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’s Impact On New Home Purchases And Designs

We have gone past the phase where working from home was a Covid-19 forced anomaly to one that looks like it will be a permanent part of our business work style and culture.

Large businesses are adapting to this work-at-home style and redesigning their office complexes to accommodate staff who must be on the premises. So office desks are now at least 6-feet apart. No more open spaces where people sit side by side to work. They are also creating dedicated areas for larger meetings and video conferencing rooms that will accommodate social distancing.

The work from home trend is having a dramatic impact on the way we work, eat, learn and even recreate. And the idea of working from home on a more permanent or semi-permanent basis is having a significant impact on the real estate market and future home designs.

The biggest impact we are seeing from our research on this subject comes from when people look to buy pre-existing homes. In the past, the number of bedrooms was on the priorities list. While bedrooms still matter, buyers now are looking at homes with an extra bedroom or an area that can be turned into a home office.

For example, if a person or family is looking to buy a two-bedroom home, they are now looking for a three-bedroom home and want to designate that third bedroom as a home office space.

They want to have a home with a dedicated room or area that they can work in and have room for privacy, a noiseless environment that is big enough to have room for larger monitors, stand-alone printers and optimized as a Zoom room.

While the home office is now a larger priority, it needs to be functional, not just attractive. These rooms might also need to be multifunctional as learning-from-home continues to be apart of school interaction for kids. And as a sign for our times, there is also interest in designing an area for package deliveries and drop-off that is more secure.

Interest in buying a second home is higher, too. The idea that a person can work from anywhere suggests that while they may not want to move to Hawaii or the Bahamas for work, they do want to move to areas with great scenery and open spaces. In homes with barns, sheds and garages, many seek to convert them into dedicated offices or play areas for their children. These areas could also serve as spaces for kids who are forced to learn from home and parents want them to do it in a better environment than utilizing their small bedrooms.

An interesting tech twist is related to reimagining the home theater. When we moved from analog to digital TV and HD, many homes created what is known as home theaters. Some were very elaborate, and in very high-end homes, they were large dedicated rooms with Barca lounger seats and wall-sized screens. Now, many of these larger home theaters and even smaller ones are being converted into dedicated Zoom rooms and optimized for video conferencing. Productivity now trumps home theater entertainment.

People are re-imagining their lives in a post-pandemic world where so much has changed. They realize the future seems to point to both work and learn-at-home being with us well into the future. This has changed the dynamics of the home real estate market and is now determining what types of homes sell or what new designs will be imagined and built.

 

The Fall Real Estate Market Is Very Hot

It is abnormally hot for fall as mortgage rates break records. The coronavirus pandemic has remade what’s normal, and homebuying is no exception. Typically, the real estate market tends to hit the brakes in the fall, as kids return to school and families juggle work, extracurriculars and the upcoming holidays.

But that’s not what’s happening as we head into the second week of September, closing in on the official start of fall: Sept. 22. Homes are getting snapped up faster as home values rise and mortgage rates continue to slide.

“Home sales are currently stronger than they were pre-pandemic and show no signs of slowing,” says Cheryl Young, senior economist at Zillow. “Demand is being fueled by low mortgage rates. We’re also seeing deferred home buying as the economy and housing market pressed pause in the spring.”

The median listing price on single-family homes grew for the 17th straight week, jumping 10.8% year-over-year, which is the most rapid growth in over two years. Meanwhile, mortgage rates have broken new records. The average rate on the 30-year fixed-rate mortgage is now at 2.86%, and the 15-year hit 2.37% this week—both all-time lows, according to Freddie Mac’s recent Primary Mortgage Market Survey.

As the number of homes for sale continues to shrink, new listings are being snapped up quickly. They’re lasting 12 fewer days on the market than they were 12 months ago, according to Realtor.com’s latest housing trends report.

“With unusually high buyer interest this late in the homebuying season, buyers are moving much faster than this time last year to beat out competition and lock in low mortgage rates. This means homes are sitting on the market for much less time, despite notably higher price tags,” the report’s author, Realtor.com economist Danielle Hale, wrote.

Whether this buying trend will continue is up in the air as supply is lagging behind demand, which appears to be the only real obstacle. What’s holding homebuying back now are chronically low levels of inventory, Johnson says, and stiff competition for homes that do come onto the market.

New listings dropped 12% during the week ending on Sept. 5, which spells trouble if construction doesn’t pick up. This is especially harmful for first-time buyers who are competing against a slew of bids for the same listing.

“Multiple offers are quite common for starter homes,” says Lawrence Yun, chief economist at the National Association of Realtors (NAR).

Why Is Homebuying Taking Off Now?

Experts can’t point to one reason why homebuying has defied expectations as we face a still uncertain economy and elevated levels of unemployment. Certainly, the Federal Reserve and GSEs, Fannie Mae and Freddie Mac, helped keep the market liquid so lenders could continue to do business as well as contain mortgage rates. But why is there such a big appetite for real estate now?

Low mortgage rates? People fleeing cities? The need for more space as working from home and remote learning become realities? Dormant buyers who were waiting for the pandemic to subside? It’s likely a combination of a few or all of these factors.

“Homebuying is currently on a tear, but much of this is likely due to the fact that those looking to buy during the spring homebuying season had to wait as the pandemic took hold,” Young says.

One influence that is undeniable in the recent buying spree is the rise of the ultra-low mortgage rate, says Yun of NAR. Buyers who were held back from buying during the spring watched mortgage rates drop. Now that businesses are opening up and more people are finding ways to live with the coronavirus safely, the homebuying hesitancy has subsided. Low rates are just adding extra impetus to what was already a motivated buying segment.

“Low rates are the key reason for the robust homebuying, despite the still-high unemployment rate,” Yun says. “Those with secure employment are taking advantage of the low interest rates.”

The circumstances surrounding the pandemic have created homebuyers, as well, says Bill Cosgrove, president and CEO of Union Home Mortgage. People are using their kitchens for office space and spare bedrooms for classrooms, so many of them are looking to upsize. Not only do they want more square footage, but they want to get away from urban cores so they can also have outdoor space.

Are you trying to find the right home? Talk To Tammy, 636.931.9100

Housing Market Changes: From Urban to Suburban and Rural Living

A new report by youth marketing experts YPulse titled “No Place Like Home” provides significant new insights on how the Covid pandemic has changed how Gen-Z and Millennials view the homes. The following statement summarizes key findings: “As young people look to their spaces as mental health retreats, at-home items and services that comfort, declutter, or foster a feeling of escape that from the outside world will resonate.” The opportunities for marketers are clear and will be elaborated on below.

YPulse previously observed that millennials have homebody tendencies, with a majority preferring to go to a  café or watch Netfix at home as opposed to going to a party on a Saturday night. A recent survey confirms that this sentiment was present even prior to the pandemic, with, “…67% of 19-37 year olds telling YPulse in January this year that they would rather stay in on the weekends than go out.”

Both Millennials and Gen-Z (widely regarded as the most stressed out generation in history) are seeing the home as a refuge from the outside world, as many have felt stressed by issues such as climate change, the 2008 recession, student debt, and now Covid-19.

Shifts in How Young People Use Their Homes Will Create Opportunity

With a strong majority of Millennials and Gen-Z having the goal of owning a home, how they use that home will be of interest to markets in many product categories. YPulse points out several Covid-related shifts in emphasis among the younger consumers in terms of how they will use space, including heightened demand for:

  • Fully equipped home offices (seating, lighting, desks, temperature control), with many indicating a preference to work at home even after the pandemic.
  • Home fitness space and equipment, with 63% indicating that when the pandemic ends they would prefer to exercise at him.
  •  Private outdoor space, with many preferring having their own private space even after Covid passes as opposed to using public parks for this purpose
  • Cooking supplies and well-equipped kitchens. While the demand for eating out does not appear to have done away, there has been an uptick in the number reporting that cooking is a hobby.
  • Play space for children; this has been spurred by many dealing with home schooling while trying to keep them busy via fun and productive entertainment.

Renewed Emphasis on Comfort, Simpler Design, and Home Improvement

YPulse reports that Covid has led to 80% of young people self-quarantining and, 83% reporting that their home has provided them with comfort during the pandemic. In addition, 71% actually indicate that they actually enjoy being able to spend additional time at home. This “shelter from the storm” as YPulse puts it, brings comfort to young consumers, who describe their ideal home as being comfortable, cozy, safe, calming, and quiet. Accompanying these feelings is a desire for simplified décor that is calming and reflects a less cluttered environment. The report also suggests that “Cozy, homier ads are more relevant than ever to young consumers,” advice that would appear very sound going forward.

The “comfort” element of the home is making young consumers more likely to indicate they want to engage in do-it-yourself home improvements. The report indicates that 64% of young consumers say they are more interested in-home improvement than before Covid. DIY may be especially important in the short-term, as these young consumers look to make improvements while limiting expenditures, and may become a longer-term trend as well.

A Shift from Urban to Suburban and Rural Living

The report observes that while about 3 million Millennials have moved back with their parents during the pandemic,  a majority live on their own. Prior to the pandemic, 34% of Millennials and 8% of Gen-Z consumers owned their own homes, with and additional 46% of Millennials and 9% of Gen-Z being renters. Clearly, it is a goal of both of these generations to own their own home in the future, with 85% of young people reporting that they plan to eventually buy a house.

Once the pandemic ends, this desire to should produce good times for the housing market. Assuming a reasonably healthy economy and no dramatic changes in federal tax code, it remains likely that once the crisis passes that there will a boom in Millennial wealth, leading to an even better housing market.

Ypulse’s report indicates that 48% of those ages 19-37 who rent or live with parents are putting off home ownership because of Covid. So where will they live? A notable trend that is that more urban Millennials are considering or planning a move to a suburban or rural area. YPulse’s data shows that the top reasons for this sentiment are lower housing costs, low crime rates, being close to friends, being able to afford a larger home, and having more outdoor space. Unless the significant violent crime increases taking place in many major cities can be held in check via policy changes, it would appear that this trend could be exacerbated as real estate experts are already reporting exodus from many major cities as a result of increased crime and high tax rates. As YPulse’ report states, “Moving out of cities is also becoming a dream as some plan for a new future.” If more work remains remote post-Covid, this may become a very realistic dream for many young people.

For example, As the pandemic devastated New York City in March, schoolteacher Ali Iberraken and her young family rushed to relocate outside the city—way outside the city. They left their two-bedroom Brooklyn brownstone for an Airbnb in the woods of Virginia’s Shenandoah Valley. The Iberrakens had planned to decamp for three weeks but ended up staying for two months, not least because they loved the peace and beauty of the bucolic environment.

“Virginia made me realize that’s exactly the lifestyle I wanted,” Iberraken said. “We tried to stay as long as we could, and upon coming back to New York, it was such a big difference. Now we’re going back to the same old playground in 90-degree heat and horrible humidity.”

She’s not the only one pining for a rural escape during the COVID-19 crisis. A spate of recent headlines such as “Coronavirus may prompt migration out of American cities” and “Americans flee cities for the suburbs” suggest a major demographic shift is underway—a shift that could have profound consequences for housing prices and the broader real estate market.

Are you looking for the right home for you and your family or want to list your house now? The market changes so fast even in times like this. We’ve got the right guidance for you! Talk To Tammy, 636.931.9100

Coronavirus: Housing Providers FAQs

Housing providers have special considerations when it comes to their residents. How they can protect them? What precautions should they take? How they can insure the building is protected and sustainable. This FAQ answers those questions.

What properties are covered by the federal eviction moratorium?

All rental properties are covered by the CDC notice(link is external). NAR has published a one-page summary(link is external) of the order issued by the CDC. It does not apply to residential properties in locations with an eviction moratorium that provides the “same or greater level of public-health protection that the requirements” of the order. It also does not apply to American Samoa.

When did the federal eviction moratorium begin?

The moratorium began on September 4, 2020. After that date,  a housing provider may not evict for failure to pay, any tenant who submits a signed attestation, per the Notice through December 31, 2020.

Is rent that accrues during the eviction moratorium forgiven?

No: The moratorium prohibits housing providers from evicting, but does not forgive the rent that is due. In fact, for tenants who have attested and received the eviction moratorium, a property owner or agent may charge penalties, late fees and interest, per the lease.

How can the government do this? Isn’t it a 5th Amendment takings?

The order by the CDC is based under Section 361 of the Public Health Service Act, and is designed to “prevent the further spread of COVID-19.” Legal challenges are anticipated.

Is there an appropriate way to request past due rent without having to do 30-day notice to quit?

An owner can certainly make a request for rent payments that are due during the eviction moratorium; owners may also enter into repayment agreements with tenants during the moratorium, making clear the amount due and the terms for repayment. 

If a tenant doesn’t pay the full rent on time, can I send a late payment notice to the tenant?

Yes, but with some caveats: the moratorium prohibits initiation of eviction proceedings but it does not prohibit an owner from sending the tenant a notice that the rental payment is late or incomplete. Among other things, if an owner wants to initiate collection or eviction proceedings after the moratorium ends, it is wise to have a copy of these notices on hand, making clear that the housing provider documented the nonpayment and provided information to the tenant. If you send such a notice, you should consult with your legal counsel about the wording. Among other things, the notice needs to indicate that it is not itself a notice of eviction.

What other steps should I take if a tenant doesn’t pay the full rent on time?

In addition to providing a notice of nonpayment, many owners are asking tenants to execute a formal rent forbearance agreement. These documents constitute a contractual agreement between the housing provider and the tenant, identifying the amount of rent that is unpaid and providing terms for repayment in the future. If a tenant has a good rental history in the past, it may be desirable to work out terms for repayment after the moratorium, rather than go through the effort to evict a tenant now and try to re-rent the unit. From the tenant’s point of view, many are eager to enter into a forbearance agreement that establishes a mechanism to pay accrued rents to avoid having to pay all accrued but unpaid rent in a lump sum at the end of the moratorium period. A forbearance agreement clarifies what the tenant owes and when it will be paid, and provides remedies that the housing provider can exercise if the repayment terms are not met. Again, housing providers need to consult with legal counsel to make sure that the forbearance agreement complies with state and local landlord/tenant laws in general.

Can tenants pay partial rent?

Some housing providers may want to enter into a rent discount agreement with tenants, under which the tenant agrees to pay a discounted amount of rent on the regular due date each month. Many tenants, even if they recently lost their job, will continue to receive some income from unemployment compensation and other sources and would be willing to pay some portion of their current rent to avoid facing a lump sum at the end of the moratorium period and possible eviction thereafter. Likewise, many housing providers would prefer to receive at least some portion of their rental income on a current basis, rather than no income at all and face the cost and uncertainty of eviction in the future. Again, any such discount agreement should be prepared by legal counsel familiar with state and local landlord/tenant law requirements.

If tenant does not pay rent during the eviction moratorium, when can I start to charge fees or penalties for nonpayment?

Immediately. Unlike the previous moratorium in the CARES Act (which has expired), the CDC notice allows a property owner to charge late fees, penalties and interest on any rent that accrues during the eviction moratorium period (September 4 – December 31), per the terms of the lease.

Am I allowed to initiate eviction for cause (criminal activity, etc.) during the eviction moratorium?

Yes: the moratorium only applies to actions “for nonpayment of rent or other fees or charges.” A housing provider can initiate a “for cause” eviction if a tenant has breached some other lease provision – such as committing a crime or assault on another tenant – that does not involve nonpayment of rent or other charges or fees.

The housing market changes daily, stay updated with us. For all your real estate needs, Talk To Tammy 636.931.9100!

NEW Flood Risk Data Available

New Flood Data Adds an Extra Dimension for Shoppers and for Research

September 1st, 2020 – Now, flood data, available on realtor.com® will enable buyers to consider the flood risk of a location when thinking about their home purchase.  The flood data includes an estimate of a home’s FEMA flood zone as well as Flood FactorTM, comprehensive flood risk data displayed at the property level in the form of a score, ranging from 1 (minimal risk) to 10 (extreme risk) powered by the First Street Foundation. When available for a property, it will display the current risk of flooding for the home; whether that risk is increasing, decreasing, or constant; and the likelihood of that property experiencing a flood event over the next 30 years. 

Previous research conducted by realtor.com® and featured in the Wall Street Journal found evidence that homes outside of FEMA high-risk flood zones appreciated faster than homes inside those zones between 2012 and 2017, suggesting that buyers already attempt to adjust for this risk. But most buyers are not deterred just because a home has flood risk.  In a consumer survey conducted this spring by Toluna research for realtor.com®, a majority of buyers (55 percent) would still buy a home even if they knew it was in a flood zone, but roughly four in 10 buyers would expect some kind of discount on the home, presumably for the extra costs associated with flood risk. Younger shoppers were more open to buying a home with flood risk than those aged 55 and older.

The shopping experience on realtor.com® will now make information about flood risk available to home buyers, homeowners, and real estate agents upfront. It will enable buyers to factor this risk into their evaluation of the tradeoffs of buying a particular home. The data will also help buyers and owners ensure they have adequate insurance coverage, since flood risks are not covered by homeowner’s insurance policies. By helping real estate agents make this risk an early part of the home search discussion, this data may incentivize owners to make improvements to their homes that help mitigate flood risk. This information may also reduce the likelihood that a home sale is derailed by unexpected information about flood risks late into the transaction.

In the future, this flood risk data will enable research to answer questions such as how a rating affects the price of a home or how long it takes to sell. We may also be able to evaluate whether the FEMA mapping or Flood FactorTM data have different impacts on market outcomes or consumer home shopping behavior.

For assistance in finding the right home or guidance in the real estate market, Talk To Tammy636.931.9100!

Waves of Homebuyers Hit the Housing Market Before Labor Day

25th August 2020 – The realtor.com Housing Market Recovery Index reached 104.8 nationwide for the week ending August 15, posting a 0.9 point decrease over last week and 4.8 points above the pre-COVID baseline. The ‘housing demand’ component remained above recovery, with this week’s index reaching 121.8, the second highest index value since March,
Locally, a total of 34 markets have crossed the recovery benchmark as of this week. The overall recovery index is showing greatest recovery in Las Vegas, Seattle, New York, Boston, and Philadelphia.

National Recovery Trends

Waves of home shoppers continue to drive the housing market recovery this summer, powering sales and putting a dent on inventory as back-to-school plans hang in the balance. The realtor.com Housing Market Recovery Index reached 104.8 nationwide for the week ending August 15, posting a 0.9 point decrease over last week and 4.8 points above the pre-COVID baseline. The slight drop in the overall index this week comes after visible and opposite changes to demand and supply components of growth.

The ‘housing demand’ component remained above recovery, with this week’s index reaching 121.8, the second highest index value since March, after posting a second consecutive weekly increase. In contrast, the ‘housing supply’ component declined back down to 97.5, after having surpassed the recovery threshold last week. New listings remain on the right trajectory but growth is still variable on a week to week basis, and consistent improvement will be key in the weeks to come.

With supply and demand moving in opposite directions, sellers are clearly gaining an upper hand as buyer competition builds up. While sellers are returning to the market, buyers are increasingly outnumbering them, causing overall levels of inventory to decline.

The pandemic has transformed the homebuying season to one that’s not dictated by the school calendar. In a typical year, online traffic peaks in July and begins to dwindle down in august as schools restart in the fall. This year, online traffic has continued to accelerate through August, as most of the country debates back-to-school plans. This bodes well for sellers in the next few weeks, as the usually quieter early fall season may see summer levels of activity.

Overall Housing Recovery Index 104.8 -0.9
Housing Demand Growth Index 121.8 +3.3
Listing Price Growth Index 106.5 +0.2
New Supply Growth Index 97.5 -4.2
Pace of Sales Index 104.7 +0.0

The ‘housing demand’ component – which tracks growth in online search activity – remained visibly above recovery, with this week’s index reaching 121.8, up 3.3 points over the prior week and 21.8 points above the January baseline. Homebuyer interest continues to outpace last year levels as detected on realtor.com over the last few months. While record-high prices, short supply and economic headwinds pose significant challenges, the pool of ready-to-transact buyers continues to grow.

Powered by a backlog of demand, the ‘home price’ component – which tracks growth in asking prices – increased by 0.2 points last week, and is now at 106.5, 6.5 points above the January baseline. With supply at record lows and buyer competition on the rise, sellers have regained leverage, enabling the fastest price growth recorded since January 2018. As inventory and foot traffic grow through the end of the summer, we’ll get a good indication of whether higher asking prices will translate into higher selling prices.

The ‘pace of sales’ component – which tracks differences in time-on-market – continues to remain above the pre-COVID baseline. The time-on-market index remained the same as last week, at104.7, 4.7 points above the January baseline, suggesting buyers and sellers are continuing to connect at a faster rate and setting up the peak homebuying season in August.

Notably, the ‘housing supply’ component – which tracks growth of new listings – declined to 97.5, down 3.3 points over the prior week, and 2.5 points below the January baseline. The temporary boost in new listings seen earlier came as the summer season replaced the typical spring homebuying season. More homes entered the market than typical for this time of the year, but further improvement could be limited going into the fall as the peak cycle subsides.

Local Recovery Trends

The Midwest Approaches the Recovery Threshold
Regionally, the West (112.7) continues to lead the pack in the recovery, with the overall index now visibly above the pre-COVID benchmark. The Northeast (107.4) and South (101.8) remain above recovery pace but conditions in the south declined slightly this week. The Midwest (99.7) continued to see slight improvements in market conditions.

Notably, it was primarily the ‘housing supply’ component which decreased the South’s overall score this week. The ‘housing supply’ component, measuring new listings, declined -3.4 points in the South, while all other components grew. While the Midwest and Northeast continued to see improved supply conditions, the West’s ‘housing supply’ component also declined, by 2.7 points, potentially indicating a small slip in seller confidence in the South and West this week.

Social distancing and economic resilience continue to be key factors driving local differences in the housing recovery. Per our earlier research, the spread of COVID-19 is closely linked to the housing slowdown, with markets with higher cases per capita more likely to see a bigger impact on supply and the pace of sales. The speed and sustainability of the reopening, and each market’s ability to contain COVID-19, are dictating the speed of recovery across the regions.

Finally, resilient economies may have an edge in the housing recovery, and areas with strong job markets before COVID-19, especially those with thriving tech sectors, are seeing buyers and sellers reconnect faster than the rest of the country. Are you ready to list your house? 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

6 Home Trends Buyers Love

Open floor plans, smart homes, and outdoor areas are among the features in top demand for home shoppers this year. Home improvement website Fixr’s recent study, Single-Family Home Construction and Remodeling Trends 2020, highlights the renovation and construction choices of buyers and homeowners in 2020. The results reveal some key areas of interest in home design that real estate professionals may want to spotlight.

1. Open floor plan and two-story homes represent the most popular layouts.

Floor Plans

While there has been a trend toward open floor plans for the past few years, 2020 is seeing an overwhelming consensus: 90% of experts selected an open floor plan as the most popular single-family layout. And it’s likely to remain so in the future.

As quarantine periods and social distancing guidelines force families to spend more time together at home, large common areas command a premium value. Family rooms, dens, and open kitchen areas are acquiring new importance.

Another large percentage—77%—are favoring two-story houses in 2020. Compare this to the 29% who preferred single-story homes, or the 2% who favor split-level residences.

2. Smart homes rank first among design choices.

Popular Design Choices

A growing trend in home design is the smart home, in which AI-based automation systems are seamlessly incorporated into electric circuits, heating/cooling systems, and entrances. Buyers this year are likely to appreciate homes in which smart thermostats, security cameras, and smart outlets are already installed.

Since installation of many smart systems is relatively affordable, this represents an important opportunity for real estate professionals to make their listings trendy, modern, and full-featured.

3. Most homeowners make accessibility modifications to their home for future personal use.

Modification Reasons

Homeowners looking to age in place are exploring renovations that allow them to do so more easily. Homes with accessibility features likely will be more attractive to senior buyers as they look toward a future of independence, even as their physical abilities may decrease. This future need is a motivating factor behind such renovations (54%) than current personal use (11%) or current use for an aging relative (22%).

Buyers also are evaluating potential homes with accessibility modifications in mind. For instance, a front yard with space for a ramp will be more appealing than one with front steps leading directly to the street.

4. Energy efficient homes with tight building envelopes are among the top designs for green construction.

Green Construction

As Americans deal with furloughs, layoffs, and economic uncertainty, many are paying more attention to their energy bills. Energy efficient homes are suddenly much more attractive than conventional properties, and buyers who may not have ever considered green construction are making energy efficiency a priority.

Sixty-two percent of design experts say energy efficient homes are a top priority in 2020, according to Fixr’s study, far outweighing other options like cool roofs or solar panels.

Prevent Energy Transfer

Experts say a tight building envelope—more than exterior or interior insulation—is the most common way to prevent energy seepage. A tight building envelope minimizes air transfer and can be an important feature of an energy efficient and environmentally friendly home. A home with both effective insulation and a tight building envelope will provide the best value to a buyer who desires lower energy bills and minimal heating requirements.

5. Family space and outdoor kitchens are trending in 2020.

Outdoor Living

Outdoor playsets, firepits, and recreation-oriented yards are seeing an uptick in popularity, especially among married couples with kids. For real estate and staging pros, this means that a little attention to backyards, porches, and other outdoor living areas can ignite extra buyer interest.

This is a 2020 trend that has only been cemented by quarantine rules and social distancing regulations. As playgrounds, parks, and outdoor amusements became unavailable, families were forced to think in terms of what outdoor activities they could offer their children on their own property.

Outdoor Living Spaces

But outdoor living spaces aren’t limited to playgrounds, decks, and patios. Fixr’s research shows that outdoor kitchens were nearly twice as popular as a traditional patio. The outdoor kitchen is another trend that has been steadily increasing over the past few years, and it will be interesting to see how it continues to evolve in 2020 and 2021. New recommendations for socially distant entertaining, which may be better suited for meals and meetings with friends outside, may increase the number of homeowners wanting both outdoor kitchens and seating spaces.

6. Contemporary and modern will be the most common styles used in modular construction.

Prefab Construction

Modular and prefab construction continues to be widely used, and Millennials are most likely to build modular homes. As part of the Fixr survey, consumers were asked which style of prefab building would be most popular in 2020. A large majority (62%) indicated that a contemporary, modern style would be most commonly selected by home buyers. The runner-up choice was ranch-style—but it was only selected by 22% of respondents.

This year has been in many ways an uncharted year, full of unexpected surprises. But even as priorities have changed, many home buying and renovation trends have remained consistent. Keeping track of these trends can help us stay relevant as we navigate the real estate industry in a socially distant world. Looking for a new home? Talk To Tammy, 636-931-9100

COVID-19: The Effect On Rental Markets

August, 2020 – Pricey Cities Become Cheaper, Cheaper Cities Become Costly

While the rental market remains far from robust, two important factors — rent decreases in the country’s most expensive cities and rent increases in more affordable cities — suggest the coronavirus pandemic is causing a squeezing effect on rental prices across the country.

According to online rental platform Zumper, this seesaw effect has continued to accelerate this summer as the outbreak persists and more Americans are opting for cheaper places to live while working remotely.

“In our August national rent report, seven of the 10 priciest markets had larger year-over-year percentage decreases than the month prior,” said Anthemos Georgiades, co-founder and CEO of Zumper. “Additionally, five of these cities had larger month-over-month percent decreases this month than last. Meanwhile, of the top 10 least expensive cities in this report, only one city experienced a decrease in rent.”

The two priciest markets continued their downward trajectories with San Francisco and New York City one-bedroom rents down 11% and 7%, respectively, since this time last year.Of the top 10 least expensive cities in the 100 tracked in the report, only one city, Tulsa, Oklahoma, had a decrease in median rent for one-bedrooms.

“As historically expensive cities become cheaper and historically cheaper cities become more expensive, the gap between the price distribution of rentals across the country seems to be closing,” said Georgiades. Overall, the national one-bedroom rent increased 0.3% to a median of $1,233, while two-bedrooms grew 0.6% to $1,493. On a year-to-date basis, one and two-bedroom prices are up 0.7% and 1%, respectively.

Here are the top five rental markets:

1. In San Francisco, one-bedroom rent dropped another 2.4% last month to $3,200, while two-bedrooms decreased 3% to $4,210. Notably, both one and two-bedroom rents are now down over 11% since this time last year.

2. New York City, similar to San Francisco, continued to see rents drop with one-bedrooms declining 1.7% to $2,840 and two-bedrooms decreasing 0.3% to $3,200. Both one and two-bedroom prices in this city have fallen around 7% year-over-year.

3. Boston saw one-bedroom rent drop 2.5% to $2,350, while two-bedrooms dipped 3.1% to $2,810.

4. San Jose, California held on as the fourth priciest market with one-bedroom rent remaining flat at $2,300, while two-bedrooms decreased 1.4% to $2,820.

5. Oakland, California moved down one spot to become the fifth most expensive market with one-bedroom rent falling 3.5% to $2,220, while two-bedrooms grew 1.8% to $2,900.

In stark contrast to the nation’s most expensive cities, median rents in less expensive cities have been steadily increasing. Tulsa, Oklahoma, inched up one position to become the 99th priciest market with one-bedroom rent growing 5.1% to $620 and two-bedrooms increasing 1.2% to $820.

Memphis catapulted up eight spots to rank as 76th. One-bedroom rent jumped 5.1% to $820, while two-bedroom units climbed 4.8% to $880.

Durham, North Carolina moved up nine positions to 43rd with one-bedroom rent growing 4.8% to $1,090. Two-bedroom rent had a more modest growth rate, increasing 1.6% to $1,250.

Providence, Rhode Island moved down four spots to rank as the 22nd priciest city and tied with Washington, D.C. for the largest rental decline last month, falling 4.8% to $1,400.

Washington, D.C. remained the sixth priciest market and similar to Providence, Rhode Island, saw rent drop 4.8%, settling at $2,160, while two-bedrooms decreased 1.4% to $2,880.

Nationally, median rents continue to tick up during the summer moving season. Overall, the national one-bedroom rent increased 0.3% to a median of $1,233, while two-bedrooms grew 0.6% to $1,493. On a year-to-date basis, one and two-bedroom prices are up 0.7% and 1%, respectively.

If you are ready to invest in a rental property, looking for the right home or need guidance in selling your house, Talk To Tammy636.931.9100

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!

Key Housing Indicators Begin to Turn Around in May

  • National inventory declined by 19.9 percent year-over-year, and inventory in large markets decreased by 21.9 percent.
  • The inventory of newly listed properties declined by 29.4 percent over the past year, and 28.6 percent in large markets
  • The May national median listing price was $330,000, up 1.6 percent year-over-year.
  • Nationally, homes sold in 71 days in May, 15 days more slowly than last year

Realtor.com®’s May housing data release reveals that the U.S. housing market likely reached its low point during mid-April, with constrained new listings and minimal price growth. Signs of recovery emerged, as yearly declines in newly listed inventory slowed and listing prices recovered. However, despite many positive trends, COVID-related challenges linger, as homes were on the market more than two weeks longer than this time last year. 

For-Sale Homes Still in Short Supply, but New Listings Trend Improves

The total number of homes available for sale continued to be constrained in May. Nationally, inventory decreased 19.9 percent year-over-year, a faster rate of decline compared to the 15.3 percent year-over-year drop in April. This amounted to a loss of 255,000 listings compared to May of last year. The volume of newly listed properties in May decreased by 29.4 percent since last year. While still well below last year’s levels, the rate of decline in newly listed properties has improved from a decline of 44.1 percent year-over-year in April, signaling that sellers are starting to return to the marketplace, which is needed to restore inventory levels to healthy market conditions 

Housing inventory in the 50 largest U.S. metros declined by 21.9 percent year-over-year in May. This is an acceleration compared to the 16.0 percent year-over-year decline in April. The metros which saw the biggest declines in inventory were typically those hardest hit by COVID-19, such as Philadelphia-Camden-Wilmington, PA-NJ-DE-MD (-38.6 percent); Providence-Warwick, RI-MA (-35.8%); and Baltimore-Columbia-Towson, MD (-34.5%). This month, none of the largest 50 metros saw an inventory increase on a year-over-year basis and 43 out of 50 saw greater inventory declines than last month. However, 45 out of the 50 markets saw the yearly decline in newly listed properties improve somewhat since last month.

COVID-19 Extends Days on Market

Homes continue to sell more slowly than last year due to stay at home orders and modified behavior resulting from COVID-19. Nationally, the typical home sold in 71 days in May, 15 days more slowly than May of last year. In the 50 largest U.S. metros, the typical home spent 58 days on the market, and homes sold 13 days more slowly, on average, compared to last May. Last month, the increase in time spent on market was more apparent in the 50 largest metros. This month, it appears that the nation’s largest metros have improved relative to the national rate. Among the larger metropolitan areas, homes saw the greatest increase in time spent on the market in Buffalo-Cheektowaga-Niagara Falls, NY (+34 days); Pittsburgh, PA (+33 days); and Detroit-Warren-Dearborn-MI (+32 days); among other areas that have been particularly hard-hit by COVID-19.

Listing Prices Hit New Highs Despite COVID-19

The median national home listing price grew by 1.6 percent year-over-year, to a new high of $330,000 in May. This is a re-acceleration from the 0.6 percent year-over-year growth seen in April. Movements in the median listing price continue to be partly driven by a change in the mix of inventory. This month, the share of more expensive properties on the market recovered and increased compared to last month. Moreover, our weekly data shows the year-over-year change in the median listing price growing by as much as 3.1 percent year-over-year in the week ending May 30th. The nation’s median listing price per square foot grew by 5.4 percent year-over-year, an acceleration from the 4.0 percent growth seen last month.  

Within the nation’s largest metros, median listing price growth also accelerated compared to last month. Listing prices in the largest metros grew by an average of 3.3 percent last year, an acceleration from the 1.6 percent year-over-year gain seen last month. Of the largest 50 metros, now 35 saw year-over-year gains in median listing prices, up from 30 last month. Los Angeles-Long Beach-Anaheim, CA (+14.9%), Pittsburgh, PA (+14.0 percent); and Cincinnati, OH-KY-IN (+12.1%); posted the highest year-over-year median list price growth in May. The steepest price declines were seen in Detroit-Warren-Dearborn, MI (-3.4 percent); San Antonio-New Braunfels, TX (-3.2 percent); and Seattle-Tacoma-Bellevue, WA (-3.1 percent). 

We can help you list your house with the right price or find you your new home, Talk To Tammy! 636.931.9100