Photo by Andy Dean Photography
When the COVID-19 pandemic took hold this spring, real estate agents were among many professions bracing for a decisive hit to their business.
“It looked like it was going to be a good year the first of January, and then the start of March we had COVID, and I thought, ‘Well, so much for this year,’” said Suzanne Elliott of Berkshire Hathaway. “But the market just kept on moving.”
Elliott noted that the lower price range in the market has been particularly lively in recent months.
“I sold a house that was around the $200,000 range and there were 19 offers on it in the first day and a half,” she said.
That kind of activity is typical right now for a correctly priced residential property.
The Lexington–Bluegrass Association of Realtors (LBAR) reports that the average number of days on the market are down, and the number of showings happening in the area is on par with what the industry saw in March and April last year.
Because of the time involved in closing on a house sale, LBAR’s data runs 30 to 60 days behind.
The latest figures show that residential home sales remained quite strong throughout March, said LBAR CEO Justin Landon, but showings began dropping off in April, causing a delayed pause in home sales weeks later.
As people adjusted to the ‘new normal’ in later April, however, Landon said showings picked back up and that has been reflected in an increase in sales since.
Most real estate agents credit the whirlwind market to low inventory and high demand, but that isn’t a recent imbalance.
“I want to be very careful that we don’t point to our tight inventory and say, ‘That’s a COVID-19 impact.' I think the coronavirus has probably exacerbated the inventory challenges we were already experiencing." — LBAR CEO Justin Landon
“I want to be very careful that we don’t point to our tight inventory and say, ‘That’s a COVID-19 impact,’” Landon said. “I think the coronavirus has probably exacerbated the inventory challenges we were already experiencing. In January we were already at the lowest inventory in the history of the market.”
Part of the reason for that is the finite amount of land within Lexington’s Urban Services Boundary that can support new residences. Builders, who often want a property sold before beginning construction, are backed up between eight months and a year.
Adjusting to a new normal
That isn’t to say nothing has changed in the time of coronavirus. Showings now involve masks, hand sanitizer, gloves and, in some cases, even disposable booties to fit over the shoes of buyers and agents walking through a home.
“Very early on, our industry embraced the guidelines the governor issued,” said Landon. “We were social distancing, we were sanitizing and we were masking. We did that right at the beginning and have continued that aggressively all through the process. I think that put clients at ease that we were doing everything we could to keep them safe.”
Perhaps surprisingly, most experts interviewed agreed they don’t hear much from sellers in the way of anxiety about having people do a walk-through in their home.
The closing process also looks different.
“There’s one company that you’re invited to go in and sit around the table as always,” said Katy Prather of The Prather Team and Keller-Williams. “There’s another attorney who [has] the Realtors stay in their cars. There’s another attorney who will take the buyers in and sellers in separately. They’re all different, and it’s whatever they’re comfortable with.”
While 30 days was a standard timeframe for closings pre-pandemic, that timeframe has stretched out closer to 45 days for many. That’s not a result of reduced capacity of lenders, but rather a reflection on how busy many have become. Interest rates remain at 3 percent or less for many buyers, and that has a lot of people thinking about refinancing homes they plan to stay in for a few more years.
What does ‘home’ look like now?
The same types of properties that were in demand before the pandemic have remained popular. For Prather, ranch-style houses with a basement are the most requested, followed by ranches with no basement.
Prather also said the pandemic has not made buyers less demanding in what they want to see from a home.
“The buyer today that I find is very particular,” she said. “They do not want anything that needs to be cleaned or painted. If it’s not up to snuff, they’ll pass on it, even though there’s not a lot of product.”
“The buyer today that I find is very particular. They do not want anything that needs to be cleaned or painted. If it’s not up to snuff, they’ll pass on it, even though there’s not a lot of product.” — Katy Prather, The Prather Team and Keller-Williams
Mina Mattone of Bluegrass Sotheby’s said she believes people are looking at houses with a different perspective now that many of them have been stuck at home for weeks or months.
“I think people realize how important it is to have a nice home and, now that we’re working at home more, everyone seems to want to have more space,” she said.
Mattone says clients in the popular Chevy Chase neighborhood and other downtown neighborhoods seem to find it more important now to buy someplace where they can walk to nearby attractions, or enjoy a walk around the block.
Buyers, sellers both stand to do well
No one is quite sure what the fall will look like for the real estate market. Most agents agree interest rates seem unlikely to rise again for some time, but no one can be sure of what the economy will do — in response to COVID-19, the election, or the end of economic stimulus and other income supports.
“We’re just taking it day by day,” said Elliott. “We have nothing to look back on, because nothing like this has ever happened before. We’re lucky, I think, in Kentucky, that COVID has been handled well. I think we’ve been cautious. I’m pretty pleased that most places I go most people have on masks. I think we’ve listened and tried to follow the guidelines.”
Landon said for those on the fence about whether to sell, it’s a great time to take the leap if you can price your house correctly — and if you’re willing to confront a competitive market as a buyer.
The best cure for that, he says, is to hire a real estate agent who can help you navigate the negotiation process, which has become more complex than ever.
“It’s very rare that you can say it’s both a buyer’s and a seller’s market,” he said.
But here we are.
To read a Market Analysis of Lexington Real Estate in the Era of COVID-19 from Fayette County Property Value Administrator David O'Neill, click here.