Open houses stopped. For sale signs gone. How coronavirus is hurting California real estate
In an unprecedented move, California’s main real estate sales association has called on agents not to hold open houses, not to enter homes and not even meet face to face with clients for fear of spreading the coronavirus.
That guidance by the California Association of Realtors appears likely to lead to a near shutdown of the state’s resale housing industry that could last as long as the virus continues spreading in California.
The move is quickly putting another large dent in the state’s shriveling economy.
Sacramento-area home sales agents interviewed by The Sacramento Bee say most are abiding by the request, which was made after Gov. Gavin Newsom’s Thursday statewide order to cease nonessential business during what officials are calling a “shelter at home” period.
Newsom’s order last week is designed to slow the spread of the coronavirus. As of Monday, state officials say they have recorded 1,733 coronavirus cases, and 27 deaths since the virus was first found in the state in February. Sacramento County had recorded 88 cases and four deaths as of Monday.
Open houses shut down
The shutdown of home tours and open houses echoes the dramatic several-year dormancy the home resale industry suffered in 2007 and 2008, when the national mortgage crisis led to a major recession.
“Realtors should cease doing all face-to-face marketing or sales activities, including showings, listing appointments, open houses and property inspections,” the CAR group posted on its website. “Clients and other consumers are also subject to these orders and should not be visiting properties or conducting other business in person.”
New data, gathered since the governor issued his order, suggest the industry shutdown is underway, just as the spring buying season was expected to heat up.
Industry watchers say they counted just 20 open houses around the Sacramento region on Sunday. Typically, there would be several hundred - or up to 1,000, realtor Tim Collom said.
More than 340 sellers took their homes off the market in the last 10 days in the Sacramento region, some postponing their sales efforts for a few weeks or months, others dropping plans entirely to sell their houses, according to real data and trends analyst Ryan Lundquist.
That’s an estimated 11 percent of what had been an already low number of homes on the market in the Sacramento region.
Lundquist, an appraiser, said he no longer will go through homes to conduct appraisals. Instead, he will attempt to do appraisals via other analysis methods.
Erin Stumpf, a director with the Sacramento Association of Realtors, said she is still working on closing active deals, but will no longer go into a house or send a client into a house. She said she sees it as a violation of the industry’s code of ethics.
“If we engage in physically meeting people and taking them into somebody’s home, that is potentially risky behavior, especially if it is an occupied residence,” Stumpf said. “We should cease person-to-person contact. Our clients should be staying at home. We should be staying at home.”
Virtual home tours on the rise
If there is a sliver of good news, industry members say, it’s that some enterprising agents and real estate companies already are publishing sophisticated online virtual home tour videos that may persuade some would-be buyers to pull the trigger even if they do not physically enter the home they intend to purchase.
The real estate industry is creative. “People will always find a way to get stuff done,“ analyst Lundquist said.
County officials are still recording real estate transactions. And title companies, mortgage brokers and lending institutions can still work online and remotely processing sales. The governor and counties also appear to have given the OK for home repair work to continue.
Realtor Collom, who began producing more sales videos and video home tours, said that if the virus shutdowns continue for weeks or months, he thinks more people who need to buy or sell a home will be willing to do so based mainly on virtual tours.
“Video production will be the new way to sell homes safely,“ Collom said. “We haven’t had any virtual offers yet, but it is early on. People will have to change.”
That said, Collom and other real estate industry members say the landscape is changing so fast in the past two weeks that they do not know what is upcoming in the days or weeks ahead.
Stumpf said she is keeping in contact with her sellers and buyers and is still marketing homes. She said she hopes that if the coronavirus outbreak wanes and state officials ease restrictions in the coming months, the state’s real estate and housing sales market will bounce back fast, and experience its spring selling season a few months later than usual.
That will depend, however, on how hard of a hit the economy takes in the coming weeks and months, and how many people lose jobs, either temporarily or permanently.
Industry members say it is too early to tell what effect the virus crisis will have on home values.
“There is not good closing data to compare yet,” CAR economist Jordan Levine said.
Median values had been rising in the last two months to more than $400,000 regionwide. There is some evidence from the state of Washington, which was hit by the virus harder and earlier than California, that sales prices are seeing a slight slump.
This story was originally published March 24, 2020 at 5:00 AM.