Frosty April: Home Selling Is Slowed, But Not Stopped By The Response To COVID-19
Six weeks after the first death in the country attributed to COVID-19, ordinary activity in western Washington State as in much of the nation has ground to a halt. This has been due partly to the virus itself, but in greater proportion to the varied assortment of state and local policy responses to the threat the virus presented. In the Central Puget Sound region inclusive of King, Snohomish, and Pierce Counties, the result has been an unprecedented drop in new listings, while selling prices and the numbers of selling transactions appeared stubbornly resilient. In the more rural corners of the state, the effects are likely to be deeper, and could last for a generation. RSIR looks at how market participants are hedging against uncertainty as they face these never-before-seen events.
The Governor’s Office Responds
Behind the scenes, with senior federal government advisors warning that COVID-19 deaths could mount into the hundreds of thousands, state and local officials in Washington acted quickly. A measured response was the first resort, and Governor Jay Inslee closed schools and banned large public gatherings in King, Pierce, and Snohomish Counties in mid-March. Yet within a week, those orders were escalated into a statewide stay-at-home decree for all non-essential workers. Definitions of “essential work” were improvised from a list published by the Federal Emergency Management Agency. In the ensuing weeks, the real estate industry (among other business interests) prevailed upon the Governor to allow standard real estate marketing activities such as buyer viewings, home staging, and photography to proceed; yet residential construction remained prohibited as of 9 April.
Industry Observers React
The year had begun strongly, continuing the recovery in Seattle’s residential price growth reported by the CoreLogic Case Shiller Home Price Index since prices bottomed during the preceding summer. Yet fear set in with the virus’s outbreak in Seattle and two consecutive stock market crashes early in March. The Northwest Multiple Listings Service (NWMLS) described that month’s real estate activity as “mixed” due to “disruption and uncertainty” regarding interpretation and enforcement of the Governor’s order.[1] Mike Grady, president and COO at Coldwell Banker Bain, predicted that “all numbers [would] decline in April and May.” Windermere Chief Economist Matthew Gardner dismissed the March NWMLS numbers as “essentially irrelevant,” and advised that April’s numbers as well would “not be an accurate representation of the market.”[2]
What The Data Currently Shows
Rather than wait for the NWMLS’s April press release, we at RSIR immediately began tracking the real estate market impacts of the Governor’s “Stay Home, Stay Healthy” order. We sought to look beyond the monthly data, and so delved into the daily posted listings and sales. We had questions regarding the extent to which sales were or were not tracking with new listings; and whether at different levels, the prices of the homes sold were higher than, lower than, or comparatively equal to the prices at which new listings were offered.
In King, Pierce, and Snohomish Counties, the answers to those questions appear to be that sales kept up with the new listings through the first week of April, although most of these were contracted from late February through mid-March. In the twenty days after the stay-at-home order was announced, new listings were substantially reduced from the averages for those weekdays during the previous three years (2017-19). While hundreds of new sales continued to be contracted, most of those sales remain pending.