A stay-at-home order Maryland Gov. Larry Hogan issued last week has put additional restrictions on in-person house showings by real estate agents.
Hogan’s March 30 order requires Marylanders to stay in their homes except for essential reasons, such as getting food, seeking medical attention or getting exercise. Workers at businesses deemed essential may travel for work purposes.
Maryland Realtors, a trade association of about 28,000 agents, released interpretive guidance following a meeting with the governor’s office on Friday. It states that residential and commercial real estate services are considered essential.
But agents must observe several guidelines, including:
- Scheduling in-person visits by appointment only
- Keeping a three-person limit at each property, including the agent
- Practicing social distancing, or staying 6 feet from others
Agents are allowed under the order to preview and show listings by appointment, conduct virtual tours, hold walk-throughs for buyers and facilitate contract signings, among other activities.
But even before the governor issued his latest order, area agents said the real estate business began to suffer earlier than that last month, when the pandemic began.
At the beginning of March, the market was strong, coming off a February that saw closed sales in Montgomery County increase nearly 25% from February 2019.
But that changed due to a volatile stock market, health concerns about visiting homes in person and other complications caused by the coronavirus disease, or COVID-19, outbreak.
Some agents interviewed in this story spoke with Bethesda Beat before the governor issued his latest order.
“Everything is harder,” said Hans Wydler, a Chevy Chase-based associate broker with Compass real estate. “The logistics of transactions are brutal. Sellers don’t want strangers in their homes. Buyers don’t want to be in harm’s way. Some contractors are not working at all.”
The real estate data website showingtime.com displays a graph of house showings. It compares showings in one week to showings in the first week of the calendar year.
For the week of March 12, showings were up 28% from what they were the week of Jan. 7.
But in the week of March 30, showings had declined 44.8% from the first week of the year.
This year’s downward trends in March differed from those seen last year. Showings for the week of March 30, 2019, were up 35% from the week of Jan. 7 that year.
Before an earlier order from the governor last month that limited being out in public, in-person visits were happening, Wydler said, but only by appointment. In some cases, buyers were asked to wear gloves and facemasks.
“So everything’s harder. It doesn’t really put you in a buying mood when someone hands you a mask,” he said.
Wydler said a number of high-end sellers pulled listings due to “gyrations” in the stock market that made buyers less inclined to invest in a major purchase. However, there were still many transactions at lower prices, he said.
The effects on the economy and the housing market from the virus, Wydler said, might continue into the fall.
“Depending on how this pans out, it can be bad,” he said. “Jobs drive housing and if jobs disappear, it can affect housing.”
Lauren Davis, a Bethesda-based agent with Sotheby’s International Realty, said homes priced under $1 million were selling after not many days on the market. The market for homes in that price range feels “more frenzied and busier,” she said
But luxury homes in the $2 million range, Davis said, weren’t selling as fast. Buyers at that level, she said, likely hesitated to make an investment with a plummeting stock market. With interest rates low, buyers in the under $1 million category had more incentive to buy, she said.
“It’s cash, versus taking money out of the stock market [for buyers of expensive homes]. And they’re taking advantage of low interest rates. We are dealing with record low inventory, so I think it’s creating a frenzy in that price range,” she said.
When listing agents were still visiting homes, they were taking precautionary measures such as wiping down door handles and turning on the lights for prospective buyers.
Virtual tours became a temporary substitute for in-person visits as COVID-19 has worsened.
Mary Noone, a Chevy Chase-based agent with Compass, said virtual tours online used to consist of about 30 photos of a house, before coronavirus hit. Now, she shoots video with her phone while narrating each house.
“We now have the luxury of doing 3D modeling. So I feel like every agent has learned to adapt to things,” she said.
Clicks on the virtual tours have increased, Noone said, but this hasn’t translated into an increase in sales.
Buyers were still buying, Noone said, but at less than $1.5 million. Even when the epidemic ends, it will take a while for activity to rebound to pre-coronavirus levels due to the slow summer buying season.
Noone said it might be November before sales volume returns to levels seen earlier this spring.
Montgomery County had a rise in both closed home sales and new pending sales in February, compared to the previous year, according to a new report from the Greater Capital Area Association of Realtors (GCAAR), which has 11,000 members in the region.
Avi Adler, a Bethesda real estate agent with Long and Foster, said that in the first two weeks of March, real estate listings were getting multiple offers, even as people stopped leaving their homes. The outlook for the housing market, he said, “changes on a daily basis.”
“It’s been interesting because everyone’s been trying to figure out what’s been best for their clients, and clients are determining whether this is the right time for them to keep their home, put their home on the market and try to identify timing where things might be more beneficial to them,” he said.
Adler said virtual tours aren’t always an ideal substitute for in-person open houses for buyers, many making one of the largest financial decisions of their life.
“Most people are going to want to see a home in person before they put an offer on a property,” he said.
In addition to decreased sales activity, COVID-19 has posed logistical problems for buyers and sellers in the middle of financial transactions, said JT Burton, a Bethesda-based real estate agent with Long & Foster. Burton said that between March 1 and 7, he ratified four or five transactions.
“Keeping those together during this tailspin has been more trying than getting buyers in the door to get listings,” he said.
One seller who has lived in a house for 40 years in Bethesda, Burton said, is moving to Nantucket, Mass. He was supposed to go to settlement on April 17, but his timetable was in flux because the movers were reluctant to drive through New York and Connecticut — areas that have experienced some of the worst effects of the COVID-19 outbreak.
In response to COVID-19, GCAAR circulated an addendum for agents that protects buyers and sellers from default if they can’t fulfill contractual duties due to a virus-related circumstance.
The addendum states that if the buyer or seller can’t close on the agreed date due to “a delay caused by an act of God, government mandated quarantine or an illness to a party or party’s attorney or settlement agent,” because of coronavirus, the parties can extend the closing date up to 30 days.
Logistical problems can also arise during the financing stage of the home buying process, particularly if someone has been laid off or furloughed.
“How does that impact their ability to qualify for the loan?” Burton said.
The unknown elements of the coronavirus outbreak, Burton said, are “crippling” his clients.
“People want [home buying and selling] to be scientific, but at the end of the day, it’s individuals making emotional decisions, and that’s a big part of it. My industry is hinged on people making emotional decisions, and people’s emotions are all over the map right now,” he said.
Burton said that in 15 years in real estate, he hasn’t seen anything like the current situation.
“Three weeks ago, we were in the hottest market we’ve been in since 2007, and interest rates were better and inventory was down 24% from where it was last year,” he said. “So it was a perfect storm and an incredible time to be a seller. And that literally fell off a cliff in 10 days.”
Burton said that when the virus outbreak subsides, pent-up demand might exist in June and July as people have life changes, such as marriage, divorce and death.
“Normally, you want to be on the market between Super Bowl Sunday and Memorial Day and I find that that is going to shift, because there’s a lot of need out there,” he said.
Dan Schere can be reached at daniel.schere@moco360.media
