Advising Clients through COVID-19: Five Expert Takeaways
Editor’s note: The COVID-19 situation continues to rapidly evolve, and guidelines and regulations are frequently changing. As of the date of publication (March 17, 2020), a shelter-in-place order is in effect for six Bay Area counties. This order effectively cancels all broker tours, showing appointments, listing presentations, and open houses until April 7, 2020. This is a developing situation, and we’ll update this post as new information becomes available.
COVID-19 continues to impact our businesses and our lives on an hourly basis, often resulting in more questions than answers. In these uncertain times, it’s important to communicate—or over-communicate—the facts, and be prepared to tackle questions from buyers and sellers who are looking to you for insight.
We asked our Side partner agents how they’re talking to their clients about COVID-19’s impact on the real estate market, and they shared the five key takeaways listed below.
1. Brett Jennings, Founder of Real Estate Experts, encourages agents to remind clients that real estate is still the safest place to be.
“In US counties hardest hit by COVID-19, such as King County, Washington, Realtors are reporting that homes are still being bought and sold like normal. Here, in Santa Clara County, (we have one of the highest counts of active COVID-19 cases in California), we are not seeing much of a difference either. Our market is still thriving. Though there has been the occasional seller canceling an open house or removing a listing entirely, the fact remains that properties are still moving; buyers and sellers understand this market has something to offer for everyone."
To forecast what we can potentially expect from COVID-19, Jennings encourages us to look to prior examples for guidance:
● 1999 Dot-Com Crash
Most of us remember this all too well; in 1999, the NASDAQ dropped an incredible 78% in value. But when we look to see the overall impact on the Bay Area market, we can see that real estate only dropped 10% overall. There was no recession, but there was a significant stock market correction.
● 2008 Mortgage Crisis and Recession
This crisis arguably strikes the most fear in many of our hearts. Many homeowners also had property back then and probably felt the ramifications of the crash. The stock market dropped by 53%, and Bay Area real estate fell 27%.
● Q4 2018 NASDAQ Dive
At the end of 2018, we saw the stock market fall 25%, and Bay Area real estate dropped 8%.
Jennings says, “Furthermore, the Case-Shiller US Housing Index shows that the standard 40-year average appreciation rate is 3.8%. However, in the Bay Area, you see an average of 7.66%, which is nearly double the standard US rate."
These are all very real and intense examples of what can happen with major events that result in significant economic impact. Still, it’s important to remember that real estate is a much more durable investment than most, even in trying and uncertain times.
2. Michelle Kim, Founder of Mosaik Real Estate, prompts agents to help buyers and sellers see areas of opportunity amidst the uncertainty.
Kim says, "Right now there’s a lot of fear and confusion about the effect of COVID-19 on markets, including the housing market. However, we believe there are reasons for optimism among both buyers and sellers in the Bay Area.
For buyers, obviously this moment presents an opportunity. Historically low mortgage and refinance rates means lenders are experiencing a surge in demand, causing those rates to tick upwards (which we expect to continue!). This is a great time to get ahead of the competition and lock in a rock bottom interest rate, which will give you far more purchasing power in a transaction.
Sellers, on the other hand, can be reassured that there are motivated buyers out there. And those who decide to delay selling should know they are sitting on a valuable asset and are able to take advantage of those low refinance rates.
The important thing is that people make the right decisions for themselves. Buying or selling a home should not be taken lightly, so we strive to understand our clients' entire situations before making specific recommendations."
3. Bryn Stroyke, Co-Founder of Stroyke Properties Group at Bayside, sees buyers eager to purchase long-term property at low rates in a market with a short-term problem.
Stroyke says, “Our market in the real South bay is extremely hot despite the volatility in the stock market because of [low] rates. We’re seeing multiple offers on many many properties because money is on sale.
Buyers are still flush after a robust economy for the last 3 plus years, inventories are still low, and many are seeing this as an opportunity to lock in a long term discount (for 15 or 30 years) in a market with a short term problem.
With the equity markets in decline, great real estate and low rates are gold. These buys are long term, and the discounted rates are long term and in our market. The number of buyers who recognize this currently exceeds buyers driven to the sideline because their industry has been impacted.
Presenting our clients with a chance to diversify into real estate at historic low-interest rates means they don’t have to time these long term purchases perfectly because they are timing the discounted rates perfectly!”
4. Wilson Leung, Founder of Own Real Estate, helps his team stay focused on what’s in the realm of their control.
Leung says, “Unfortunately, COVID-19 is here, and it's circulating. But uncertainty shouldn't stop people from pursuing their goals. People still need a place to live, and they need to make a decision on renting, buying, or pursuing a dream that they've had for a long time. What we can do is make a choice to show up and contribute in areas where we do have control. More than ever, we need to be educating our buyers and sellers about cycles and trends.
Showings and open houses will resume once the shelter-in-place order is removed, so we can ensure that we implement best practices by setting up a hand-washing station, using hand sanitizer, and cutting out unnecessary expenses. Overall, with less people at open houses, buyers will have less competition, and may be one step closer to fulfilling their dreams, wealth, and legacy.”
Leung shares more insight on how Coronavirus impacts the market and five important considerations in this engaging video.
5. Texas-based Michael Silva, Founder of Happen Houston, commits to taking things a day at a time and keeping an open line of communication with clients.
“We’ve never been through COVID-19 before, but we’ve been through market shocks, oil price shocks, and Hurricane Harvey. Each occurs for a different reason and has different impacts on our communities. Despite what we’re up against, we still believe in the economic engine of the state of Texas and the four major markets in the state.
So far, we haven’t seen a significant change in buyer and seller activity - but we have seen some behavioral changes. We’ll stay on top of behavioral changes over the next two to three weeks and will continually relay up to date information to our clients.
We anticipate some interruption and change, but we’ll take it on as it comes and will continue to communicate with our clients on a regular basis to keep them updated on notable changes and market impact.”
Huge thanks to our partners for sharing their insight.
What to Do Next
Real estate professionals should frequently check the NAR Guide on Coronavirus and CAR Coronavirus Predictions: Impact on the Market. Currently, CAR intends to revise its 2020 forecast but expects revisions to be modest.
There are also several things you can do to help make sure your day-to-day interactions are managed safely, both personally and professionally. If you or someone you live with falls into a high-risk category, work from home as much as possible, and only leave the house for essential meetings and appointments. Also, be sure to make use of online meeting tools, which you can leverage to host online client meetings, team meetings, and virtual tours.
Taking these small precautions can go a long way in helping prevent the spread of disease.
Fact-Based COVID-19 Resources:
While we can’t predict the implications of this pandemic with one hundred percent certainty, we can use what we know to help make sure our teams, families, and clients are safe, healthy, and as informed as possible on what to expect. To date, Side has seen strong growth in new listings and transactions in March after a holiday dip. Luckily, real estate is resilient, and we’ll get through this. Let’s all pledge to work together to make it through quickly and safely!