After years of bustling sales and rising prices, Buffalo’s housing market has ground to an abrupt halt.
Home showings and open houses are barred by Gov. Andrew M. Cuomo’s executive order limiting business in an attempt to stop the spread of the coronavirus.
And the flood of layoffs and furloughs that threatens to push unemployment to record highs is shattering the solid economic base that had propped up the local housing market for years.
What nobody knows is how long the freeze will last, and how strongly the market will bounce back once it ends.
For now, though, it means nobody’s touring houses for sale – or at least they shouldn’t be – as it would be illegal, brokers say.
“If we leave home to conduct business, we are violating the directive,” said Stephanie Morgan, co-owner of JRS Morgan Realty. “Anyone who is out there showing homes is doing so illegally.”
So deals aren’t getting signed, unless a buyer is willing to make a significant purchase sight-unseen, or based solely on online viewings.
“Right now we are paralyzed,” said Vienna Haak, an agent with Howard Hanna Real Estate Services. “We are considered nonessential, and therefore incapable of showing our listed property in traditional fashion.”
That’s hampering once-eager buyers and sellers, many of whom are now on ice instead. And it’s putting thousands of agents temporarily out of work, and uncertain when that will change.
“Right now, we’re on shutdown mode,” said Jerry Thompson, owner of Century 21 Gold Standard in East Aurora. “I’ve never seen anything like it before. Everybody’s just sitting back and waiting for this to pass.”
The status of home inspections and appraisals are less clear. The New York State Association of Realtors and New York State Association of Home Inspectors say the state has advised that they are not essential.
Banks and mortgage companies – which are considered “essential” financial services – say appraisers are part of that process, but the real estate group isn’t so sure and is waiting for guidance from the state.
Despite the layoffs, agents are hoping that basic economic conditions haven’t changed, and pent-up demand from buyers once the shutdown lifts could still drive a strong market. But perception is starting to turn into reality, as buyers and sellers are getting nervous themselves about their own financial situations.
More than 3.3 million people filed for unemployment last week – four times the previous record from 1982 – as battered companies laid off staff. The stock market bounced like a yo-yo, wealth is falling, and incomes are threatened.
Consumer confidence tanked this month. A report issued Friday by the University of Michigan showed the fourth-largest drop in history, after the Great Depression, the 1980 recession and Hurricane Katrina.
The Buffalo Niagara Association of Realtors hasn’t posted sales data yet for this month, but the current retrenchment won’t show up in the data until at least May, if not June.
Real estate agents and executives are trying to keep up a positive outlook. Dana David, an agent for Howard Hanna Real Estate Services, noted that “this is not like 2007,” when the housing bubble in other parts of the country collapsed and caused a recession.
“We do not expect this to massively affect our local housing market,” she said. “We look at this as a pause in business, not a stop, and we expect to pick up right where we left off.”
But they’ve also adjusted quite a bit. “There are things we can do virtually to keep things moving,” said Annabelle Aquilina, an agent with Hunt Real Estate Corp.
Agents are turning to video and 3D tours to showcase their properties, using material from the homeowner or that was taken prior to the clampdown. Hunt even created a completely virtual process for listing and selling properties.
“Open houses are all virtual now, and activity has been surprisingly good,” said CEO Peter Hunt.
And, of course, they will still take offers on homes, without a viewing or contingent on a later viewing. Buyers would also have to agree to waive the inspection if their offer is accepted.
“If someone wants to buy a house, sight unseen, we have people entertaining and having those conversations,” Thompson said. “I haven’t seen one come across my desk yet, but I’m certain that somewhere along the line we will.”
But he doubts it will be common.
“It’s almost like being there,” he said of the video viewings, “but at the end of the day, unless you can see it, feel it, touch it, it’s harder for people to make that huge economic decision.”
Many potential buyers also have taken a sudden financial hit from job losses. Others are feeling uncertain. David said she’s had a few active buyers postpone their search because they got laid off, although “our supply and demand is so imbalanced” that there are more than enough buyers still out there.
Brokers still can list new properties, but some say there’s not much point right now.
“In good conscience, I can’t recommend to a client that they list their homes right now,” Morgan, co-owner of JRS Morgan Realty, said. “They’re not going to get top price.”
Sarah Robitaille of MJ Peterson Corp. has one seller with a 2-year-old child and another on the way. But they won’t list until they move to their new home, which they can’t buy right now. Another client was prepared to list a rental property last week, she said, but “we no longer have access to the home for showings.”
Meanwhile, most real estate agents are trying to do whatever they can for clients. But without new deals, they can’t make money.
“I’m not working and this is my busy time,” said Morgan. “This is where I really start to build the income for the rest of the year.”
The $2 trillion federal stimulus package approved last week also provides some relief for real estate agents, making them eligible for unemployment benefits that they normally would not qualify for as independent contractors.
“Agents across the board are becoming unglued because their income is uncertain,” said Haak, of Howard Hanna Real Estate Services. “Trying to keep a level head and optimism is getting more difficult by the hour.”
Posted by The Buffalo News