forced to move away from buying in stores and are now doing much more shopping from home,” said Yun. “Unfortunately, this has come at the detriment of commercial property owners, but these circumstances could be an opportunity for growth in the industrial warehouse market, as Americans have become more reliant on home delivery services.”

As economies reopen, 44% of NAR members say they expect the demand for industrial properties to increase, and 35% expect the demand for multi-family properties to increase. In comparison, 72% expect the demand for non-essential retail to decline and 66% said they expect office usage to decrease.

The biggest concern for small businesses, according to 83% of commercial members, is a lack of profitability due to a decrease in customers. A majority of Realtors® also expressed concern with the following: a resurgence of the outbreak forcing another shutdown (66%), protecting the health of employees, (61%) and challenges with implementing social-distancing measures (59%).

The National Association of Realtors® is America’s largest trade association, representing more than 1.4 million members involved in all aspects of the residential and commercial real estate industries.

If you are ready to list your house or need help finding the right home for you and your family, Talk To Tammy 636-931-9100!

Mortgage Rates hit another all-time LOW

The average U.S. rate for a 30-year fixed mortgage dropped to 3.15% last week. It is the lowest ever recorded in a Freddie Mac data series that goes back almost five decades.

The rate fell from 3.24% last week, setting a new record low for the third time in three months, according to the report.

Mortgage rates have fallen after the Federal Reserve began buying mortgage-backed securities to stimulate demand, said Chris Low, chief economist of FHN Financial in New York. The Fed has purchased more than half a trillion dollars of MBS after restarting in March a bond-buying program it used during the financial crisis more than a decade ago.

When the initial plan of buying $200 billion of MBS didn’t lower financing costs, Fed Chairman Jerome Powell said on March 23 the central bank would buy whatever was needed to move rates. It worked.

“The Fed is by far the biggest player in the mortgage markets right now, the biggest buyer of mortgages, and because of that, they have almost complete control over the interest rate,” Low said.

That means the central bank has the ability to stimulate home sales by driving rates to lows that most people wouldn’t have thought possible a few years ago, said Low.

“Every economist had doubts about how housing would fare during COVID-19, but what we’ve seen has been absolutely remarkable,” Low said. “Home sales are holding up extraordinarily well, and that’s in large part because of the mortgage rates.”

Last week, applications for mortgages to purchase homes gained for the sixth consecutive week to a level that was 6.7% higher than a year ago, when the U.S. was having a normal “spring homebuying season”.

A seasonally adjusted index measuring purchase applications jumped 9%, the Mortgage Bankers Association said in a report on Wednesday. The so-called purchase apps were up 54% from early April when most U.S. states were under lockdown orders to keep people at home in an effort to stem the spread of COVID-19.

Is now the right time to purchase a new home or make investments in this real estate market?

Talk To Tammy, 636.931.9100 or via tammy@talktotammy.com

Will Coronavirus Create Multifamily Investment Opportunities?

The past several years have been marked by an increase in average rent prices in many major U.S. cities, a lack of affordable multifamily housing, and a tight rental market. The pandemic and potential recession that may result isn’t likely to lead to more affordable housing, but it could lead to opportunities for some investors ready to cash in on properties in secondary markets.

Here are 3 ways that the multifamily housing market might be impacted by the pandemic.

1. House Foreclosures Could Lead to More Rental Demand

For the immediate future, tenants may be stuck in place, unable to move either due to logistical or economic reasons. Some multifamily buildings are prohibiting new residents, while others only permit remote showings, which can make it harder for prospective tenants to make a decision.

A report from Attom Data Solutions showed nationwide foreclosure lows in February 2020. However, Chief Product Officer Todd Teta predicts a rise in foreclosures once courts lift the ban on foreclosures and evictions. This could lead to more people seeking apartments, which could create a market ripe for landlords.

Much depends on what happens once the country re-opens—and when that phased reopening occurs.

“We want states to open up at a safe pace, but obviously, as the economic situation gets worse, that will impact the opportunities available in the market,” says Brant Brown, COO and CFO of Westmount Realty Capital, a commercial real estate investment and development firm in Dallas. “We’re looking at what the unemployment story is going to be, what collections are going to be, and how quickly the states re-open.”

2. Tighter Lending Restrictions Will Force Investors Not to Over-Leverage

The NMHC report spotlights tighter lending restrictions, showing the Equity Financing Index dropping from 61 to 13, and the Debt Financing Index plummeting from 68 to 20.

According to the report’s statistics, 75% of respondents said that equity financing was less available than in the three months prior; 71% of respondents said debt financing conditions were less favorable.

Especially now, Brown advises investors to avoid over-leveraging property or not leaving enough cash in the bank for repairs and emergency expenses, which could include tenants not paying rent due to job loss.

“A lot of multifamily operators have been running their properties cash-poor. In times like this, it really catches up with them,” Brown says.

In spite of low interest rates, underwriters will be looking to make sure investors have sufficient capital to manage the property.

3. Investors could find opportunities in suburban markets.

The second month of the pandemic in the U.S. found many city-dwellers temporarily fleeing their apartments for more space and a change of scenery.

“The fundamental story of [urban] markets is attractive, so I wouldn’t place bets on what the long term [impact] will be,” Brown says. “In the short run, a lot of people are very concerned about [the spread of the virus], and they’re going to vote with their feet.”

Cities may become less desirable places to live as the risk of infection continues to weigh on communities and remote work has people spending more time at home. Residents may seek larger apartments with more amenities in less populated areas, says Brown. “Wherever they move, it probably won’t be those city centers.”

More Homeowners Sprucing up their Gardens and Curb Appeal in the Time of Coronavirus

One positive thing that appears be to happening in the time of coronavirus sheltering /staying in place orders is that people are engaging in more home hobbies and creative activities that they may have not had time for before due to social activities. One can see a lot of articles about staying creative or why the quarantine can make one more creative.  One activity that Americans apparently have spent more time and money on is gardening, based on retail sales and employment data.  This is a good time for homeowners because gardening, yard improvements, and minor home renovation or simple do-it-yourself projects (deck) improve curbside appeal and reflect the kind of care and maintenance that homeowners put into their homes, both external and internal. Attractive gardens, a clean yard, freshly coated fences, mended pathways will make a home attractive to buyers, in the time of and after the coronavirus social distancing period.

Building materials/gardening store sales and employment are up compared to retail trade

Retail sales data from the U.S. Census Bureau showed that retail sales of building materials, garden equipment, and supply dealer stores (NAICS 444) increased 1% in March from February and was up 7% on a year-over-year basis. In comparison, retail sales and food services fell 9% on a month-over-month basis and 6% on a year-over-year basis.  Other industries that had higher sales in March were grocery stores (+27% m/m and +29% y/y); health and personal care stores (+4% m/m, +4% y/y), and general merchandise stores that includes department stores and other general merchandise stores (6% m/m, 7% y/y).

In 2019, Americans spent nearly $380 billion (retail sales) on building materials, garden equipment, and supplies. Building materials and supply stores (paint and wallpaper stores and hardware stores) sold $334 billion (so $41 billion is garden supplies).

While brick-and-mortar retail stores have shed about 300,000 jobs since January 2017, the employment in brick and mortar stores has remained relatively flat at 1.3 million. In March 2020, it is one of the few sectors that posted year-over-year employment gains, of 11,500 jobs. However, employment did fall by nearly 4,000 from February to March.

Impact of landscaping on home values

What’s the impact of projects that improve a home’s curb appeal on the likelihood of selling a home and home values? According to NAR’s 2018 Remodeling Impact Report: Outdoor Features,  “74% of REALTORS® suggested sellers complete a landscape maintenance program before attempting to sell, and 17 percent said the project most recently sealed a deal for them, resulting in a closed transaction.” The cost in 2018 was $3,000 and 100% was recovered when the home was sold.

Single-family detached homes with green spaces: part of the American dream

Since 2009, the prices of single-family homes have also picked up faster than condominiums, as low mortgage rates have made a home purchase more affordable, as well as due to difficulty obtaining individual-unit mortgage financing in condominium projects that are not FHA-approved.1 As of March 2020, the median sales price of single-detached as $282,500, or nearly $20,000 more than the median sales price of condominiums/coops of $263,400.  Since January 2012, the median sales price of single-family detached homes has increased by 83% compared to 70% for condominiums/coops. The higher price of single-family homes reflects the preference of buyers for these homes, perhaps because the house with the picket fence and green yard embodies the attainment of the American dream of homeownership.

We can help you sell your house or support you finding a new home,

Talk To Tammy: 636-931-9100 or contact us via tammy@talktotammy.com

Most REALTORS® Confident That Home Prices Will Stand Firm

Many real estate professionals don’t foresee a significant drop in home prices from the COVID-19 pandemic, and certainly not to the degree of the Great Recession’s impact on the housing market. For residential property prices over the next 12 months, 38% of more than 4,000 REALTORS® say they expect prices to increase and 23% expect prices to remain stable, according to the March 2020 REALTORS® Confidence Index Survey, a monthly survey of real estate transactions conducted by the National Association of REALTORS®. 

“Although the pandemic continues to be a major disruption in regards to the timing of home sales, home prices have been holding up well,” Lawrence Yun, NAR’s chief economist, said in a statement following a report on pending home sales in March. “In fact, due to the ongoing housing shortage, home prices are likely to squeeze out a gain in 2020 to a new record high.”

Home prices were still rising across the country as the pandemic widened in scope in the U.S. in March. As of March, the median home sales price increased 8% year over year to $282,500, according to NAR.

“Prices have held up due to a combination of measures under the $2.2 trillion CARES Act passed plus the additional $484 billion funding passed April 23 to pay for unemployment insurance benefit claims and payroll assistance for small businesses,” Scholastica Cororaton, a research economist for NAR, notes on the association’s Economists’ Outlook blog.

The median list prices in several markets are still up compared to a year ago, according to realtor.com® data. For example, in Los Angeles, the median list price is up 16% compared to a year ago, while in Las Vegas and Denver, median listing prices are up by 3.6% and 3.5%, respectively, compared to a year ago. In the New York-New Jersey area, which has accounted for the largest share of coronavirus cases in the country, median listing prices are still up from one year ago by 2.9%.

As of April 18, 58 of the 100 largest metros were still seeing higher median listing prices when compared to a year prior, according to realtor.com® data. Properties were staying on the market longer—six more days during the week of April 18 compared to April 2019.

But markets like Washington, D.C., were seeing median list prices up by 4.4% the week of April 18 compared to a year prior.

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