Housing market expected to suffer because of COVID-19

Local home sales did well in February, but March is worrisome

Home sales were doing well in Humboldt County in February, but realtors don’t expect the same to hold true for March because of the outbreak of COVID-19.

Sales of single-family homes in Humboldt County increased by 12.8% this February compared to the year before, though sales dipped 3.3% compared to January, according to data from the California Association of Realtors. The association expects there to be a negative impact on home sales in Humboldt County because of the shelter in place order, according to a news release from the association.

“As the coronavirus pandemic worsens, the housing market is expected to decline precipitously in the coming months, particularly in counties and cities with a ‘shelter in place’ mandate, where open houses and home showings cannot be held,” said association President Jeanne Radsick. “Additionally, sales in escrow may be delayed by the closure or limited availability of all the essential services related to a home sale, such as financing, title, escrow, recording or by buyers who may have backed out of a purchase due to coronavirus concerns.”

The cost of a single-family home increased in February; the median home price in Humboldt County was $310,390, up from $308,000 in January and $298,000 in February 2019, according to the association. That’s not expected to last either.

“The economic impacts of the coronavirus pandemic are becoming more pronounced as uncertainty continues in the financial markets, consumer spending declines and unemployment insurance claims rise — all factors that impact the housing market,” said the association’s senior vice president and chief economist Leslie Appleton-Young. “The housing market condition is expected to deteriorate accordingly in the near term, with both sales and prices being downgraded from our original 2020 housing forecast in the coming months.”

A flash poll conducted by the association between March 14 and 16 found 54% of realtors had a client who backed out of buying a house because of concerns over COVID-19 and 45% had clients back out of selling a property for the same reason, according to the association.

Realtors at a national level don’t seem as concerned. Earlier this month, the Federal Reserve cut interest rates to a range of 0 to 0.25%, which is expected to lower mortgage rates.

About 45% of realtors nationally said there was no significant change in homebuyers’ behavior and 61% reported no changes in sellers’ behavior either, according to an economic pulse flash survey conducted between March 16 and 17 from the National Association of Realtors.

However, realtors seem less confident by the week. The week before, 16% of realtors said there was a decreased interest in buying homes because of the novel coronavirus, according to the survey. That tripled to 48% last week.

Similarly, 87% of realtors said there was no change in the number of houses on the market because of COVID-19 two weeks ago, but last week that number declined to 69%.

“The decline in confidence related to the direction of the economy coupled with the unprecedented measures taken to combat the spread of COVID-19, including major social distancing efforts nationwide, are naturally bringing an abundance of cau

tion among buyers and sellers,” said the association’s chief economist Lawrence Yun. “With fewer listings in what’s already a housing shortage environment, home prices are likely to hold steady. The temporary softening of the real estate market will likely be followed by a strong rebound once the economic ‘quarantine’ is lifted, and it’s critical that supply is sufficient to meet pent-up demand.”