By Jeff Falk
We continue to learn new things about the Coronavirus, nearly every day.
Here’s what we have come to know about COVID-19’s effect on the local economy: Activity is essential to businesses’ well-being, and one of the ways to slow the spread of the virus is inactivity and mitigation.
The same is true of the local housing market, to a degree. The Coronavirus has slowed – but not crippled – the central Pennsylvania and Harrisburg real estate markets, creating a need for homes, lowering interest rates and dashing consumer confidence. In effect, it has created a cautious, or wait-and-see approach.
Pete Weigher, owner and president of TeamPete Realty Services, and Joy Daniels, owner of Joy Daniels Real Estate Group, are two of Harrisburg’s top real estate agents and experts on the local housing market in central Pennsylvania.
“The COVID crisis created an environment that no one had ever encountered before,” says Daniels. “We had tremendous restrictions placed on our industry that prevented in-person activity, but buyers and sellers still had a need to move. This required great adaptation by brokers and clients, as to how we were going to reach their goals. The underlying reasons for sellers needing to sell and buyers needing to buy were not changed by the pandemic. Although the uncertainty created by the pandemic did cause people to delay their plans.
“Once the restrictions on real estate activities and the public were lessened, our industry was able to resume many activities,” adds Daniels. “In essence, the normal spring market was delayed by several weeks and now all that activity has shifted to the summer and fall. We encountered a great jump in activity once the agents were able to resume in-person activities and the consumer confidence in safety measures increased. Buyers who had been stymied are now ready to buy, but many sellers are still afraid and not ready to put their homes on the market.”
“There are great opportunities out there,” says Weigher. “It’s a matter of understanding your expectations and the forces of supply and demand. The supply is lower in some price ranges. It’s a matter of taking a look at it. Right now, interest rates are less than three percent. In many cases, it can be the perfect storm.”
From Jan. 1 of this year to Aug. 1, 2020, in Dauphin and Cumberland counties, there were 576 fewer real-estate closings compared to the same period last year. In 2019, the number of closings in the two counties, between January and August, stood at 4,174, and in 2018, they were numbered at 4,133.
This year, there have been 3,598 real-estate closings in Dauphin and Cumberland counties.
“What COVID-19 has done to the market is lower the inventory and made the demand higher,” says Weigher. “You’re seeing more competing offers. There has been a rebound over the last three months, and the market has been very active. I think there was some pent-up demand. That, along with the interest rates, makes it a great time to explore real-estate options.”
“I would characterize the market as a very strong sellers’ market at this time,” says Daniels. “We’re seeing large volumes of homes being sold. The demand is high because the supply is low, limiting the number of homes on the market, which has created a very competitive market for buyers.”
We are now seven months into this Coronavirus crisis, and it seems that the local housing market is beginning to loosen, in conjuction with many of the societal restrictions. In the first two months of 2020, before the full impact of COVID-19 was understood, it was shaping up to be a fairly typical real estate year.
“In the first two months of the year, the market was very active,” says Weigher. “There was a shortage of inventory. But again, it’s specific to price range, location and product. Therefore, it could be the perfect storm. It depends on your circumstances.”
“Our markets prior to March were very similar to their current state,” says Daniels. “We were going into the spring of 2020 with good economic markers, and our market was set up to be strong. The inventory was low and demand was high going into spring, but we had the belief, based on previous spring seasons, that many sellers would be putting their homes on the market to meet the demand. Everybody always says that spring is the best time to buy or sell a home.”
While the combination of all those economic factors have – and will continue to – affect the central Pennsylvania housing market, not one of them is stronger than the element of ife circumstances. Despite the Coronavirus pandemic, life happens, and it goes on.
“Finding out ‘the why’ for a client is always a top priority for any real estate agent,” says Daniels. “The motivation for buying or selling can involve any major, or even minor, life change in a person’s life. The common reasons for moving include job status, marriage or divorce, birth or death, downsizing or upsizing. When we as real estate agents weren’t deemed ‘essential’, that was surprising to me. Those things are big changes in people’s lives.”
“It’s not always about the market place,” says Weigher. “It can be a life situation like retirement. Selling because the demand is low can get a great return on your investment. Buying people are trying to take advantage of low interest rates.”
Despite the presence of past indicators, the future is always difficult to predict. But there are signs of a bright future, and a return to some sort of normalcy in the local real estate market.
Consumer confidence may very well be the key.
“Honestly, things are better now than they were a month ago, whether you’re a buyer or a seller,” says Daniels. “But our climate could change rapidly, with a sudden increase in interest rates or a return to lockdown measures, if the pandemic were to flare up in our state. This would not suppress the demand, but could limit the supply of homes even further and put the brakes on our market. Also, we are moving into the fourth quarter and a November in an election year, and the result could affect the economy.”
“Time will tell,” says Weigher. “At this point, things are very active. We’re seeing many, multiple products. Will we continue at this pace? It depends. Maybe or maybe not. If you’re a buyer, you may be competing against other buyers. Right now, you can get a little more money for your home. But the rebound has been very, very strong.”
Not unlike their clients, local real estate agents like Weigher and Daniels are very much at the mercy of the current market. By employing a proactive approach, they seek to embrace the things they can’t control, to identify the things they can control, all the while serving with a personal, people-first touch.
“The market changes all the time,” says Daniels. “We as realtors have always been responding to the data, and our job is to share that with our clients. Our job is to keep them informed of the current market. That’s what the real-estate profession is all about. We can’t change the market. We can only listen and respond. Realtors live to be adaptable. But COVID-19 has challenged us with things we’ve never experienced before. I’m really proud of what our profession has accomplished, really fast.”
“It’s a great time to explore your options,” says Weigher. “You need to ask yourself what’s your current place in today’s market. It’s a very unique time. It’s a matter of being patient and setting proper real-estate expectations. If you have the slightest interest in selling, it’s really essential to explore the marketplace. If you’re a buyer, the key is to hang in there.”