‘Ask the Appraiser’ by Anthony Sarro
Question; (from multiple readers) How has the Coronavirus affected the real estate market?
Answer; For those of you who have, or have known of anyone who has grappled with the “Beast,” then you know the Covid-19 virus is a deadly adversary to humans, but it has also waged a war on the current real estate market. As this is such an important and broad ranging topic, I’ve decided that not only my opinion, but the opinions and observations of my colleagues from a cross-section of real estate professionals would be necessary to support me in this battle.
R.E. Broker, Marc Gerber, Berkshire Hathaway Homes, Eastchester NY; “I put a rental on one night and the next day I had over a dozen inquiries. People want out of NYC, reminds me of 9/11.”
Bankruptcy and Consumer Protection Attorney, David J. Babel, Esq. , Bronx NY. “Clients are not yet calling in droves. Many people are in shock and adjusting to being self-quarantined. Others are just sitting home and waiting out their combined NYS and Federal unemployment checks. But the surge is coming in another couple of months because the Federal money of $600 per week will be running out soon. There will be a rush of people seeking and needing a fresh start. This will be with us, unfortunately, for longer than we may realize.”
Mortgage Broker, Husam F. (Sam) Hattar, Arlington Financial, Yonkers, NY. “Banks have tightened up guidelines to mitigate the risks involved. FHA has raised credit score requirements on some loan products. In the past, FHA lenders would accept a 500 credit score. Due to the economy, banks are looking for 640 and up. Delinquency rates are rising due to the pandemic, with 9% of all loans as of May being in forbearance. To mitigate the losses, banks are making it a little tougher to get a loan. On a positive note, as a broker I have the opportunity to shop around with different lenders and find a product for the borrower that works.”
R.E. Broker/Owner, Eric Stein, ReMax Realty, Tuckahoe NY; “We had 5 buyers for every house prior to the virus. We still have 1-2 buyers per property which is still a good thing. Inventory remains low and we will see less bidding wars with prices leveling off. I don’t think we will have a major downturn as we did in 08’ unless we see an increase in unemployment. If the stay-at-home order is extended, then prices could start to decline. Interest rates are low, so now is a good time to buy.
Commercial Real Estate Appraiser, Kathleen Carroll, Queens, NY. “I am finding it very difficult to ascertain specific market trends during the coronavirus period. There is some activity, but these are for properties that were already in contract just prior to the pandemic lockdown and are not new transactions. In my recent experience, it seems that everything is “on hold” and that current market activity is basically nonexistent. I believe the true market effects of the pandemic will not be evident in closed sales/pending transactions for at least six months from now.
Anthony Sarro. My personal research indicates that pandemics tend to pause the housing market. Although there are few pandemics from which to gather data from, this trend is historically consistent. Real estate website traffic has decreased 40%-70%, homeowners who were considering listing their houses have decided to wait until after the smoke clears, and the few houses which are still on the market have been relegated to virtual tours with no virtual buyers. If there are no consequent closed sales, there is no statistical data, and or for those readers in or outside of the industry, no “Comps” available to determine a home’s current market value. If and when the world and economy reopen, the typical cycle will begin again and housing prices may just pick up where they left off at pre-corona levels. Due to government intervention with mortgage holders and mortgage servicing companies as well as a relatively strong stock market, I don’t believe that this will be the 2008 housing market all over again. However, the future remains unknown, as the “Beast” has a mind of its own.
For What it’s Worth, Anthony
To be featured in our next installment, please Email your real estate appraisal questions to; PriorityAS@msn.com About the author; Anthony Sarro has 35 years of national appraisal, appraisal review and real estate tax reduction experience. More information can be found at www.NYCityAppraisals.com and www.RealEstateTaxReductions.com
