Less inventory, no touching: How COVID has changed the Lexington real estate market
First-time buyer Connor Powell had been looking for a home for about six months when the pandemic hit. Suddenly everything got a lot trickier.
“The market came to a complete halt for about three weeks,” said Powell, 22, who works for an engineering firm in Richmond. He’d set up a Zillow alert to let him know when new listings that met his parameters came on the market.
For weeks there was just nothing. Then a house in the Hamburg area, a corner lot and in his price range, came up.
His agent warned him that looking at houses now would be a little ... different.
“I was worried, worried about being able to see the houses,” Powell said.
But Kristy Gooch, his agent, came prepared.
“Now we wear gloves, masks .... booties. We open the doors for the clients, but stay away from them,” she said. “And don’t touch what you don’t need to touch.”
Powell had already lined up his financing and was able to buy the house; he closes on May 1. But it will be a while before he moves in; he plans on deep-cleaning to be extra cautious.
Open house precautions
Rusty Underwood, a real estate agent with Milestone in Lexington, said that some sellers are reluctant to list right now because they don’t want people in their homes.
Agents try to do as much “virtually” as possible, Underwood said, “but most people don’t want to make a purchase without having been inside.”
So they take precautions, he said.
Besides the PPE, he said, “You can’t bring your parents and your best friend to weigh in … it’s just the bona fide buyer and agent. Agent opens and close all the doors and buyers keep their hands in pockets.”
He said they have to be sensitive because sometimes people have no choice in whether or not they are moving. He’s working with sellers right now who are relocating for work to the North East. When they come back to Lexington for family, they will self-quarantine for two weeks, he said, so their house will be off limits.
Home sales
According to the Lexington-Bluegrass Area Realtors, the numbers of new listings on the market in March dropped by almost 8 percent, about 132 fewer homes.
“But all that’s done is shrink the inventory. The supply is going down but the demand is remaining the same,” Underwood said.
“To condense it all down, we have not see a real dramatic change in the data,” Underwood said. “And a lot of it was driven by logistical changes, rather than unemployment or lost wages. That may come … but right now the money is still out there.”
Overall for March, sales were up 4 percent to 1,131 homes (these homes sold in February and close in March); the median price was up 12.7 percent for the month, to $191,500. Pending sales, which will close in April, were down 7 percent.
Underwood predicted that once social distancing restrictions are eased, sales will take off.
“I think you’ll see a real quick snap back,” he said.
Gooch, a ReMax Elite real estate agent in Nicholasville who is the president elect of LBAR, agreed.
Financing, closing during COVID
Volatility will continue during the shutdown, she said, particularly as layoffs and furloughs continue to impact purchasers’ financing.
Some purchases have hit stumbling blocks, she said, and lenders are now checking employment status 24-48 hours before closing to make sure the buyers’ financial situation hasn’t shifted.
When it does, they try to renegotiate, Gooch said. Or try to extend the contract to buy time for people to return to work. “Some of us are being super creative,” she said.
Most lenders are understanding for now; the main change with the closing process? Everyone keeps their distance and signs paperwork one at a time.
Gooch said that there may be longer term effects on the market if unemployment continues to be high or if the economy can’t restart smoothly.
“What we need are consumers to protect their credit-worthiness, use the stimulus as intended and to pay mortgages and rents,” she said.
Overall there are still more buyers than sellers, she said.
“We came into this pandemic with a low listing inventory anyway, and the people who are wanting to purchase can and are … And those who want to sell can and are,” she said. “We’re trying to work with both parties to get them to the closing table because that’s where they want to be.”
