Utah’s home sales slow down as coronavirus effects take hold
(Leah Hogsten | The Salt Lake Tribune) Realtor Alicia Holdaway has been using social media apps including Facebook Live and Marco Polo to show potential buyers a 360-video tour of each of her home listings in Utah and out of state.
Like real estate agents do, Alicia Holdaway ran a keen eye over the niceties of a higher-end home in suburban Riverton, telling her clients about its spacious garage and second-floor bedrooms.
But unlike other home tours, these prospective buyers were far away, watching as Holdaway streamed video through her phone.
Virtual tours using platforms such as Zoom and Marco Polo are giving Utahns ways to continue buying and selling homes with less risk of viral infection.
But the roaring economic highs and constantly rising home prices of past months have given way to a sharp slowing in sales in two short weeks.
There are signs that fear and uncertainty have started to color market sentiment, even as the traditionally up-close, handshake business of home realty undergoes a hygienic overhaul.
More buyers are making offers without stepping foot on the property, while armies of home inspectors, appraisers, title experts and lenders continue to improvise and invent new ways to get their jobs done remotely.
“I am super proud of our industry and the quick adaptation that we've done to safely still serve people's basic needs for shelter and home,” said Holdaway, a Draper-based real estate agent with Summit Sotheby’s who is also president of the Salt Lake Board of Realtors.
(Leah Hogsten | The Salt Lake Tribune) Realtor Alicia Holdaway sits outside one of her home listings in Riverton. Holdaway has been using social media phone apps like Facebook Live and Marco Polo to show potential buyers a 360-video tour of each of her home listings in Utah and out of state.
Homebuyers and sellers are hesitating
The Wasatch Front saw home sales increase by about 4% for the first three months of this year and Salt Lake County was up 3%.
Then came April, with rising fears over coronavirus infection, widespread business and event shutdowns and a wave of stay-at-home orders enacted across seven Utah counties.
In the first seven days of this month, sales in Salt Lake County alone fell 18% below where they were last year.
Analysis released this week by Redfin, the Seattle-based online real estate brokerage, indicates that many areas continued to see similar declines since then, with home sales nationally down 25% for the week ending Monday.
Evidence from Utah home listings suggests some homeowners are pulling back. A few are panic selling — while would-be buyers begin to feel tightening credit, with more hurdles to jump to get a loan as lenders worry about job losses. Visits to model homes in Utah are reportedly down.
Properties are hanging on the market longer than they used to, another sign of caution. Hesitation could soon spread to first-time homeowners, who may hold off on buying because of pandemic unknowns and, longer term, possible employment worries.
The patterns are akin to the 2008 Great Recession, said Babs DeLay with Salt Lake City-based Urban Utah Homes and Estates. “A lot of people got very, very damaged by that and it will be the same people damaged this time.”
Some sellers have lopped thousands of dollars off their asking prices in recent weeks, raising the prospect of bargains in the market. Several agents said some wealthier homeowners with second homes in Utah have gotten clobbered by recent stock market declines and have started to sell to raise cash.
While some of these signs are ominous, few Utah analysts are crying doom just yet. The fundamentals of the state’s sales of new and existing homes give it the potential to bounce back quickly, depending on how long the health emergency lasts.
“The one thing I do know is that people in Utah are still having babies and families are still growing,” said Jeffrey Farrell, a real estate agent specializing in selling homes in Salt Lake County’s southern suburbs. “My phone is still ringing.”
Unlike the Great Recession, Farrell and others note, this downturn is due to a virus, not underlying structural problems in real estate and financial markets.
Buying a home has changed
Real estate is considered an essential service in several of Utah’s county health orders — but with mandates to replace personal meetings with virtual ones. And no more riding in the same vehicle with clients, several of the decrees say.
That has meant figuring out social distancing all along the home sales chain.
Gloves, masks and doorstep splashes of hand sanitizer are now fixtures during in-person home tours, where sellers open all doors and turn on light switches beforehand to guard against viral transmission.
Sarah Mortensen said she and her husband prepared to sell their Davis County home in early April by stationing hand sanitizer at the front door and having Lysol at the ready to wipe door knobs and switches between visits.
Instead, they accepted their first offer “so we didn’t have to worry as much about disinfecting between showings,” Mortensen said. She added, too, that they “were concerned about job loss or a market crash so we wanted to get the house sold as quickly as possible.”
There are other stories of closings being held up or falling through due to delays in appraisers or home inspectors visiting the home. In some deals, requirements for those steps are being waived or modified to allow curbside review.
There are new COVID-19 provisions in sales contracts allowing for closing delays in case of quarantine. New forms in the buying process aim to certify that interested parties show no signs of infection before any face-to-face interactions. Use of panoramic digital home scenes, video open houses and virtual-reality walk-throughs have exploded in all forms of home marketing.
One in four Realtors across the country whose clients put in sales contracts last week said they’d had at least one buyer who never visited the property. Seattle-based real estate company Windermere recently took out full-page newspaper ads in Salt Lake City touting a new virtual-reality home tour viewing system, complete with free goggles.
Some view this expansion of technology as likely one of the most lasting effects on real estate from the pandemic — and one that will help the industry return more quickly.
“It’s really important,” acclaimed economist Elliot Eisenberg told Utah homebuilders and real estate agents in a recent speech. “To focus your energies on keeping your balance sheet together, I want you to up your game in technology so when the recovery comes, you can make everybody happy.”
Eisenberg’s prediction for how long a housing dip from the pandemic might last, by the way, is up to nine months or more.
Momentum from Utah’s healthy economy before the COVID-19 outbreak appears to be keeping the housing market afloat for now. Interest rates are turbulent but generally low, demand for refinancing is brisk, residents keep relocating to Utah for jobs, and demand is steadied by a growing in-state population.
It is unclear how that might change as COVID-19 shutdowns continue in the weeks to come, but for now people are pulling the trigger even while under social distancing and stay-at-home orders, lenders and real estate agents say.
“There are less buyers in the market, but it has allowed more opportunity to purchase with less competition,” said Ashlee Shipley, senior loan officer with Veritas Funding, a Cottonwood Heights-based mortgage lender.
An official with Salt Lake Homebuilders Association noted that home construction has also been deemed an essential business under the state and county health decrees. And with a few bumps, the state’s framers, masons, electricians, plumbers and trade specialists have kept working during the emergency.
“We social distance by nature,” said Jaren Davis, the association’s executive officer. And that, Davis said, is giving builders a chance to expand inventories ahead of a strong return in buying. Anticipating a rebound, in fact, has Davis focused on a more long-standing problem in Utah’s housing markets.
“We were in a housing shortage before the pandemic, with our economy growing and outpacing our ability to construct housing units,” Davis said. “So if we’ve slowed down ever so slightly and we’re behind anyway, then imagine the pressure that will be on us when things are ramped back up.
“As soon as that consumer confidence comes back," he predicted, "we’re still behind the eight ball.”