The spring homebuying season arrived this year without a bloom.
Existing home sales fell nearly 9% in March, according to the National Association of Realtors, as millions of Americans lost their jobs to the coronavirus pandemic and millions more hunkered down to avoid getting sick.
April's numbers will be released next week — and are likely to be even worse.
"My timing was definitely as bad as you could think of," says Barbara Von Thun, whose 10-acre property in the woods of Wantage, New Jersey, has been for sale since Feb. 12.
Back then, agents were still holding open houses and bringing buyers into homes without concern. The 74-year-old says she's reluctant now to let anyone inside.
"One set of people asked if they could look in the windows and I felt that was perfectly safe," she says.
It may be safe, but it's no way to sell a house. Von Thun isn't in a hurry to sell, partially because she doesn't feel comfortable venturing out to look for something new.
A similar story is playing out across the country.
As the pandemic started flickering to life in the U.S., Oliver Hoare listed his Kirkland, Washington, home for just under $1 million. It's the same city where one of the earliest outbreaks of COVID-19 in the U.S. emerged in a nursing home, killing nearly 40 people.
Hoare says the property had received thousands of hits online from prospective buyers, and then "three to four days after it listed, that's when the shutdown really started to happen."
He accepted an offer near the asking price, but the buyer pulled out the next day.
"I would be spooked," Hoare says. "I work for a big travel company. Uber has laid off thousands of people. … Expedia has, Airbnb has."
As of Thursday, more than 36 million Americans have filed for unemployment benefits since the pandemic hit. That's far worse than the Great Recession of 2009, which was triggered by the subprime mortgage crisis.
As job losses mount, it's tempting to compare today's crisis to 2009. But it's not an apples-to-apples comparison, says Vivek Sah, director of the Lied Institute for Real Estate Studies at the University of Nevada, Las Vegas.
Sah says buyer demand will certainly suffer until the fear of the pandemic passes, but the lending environment in this downturn is vastly different.
"It’s much more robust," he says.
After the Great Recession, banks tightened their lending standards and it became more difficult for buyers with bad credit to qualify for a mortgage. As the pandemic deepens, those standards are getting even more restrictive.
Sah also says home appraisers aren't inflating home values like they once were.
The other issue is "restricted" supply, Sah says. Homebuilders face headwinds today that they didn't see a decade or so ago. Land and labor are more expensive. Even before the pandemic, the supply of homes for sale was at a record low.
All this has kept home prices up, even in a declining market. But Sah says that could change suddenly when the mortgage forbearance program that Congress passed in March comes to an end.
"It’s not going to be forever," he says. "So what happens in July, August? Nobody is talking about the upcoming distressed assets that will flood the market, which was the financial crisis."
Still, there are signs the housing market is staying afloat for now. The Mortgage Bankers Association said this week that the number of applications for home loans has gone up for four straight weeks.
In Houston, where home sales fell 22% in April, activity is picking up again, according to real estate agent Erik Rodriguez.
"A thousand houses have sold here in the last seven days," he says, "so you know stuff is still moving."
Showings have also started to perk up again after Texas' stay-at-home orders were lifted, according to a weekly survey by the Houston Association of Realtors. And the group counted 241 virtual open houses last week to accommodate social distancing guidelines.
But there is no doubt a major driver of the U.S. economy is in uncertain territory and buyers who shell out a sizable chunk of their savings on a new home might soon find themselves in an unexpected situation.
A few weeks after Robert Gifford and his wife put an offer on a $309,000 home in Tempe, Arizona, Gifford got furloughed from his advertising job.
"It was very nerve-wracking," he says. "At times — even after we decided — we’d be like, 'Are we sure about this?' "
They moved forward with the sale nonetheless. He says they felt confident they'd budgeted well enough to live off one salary — for a while.
"I felt like if we get back on track, we’re totally fine," says Gifford, who remembers the foreclosure crisis that crushed the Phoenix area just a decade ago. "But if this pandemic goes on for another year, it would be a lot more than just me who’d be losing their house."
This article was originally published on WBUR.org.
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