As people around the world were told to stay home and shelter in place this spring, home sales around the country took a dramatic dip, with the nation seeing its largest month-to-month decline in sales since the fallout from the Great Recession.
For a few short days after Gov. Jay Inslee shut down restaurants, bars and most "nonessential" businesses in mid-March, it didn't even look like realtors would be allowed to show clients homes, says Tom Clark, president of the Spokane Association of Realtors.
"We were dead in the water for like three days, and then came back on like a life support system," Clark says.
Since those first restricted days, real estate agents have been allowed to show homes to prospective buyers with safety measures (masks, wiping surfaces) and strict limits on how many people may be in the house at one time. At first, Clark says he could only take one other person in the house at a time, making things awkward for couples who had to take turns walking through.
Still, even with creative workarounds like virtual home showings on Facebook Live and digital paperwork for contracts, Spokane home sales were down 27.1 percent in May, compared to May of 2019, according to Spokane realtors data.
That mirrors the major downturn in sales of single-family homes and condos throughout the Western U.S., which was the hardest hit region in the country, with sales down 27 percent in April this year over April last year, according to the National Association of Realtors (NAR).
Plus, the country saw the biggest month-to-month drop in sales since July 2010 when sales dropped 17.8 percent from March to April, NAR notes.
At the same time, however, national and local home prices continue to rise, with the median local listing up more than 10 percent over last May, which is largely due to a limited supply of homes for sale, Clark says.
Coeur d'Alene-area home sales are also down for the year, while prices are up 10 percent as well, according to the Coeur d'Alene Association of Realtors.
Despite a dip in April sales and the significant drop in May, sales are still up 1 percent for this year compared to last year, Clark says. Interestingly, he adds, several sales that would have taken another month to finish were finalized early due to COVID-19 concerns.
"Every buyer I've had in the last three months closed early. They said, 'Ooh ooh, let's get this done,' as soon as COVID hit," Clark says. "Two [of my] closings from April closed in March, and two from May closed in April, so that left very few for May."
The good news is, this economic crisis is not expected to result in a housing crisis like the Great Recession, which was largely caused by the subprime mortgage scam and resulted in many foreclosures.
That's not to say there won't be major impacts, though. Clark says he thinks we haven't truly seen the economic fallout yet, since most people got $1,200 stimulus checks, and those on unemployment have been receiving an additional $600 a week from the federal government. Plus, evictions and foreclosures have not been allowed under moratoriums. Not to mention, we have yet to see how many of the restaurants, bars and other businesses that were forced to shutter will not reopen, he says.
"I think that'll probably affect the real estate market to some degree, but again, we still have more qualified buyers than homes," Clark says.
There may also be a silver lining from COVID closures, he notes: More people than ever are realizing they can work effectively from home, and maybe don't have to live near their office to do their jobs. Plus, rural areas with more space are more appealing than ever.
"I think the pandemic will be somewhat of a blessing in disguise for rural communities, for those of us in the less densely populated areas," Clark says "We still have more people moving in than moving out."
With Amazon's warehouse set to add about 2,000 employees this year, and other economic opportunities, the economy in this region remains strong, he notes.
"Overall the economy is still fairly strong in Spokane, and Spokane is a much more desirable location to people than it used to be," Clark says. "Honestly, in my heart of hearts, I can't think of a reason the Spokane economy and real estate market is going to do anything other than continue on the strong path it's on."
Things aren't all doom and gloom for millennials and other first-time homebuyers either, he says.
The main struggle is the increase in home prices, which have gone up about 10 percent, he says. While that's great for sellers, Clark says he prefers an annual increase closer to 3 percent so it's not too hard on the market for buyers.
But knowing that essentially all single-family lots in Spokane that can be developed are being developed, Clark says that many potential buyers are acknowledging that waiting isn't going to save money.
"The prices aren't going down tomorrow, they're going up, so today's a good day to buy," Clark says. "If they're gainfully employed, most millennials I know are buying. They're not putting off the fact they're going to live indoors most of the rest of their life, so they're doing it now." ♦