To say COVID-19 has impacted the market is an understatement. The National Multifamily Housing Council recently reported that as many as one-third of apartment renters failed to make their April rental payment to their landlords. A slew of national tenants and retailers announced that they would not pay rent to their landlords, and many others also decided not to make their rental payments.
In addition, according to news reports this week, more than 5.4 million additional workers filed for unemployment the week of April 6, bringing the number of Americans who have filed since mid-March to more than 22 million. The unemployment rate is expected to jump to at least 15% at the end of April, and maybe even higher.
At the same time, Yahoo reported that JP Morgan Chase decided to raise its requirements for getting a home loan. The fourth largest residential mortgage lender, Chase is requiring borrowers to put down 20% and have a credit score of at least 700. They surely aren't the only lender wondering how they can protect themselves from the costs of being required to issue a forbearance to all borrowers, even as their own payments must be delivered on time to the end investors.
All this, even as mortgage interest rates flirt with their all-time lows, according to the Mortgage Bankers Association.
So, banks reported they would see steep losses, as consumers either stopped paying bills or took forbearance. In the past few weeks, iBuyers such as Zillow and OpenDoor have suspended home purchases and, in the case of OpenDoor, seen significant layoffs. Fannie Mae expects overall home sales to decline by about 15% in 2020, but the National Association of Realtors sees the market growing to 6.1 million homes sold in 2021, which seems to us to be, well, hopeful.
These are significant losses, both personal and commercial. We don't have a crystal ball, but clearly the economy won't magically rewind itself to where it was in January; and the second quarter will see a dramatic contraction. We just wonder, when we're getting emails from consumers who are afraid to go into a house for a showing, let alone go back to work with their peers, what does the new "normal" look like and how long will it take to get here?
Will we end up with virtual showings, virtual open houses and remote closings or settlements? Will home buyers end up signing all home buying and home loan documents electronically? What role will attorneys, title companies and settlement agents have in the new normal? Will this crisis accelerate electronic changes to the real estate industry?
And, this is a big one, how will all of this affect the real estate brokerage industry? Will 2 million jobs just disappear?
Over the years, we've written about changes to the real estate industry brought on by technology. Real estate agents now use 360-degree technology to take pictures and videos of their listings. But if home buyers get comfortable with buying a home without seeing it — and we know someone who just bought a million-dollar home that way this week — what role will real estate agents have on the buy side?
We may well see more significant shifts coming to the real estate industry in the coming months. Another unintended consequence of the COVID-19 pandemic.
Contact Ilyce Glink and Samuel J. Tamkin through her website, ThinkGlink.com. (c) 2020 Ilyce Glink and Samuel J. Tamkin