analytics

Real Estate and COVID-19 as at early May 2020

In times of crisis, real estate is one of the things that gets commented on by a plethora of people and is often used as a measuring stick to see how the crisis is affecting the financial scene.  The Stock Market and dollar values/foreign exchange rates are other obvious signs for whether things are going well or not.  In real estate, whether it be sales or rentals, we look at prices, number of transactions, number of new listings coming on the market and days on market to help gauge which direction property is going in.  It would be ignorant to say changes aren't happening or coming, but for now, statistics are skewed by other influencing factors and aren’t backed up by repetition over “time”.  Is there enough reliable reference points to measure or predict at this point?  That warrant categoric statements? ...  I don't believe so.  Our experience can tell us lots, and seeing the recovery from the GFC, the impact of the depression and world wars can give us a glimpse, plus looking at cycles over the years that envelope these times can help, but I'll be brave enough to say, there is nothing certain in real estate at this unprecedented time ... bar having a great agent by your side will always mean you will get the best outcome possible whether Selling or Renting 😊

Some of the shorter-term influencing factors include:
- Airbnb properties are being converted to permanent rentals so there's been an influx in available properties therefore effecting the vacancy rate that is used as a measure. 
- Lending has been quite slowed in that it’s taking longer to get approvals, especially since a lot of the banks have been offering incentives for people to re-finance so there’s been an increase in applications etc.  This lengthens the sales process effecting statistics. 
- Limitations on open-homes can be seen as a vice and a virtue (though these have just been permitted again under social distancing guidelines).  Buyers and Tenants are getting the undivided attention of an agent at an inspection, but the number of inspections will be reduced as a number do come through open homes due to the ease of accessibility.  And even with open-homes available again in their limited way, there are reports that show people are still not confident to go out in public and mix with other people unless it's essential so open home numbers will be down for more than one reason
- Different formats for Auctions will impact confidence, clearance rates and the number of Auctions being called
- There is also a lag on sales and rental data depending on how the agent reports their results, so sometimes, some results are not public knowledge for even a month after the event which skews some figures and again, makes it hard to make absolute statements about where things are at. 

Speaking from personal experience, our office is still seeing sales, there have been no major price impacts, there's been good tenant enquiry and confidence feels like it's returning from the public in both sales and rentals.  However, there are stats out there that show declines in major cities, and one polar opposite report that shows the impact will be different from area to area is the number of rental listings.  The report by Core Logic shows an increase in Melbourne and Sydney by over 30% but in the same report, the Sunshine Coast has only seen an increase of 0.2% in total rental listings.  So as you can see, results will vary from location to location and any short-term impact may not be the long-term outcome!

Certainly, what does seem to be impacted locally at this point is the amount of new sales listings coming on the market, but make no mistake, properties are still being listed. 

So it’s probably a little soon to really tell exactly how the market will be impacted.  We can get a glimpse into what is happening under a microscope, but we don't really have the telescopic view yet to measure the impact or predict what lays ahead.  I’ve read a variety of reports from a variety of commentators.  Some are predicting a 20% loss, others saying no loss.  Some are saying there’s 20% of the activity with the same prices, and others saying activity hasn’t changed!  Stats do just take time.  Sometimes in times like these, it’s a case by case situ.  Why is someone selling?  Is it to relieve financial pressure or to just change their house … this will show in the price they ask, and ultimately achieve.  Is a buyer still employed or have their wages reduced?  This will again impact what they can offer.  Put together a buyer whose got less to spend and a seller who has to sell and you’ll see a lower result.  Get a buyer who hasn’t been impacted and a seller who doesn’t have any urgency behind selling, and you’ll see a close to normal market value result.  There is unlikely to be any major records set during this time, but there will still be plenty of cases where an expected result can and will happen.

If you are looking to Sell in Buderim, or Sell on the Sunshine Coast, or Rent in Buderim or Rent on the Sunshine Coast, having a property appraisal is just one step in the process.  Working alongside an agent who has seen the market through the GFC, September 11, when it's taken an hour to rent or sell a property or when it's taken much longer and still stayed in business ... an agent with that experience is far more paramount to your decision than just being able to predict exactly what the next weeks will hold.  It's easy for commentators and agents to make sweeping statements based on opinion not fact, it takes more character to say hey ... we aren't really to know but I'll be with you every step of the way no matter how long it takes or what lays ahead.  And through our journey together, you will be informed and not feel like it's you against the market!  In case you're wondering ... I've been in real estate since 2001 --- I've made it through quiet and busy times and we will make it through this time together!  I'm very keen to chat over your real estate needs during the coronavirus ... and any time :-)