Like every other sector of the economy, residential real estate transactions slowed to a trickle this week, as businesses were forced to close, employees were laid off and stock market losses wiped out many investor portfolios.
“Our phones are dead,” says Locations Real Estate owner Vicki Spurlock, who concentrates primarily in Baton Rouge’s Southdowns area near LSU. “Absolutely dead.”
Spurlock and other residential agents say it’s too soon to say how much of an impact the coronavirus crisis and drastic measures to mitigate its spread will have on local home sales. Like everyone else in the country, buyers and sellers are still in shock, putting deals on pause as they try to determine how things will play out and how long the crisis will last.
“I have sellers who are taking their signs down,” Spurlock says. “I have another who reduced his asking price by nearly 20 percent today. If they don’t have to sell, they’re hanging on. If they do have to sell, they’re dropping the price.”
Data doesn’t yet bear out that anecdotal observation and industry experts say it will be a while before they know exactly what the impact will be. But Greater Baton Rouge Association of Realtors Executive Director Ken Damann says the sector is bracing for a chilling effect during what is normally the busiest season of the year.
“This is when things are normally peaking,” says Damann, who notes that, until last week, the market was solid.
In February, median home sale prices were up 5% across the three-parish region over the same month a year ago, pending sales were up more than 6% and inventory was down more than 4%, though the number of new listings and closed sales were both slightly down.
While the financial problems caused by the efforts to slow the spread of the disease appear largely to be behind this week’s downturn, there are practical problems, too, with trying to sell a residential property during a pandemic: Sellers don’t necessarily want strangers walking through their homes, touching their doorknobs and peeking in closets.
Thanks to technology, some tours and open houses are being conducted virtually, according to Damann, who says a potentially bigger challenge is getting buyers, sellers, closing attorneys and witnesses all together in one room to close a deal.
Not everyone is feeling the effects of the crisis yet, however. Broker Quita Cutrer sold a high-end house earlier this week and says she’s still getting new listings.
“I have a photographer scheduled to take pictures (today) on a $2 million house,” she says. “I’m actually surprised at the activity. I’m surprised it hasn’t shut down altogether.”
Developer John Engquist says homes in his Rouzan development also changed hands this week, which he attributes to record-low interest rates.
“I can guarantee you this will impact the housing market,” Engquist says. “But the offset, at least at the moment, is that banks are giving money away.”
Despite the low interest rates, Engquist expects residential home sales to come to a near standstill for a while. The question is, how long will that last?
“We’re in uncharted waters,” he says. “I believe the coronavirus numbers that are going to be coming out are going to be ugly for the next couple of weeks and then, hopefully, we’ll be able to flatten this curve and get things back up and running. It’s just a question of how long this thing lasts.”