Having to stay at home doesn’t seem to be dampening residential home sales, but it is still a bit early to know for sure how the economic shutdown, to curb the spread of the coronavirus, is impacting real estate. Boosts in sales for April may very well be a residual effect of the boom with which the year started, before anyone had heard of COVID-19, said George Warmer, Managing Broker of Coldwell Banker Commercial CBS, Billings.
But while sales have increased, inventory is down. Listings are off substantially, said Warmer. “It is definitely a sellers market.”
“It could be a tale of two stories,” said Warmer – those willing to buy, incentivized by very low interest rates, and those less willing to sell at a time when markets, business and life is in such a state of flux.
Most of the sales that closed in April were under contract prior to April and COVID-19 issues.
Warmer noted that there have been prospective buyers who were pushed to the sidelines because of having been furloughed from their jobs.
Clerk and Recorder Jeff Martin said that his office which handles the recording of documents and deeds has seen that title companies are definitely doing a lot of business. He said one company said that they had had the busiest March in five years. “It’s amazing it is as strong as it is,” said Martin.
Quinn Donovan, co-owner of First Montana Title agrees that the real estate market has been strong – surprisingly so. While he’s glad to see it, he’s uncertain about what is holding it up. While not understanding what is happening, he is glad to see it, nevertheless.
Donovan said that closings of real estate transactions have been about 15 percent – maybe 20 percent – above last year. About 40 percent of that are clients refinancing to claim lower interest rates, which are hovering around 3 percent.
Lower interest rates could also be encouraging buyers, but perhaps buyers are also reflecting their confidence in their situations even when they have been furloughed from jobs. That would be a positive statement about the economy, said Donovan, and he hopes it’s true.
He said that they have seen, more so than usual, buyers back out of deals because they lost their jobs or become uncertain about what the future holds.
The commercial real estate market is “struggling,” said Donovan, and “agriculture land is not changing hands.”
Donovan said that they are seeing people who worked at home in places like California or Texas deciding they might as well be doing it in Montana. People are relocating to Montana and it’s a trend that is likely to continue given the concerns that have been brought about by coronavirus crisis.
Warmer, too, said that his company has seen an influx of people moving into the state, especially in the Red Lodge area. They seem to be older people – retirees perhaps.
USA Today has reported that nearly a third of Americans are considering moving to less densely populated areas in the wake of concerns about coronavirus, according to new data from a Harris Poll. That may foreshadow a shift that would have a major impact on residential real estate sales and home prices. Urbanites (43%) were twice as likely than suburban (26%) and rural (21%) dwellers to have recently browsed a real estate website for homes and apartments to rent or buy, The survey was conducted among 2,050 U.S adults from April 25-27.
Current numbers show that sales in Billings are about four percent higher year over year, with April showing a 15 percent jump in sales over April last year. While sales are up, new listings and inventory are down. New listings in April were down about 33 percent and for the year they down by over 25 percent compared to last year.
The median price in the Billings market, according to Multiple Listing Service, for the month of April was $263,000 compared to $245,000 last year. The 12-month average is $249,000.
Nearly all of the nation’s metro areas saw price growth and had minimal inventory increases in the first quarter of 2020, according to the latest quarterly report by the National Association of Realtors.
Nationally, median single-family home prices increased year-over-year in 96% of measured markets in the first quarter, with 174 of 181 metropolitan statistical areas[i] showing sales price gains. That is an increase from the 94% share seen in the fourth quarter of 2019. The national median existing single-family home price in the first quarter of 2020 was $274,600, up 7.7% from the first quarter of 2019 ($254,900).
Forty-six metros, mostly in the West and South regions, saw prices increase by double-digits. These areas include Boise City, Idaho (18.1%), Eugene, Ore. (14.5%) and Colorado Springs, Colo. (14.4%), among others.