Pandemic not slowing residential real estate market

Listen to this article

Question: How, exactly, do you show a house for sale during a pandemic?

Answer: Carefully, but often.

The COVID-19 outbreak that has decimated hotel, restaurant and retail businesses has not slowed residential real estate sales, according to local agents.

“Business has been surprisingly good this year, in spite of the pandemic,” said Graeme Moore, owner of Columbia-based The Moore Co. “When this thing really started back in March, we were afraid that it would have a real chilling effect on the housing market, as one might expect if we’re talking about big layoffs and a recession and a depression and everything else. We were fearful that things would really slow down, and while they did very briefly in the beginning … the market has come roaring back.”

A combination of bottoming interest rates and declining inventory — perhaps attributable in part to a reluctance to list homes at the beginning of the pandemic, Moore said — has contributed to an unslaked home-buying appetite.

“We haven’t seen any decline in buyer activity,” said Dustin Johns, founder of Resource Realty Group in Lexington. “Houses are selling for full price, day one. You get a lot of multiple-offer situations. People aren’t hesitating to make an offer. They know to make an offer very fast because the property’s selling so fast.”

According to bankrate.com, the average interest rate for a 30-year fixed mortgage was 3.24% as of July 8. For a 15-year fixed mortgage, the average interest rate was 2.75%. In March, those numbers stood at 4.05% and 3.39%, respectively.

“It’s a good time to be a buyer in that interest rates are low. They’ve never been this low, at least in modern history,” Moore said. “But who’s winning out in the buyer/seller market right now? It’s the seller. Sellers have a lot of control.”

At Johns’ company, established in 2008, buyers have a bit more power than they might elsewhere. Eschewing the typical business model of agent commissions of 5% to 6%, Resource Realty Group affixes a flat $2,800 commission on home sales, regardless of price.

Johns made that switch in 2017 based on what he saw as a “tragic” lack of inventory.

“Since we started doing that in ‘17, our business has almost tripled every year,” he said. “It’s full-service. There’s nothing different about it in what we provide. … As you’ve got people losing jobs or (with) declining income, those are the people that it really, really helps.

“People really start looking at every dollar when you’re moving or when you’re adjusting to a new budget. You look at, ‘If we sell our house, how much money are we going to make?’ A big line item is commission.”

While his company’s commission model may save clients money at closing, it can’t give them more options. Houses are scare in premier locations such as Lake Murray, he said, with buyers looking for more backyard recreation options as COVID-19-related restrictions have curtailed travel.

“Our listing volume has pretty much stayed the same,” Johns said. “Our buyer volume went up, but there’s nothing to sell them. A lot of that is market-specific, too. Lexington would be probably one of the hotter markets, Chapin right behind it. Anything downtown that’s got any kind of value moves pretty quickly, too.”

Buyers who have spent more time at home in the past four months are looking for more space, Johns said, and “the home office has become very, very popular.”

Moore said demand has increased “across the board,” with traditional hot spots such as Shandon, Lake Katherine and Forest Acres remaining sought-after.

“Every price point, from $150,000 houses to $1.5 million houses, are all experiencing an increase in demand,”  he said. “We’ve never seen as many bidding wars as we have over the last three months.

“It’s crazy. I would say every other listing or every other buyer that I’m helping goes into a bidding war, meaning there are multiple people bidding on the same property  — during a pandemic, which just blows your mind.

“You’ve got to read the nuances of every house, but we’re being very honest with people. If the house is in a really good, sought-after area and it’s priced well and it’s ready to go, we’re advising people, ‘Look, you’re going to have to be ready to jump.’ ”

The pandemic has altered how would-be buyers view properties. Video tours, already offered by many companies, have surged in popularity, though in-home visits still occur — with added precautions.

“Buyers have still pretty much been OK with going through houses, because at the end of the day, it’s like buying ­— it’s not really like buying a pair of jeans but it sort of is,” Moore said. “You want to feel them, you want to put them on, you want to see how it works for you. It’s much the same with the housing market. People want to walk in, feel it, see it, and that hasn’t changed a ton.

“(Showing houses) looks a little different these days. You’re obviously wearing masks, trying not to touch surfaces. A lot of sellers are providing hand sanitizer at the front door. They’re maybe leaving lights on for you, closets open, so that you don’t have to touch as many surfaces while you’re there, and we’re limiting the number of people who go in and out of the house during a showing.”

Johns said procedural aspects of purchasing a home have also changed.

“Most agents don’t attend closings anymore,” he said. “In a lot of cases, you don’t even get out of your car. You park in the attorney’s office and the paralegals come out and hand you documents and pass them from one car to the next. The attorney notarizes it, and off you go.”

Moore said the rental side of The Moore Co.’s business did stall at the beginning of the pandemic, “especially the student rental housing market, with the uncertainty of campus schedules and were people coming back in the fall. That really took a while to come back around, and just in the last few weeks have people started signing leases again. … We’ve rented all of the properties we have under management now.”

While Johns said he saw some agents react to the pandemic by scaling back their activity, “we made a decision to really press forward,” increasing marketing and advertising activity. “I would say we were going 60 mph,” he said. “Now we’re going 100 mph.”