Cover photo ©istockphoto.com / Evgeny Zhigalov
Of all the changes brought on by the pandemic, what is here to stay?
From a drone’s eye perspective of 50 years, real estate might resemble a Mobius strip, a never-ending roller coaster of ups and downs with each boom-and-bust cycle sparking small changes and adaptations. But none have had an impact comparable to the pandemic, which ushered in an avalanche of innovation, new ways of doing business and a profound shift in consumer values. Some effects are a temporary response, while many reflect a significant transformation.
“The way that real estate as an industry operates has changed, and I believe it is a microcosm that can be applied to 90 percent of the economy out there. No one is going back, and that means the way we live, work and play changes forever,” observes Marci Rossell, former CNBC chief economist and chief economist for Leading RE. “COVID drop-kicked us into 2030.”
Ask agents if any prior cycle compares to the experience of the last year and a half, and they will tell you the pandemic boom is unparalleled. “I don’t think any Realtor in the country has had the experience we’ve had this last year! Yes, there have been good upticks in certain years in certain places, but never anything like this!” shares Trinkie Watson with Chase International in Lake Tahoe.
“We’ve certainly seen periods where you had to pivot skill sets and be really aware of the market and things that would impact clients, but we’ve never seen anything like the last year and a half, (and) that’s been compounded by a lack of availability,” shares Tami Simms, with Coastal Properties Group in St. Petersburg, Florida, who is also trainer for the Institute for Luxury Home Marketing.
“I think that last year was the most significant year of change from a tech perspective,” says David Marine, chief marketing officer at Coldwell Banker Real Estate. The pandemic market accomplished what major brands had been working on for years. “In 90 days,” he says, “every single real estate agent figured out a way to move the transition online. Now it’s commonplace. It’s no longer an issue.”
“Agents basically skyrocketed 10 years into the future, and they did it in a two-month period,” says Rossell. Rather than an abrupt switch, industry experts see real estate’s seemingly overnight embrace of new technology as acceptance of tools already available. Think of it as “escalating trends that were already underway that would have happened, but they are going to happen almost a decade faster than anyone expected,” explains Rossell.
Will it be a virtual world?
Prior to what Simms dubs “the Zoom age,” she says, there wasn’t a widespread understanding or trust or proficiency with virtual apps. “Now,” she says, “we know how to use it. We’re reasonably proficient at it, and there’s a level of trust. So, we’re able to embrace this technology. You know I don’t ever want to go back to having to communicate with out-of-state buyers purely by telephone.”
Virtual Sales are touted as the main advancement sparked by the pandemic, but an even greater benefit has been an industry-wide recognition and adaptation of virtual apps to enhance and expedite the process from initial views of a property to consumer education. “FaceTime is an effective tool, but really more to give a prospect a better idea of the home, not to induce an offer … though it could,” says Watson.
Looking ahead, agents don’t expect virtual sales to disappear, but they will continue to be a rarity. “I don’t think we’ll see many escrows where the buyer hasn’t physically seen the property. Yes, Zoom and similar will continue to be a part of our lives. Also, more defined photography for our listings … the importance of a comprehensive ‘walk through’ so prospects can get a good feeling for how the house flows,” says Watson.
Detailed virtual walk-throughs became more important than ever, with platforms such as Matterport leading the way.
©istockphoto.com / fizkes
“In-person viewings have been very limited. No one wants to go to open houses. No one is walking about a house just for fun. People are looking online. They are viewing the pictures of a listing maybe 10 times before they see a house. So, a showing is more like a fourth showing, and agents need in-depth knowledge of a property,” says Joanne Nemerovski, with Compass in Chicago.
©istockphoto.com / joakimbkk
Dreaming of Home
The ability to work remotely is often cited as the main driver for the surge in sales, but even more fundamental are new consumer values regarding home and lifestyle. Citing millennials, who now comprise a substantial portion of buyers, Nemerovski says many were starting careers and literally were never home, so home basically was a shoebox they visited. “I think that sentiment has changed. Home is where the heart is. It has become the center of people’s lives. People are also more respectful of their homes.”
Everybody wants their dream home,” says Frank Aazami with Russ Lyon Sotheby’s International Realty in Scottsdale, Arizona, “because they just cashed out of another home that maybe they inherited or maybe were there for 20, 30 or 40 years.”
Buyers’ expectations of quality are high and will continue to be so. “People understand the level of finishes better than ever before. We’ve gotten so much better with respecting architects, good architects’ work, good designers’ work,” he says.
“All of a sudden, consumers are finding that now it’s not all about a commute. It’s about ‘does the place that I live offer me the things that I want to do when I have a little extra time, both inside and outside.’ Outside spaces have always been a luxury item, but more so now than ever,” says Simms. Topping wish lists are beautiful recreational facilities, inside and out. Also becoming more desirable is access to nearby outdoor venues such as parks and trails. Before COVID-19, outdoor living was a growing trend; now a connection with nature has become almost an essential for homes, particularly new construction.
Skills Put to the Test
With properties selling days or hours after going on the market and multiple platforms broadcasting new listings, it would seem agents’ skills are not essential. However, the pandemic market has proved the opposite. “It’s been a really intense time for real estate professionals in terms of making sure that their communication skills are absolutely the most important thing that they have, setting expectations, both on the seller side and the buyer side,” says Simms.
“There’s more attention to vetting prospective buyers, making sure they are qualified to buy before showing them property,” adds Watson.
Price is only part of an offer’s appeal to sellers, and crafting a winning offer has been an important skill for agents and buyers in the current market. Even when multiple offers become less of the norm, this aspect of buying will continue to be important.
An intense market tempts buyers to forgo contingencies. “It has been definitely challenging to counsel people on strategies to be successful in acquiring properties, but also in making sure that they truly understand the ramifications of releasing contingencies and know the risks they are taking on,” shares Simms.
“A downside of the intensity has been buyer’s remorse, cancellations before closing, some attempted lawsuits … a result of no inspections, jumping too fast without thorough exploration, et cetera. This would be a small percentage of the purchasers, but certainly a reflection of ‘herd mentality’ going the wrong way!” says Watson, referring to the pressure buyers felt to make a decision.
With days on market hovering just over 14 in July, prices rising in 99 percent of all metro areas, and double-digit price increases in 94 percent of metros (according to NAR), the current pace might seem no less fevered. Still, indications of a transition are beginning to filter out from a number of locations. Days on market are increasing ever so slightly, and overblown prices are being reduced. Or, as Katie Treem at Keller Williams Realty in Portland, Maine, explains, it might be that a property receives 20 offers instead of 40. “We’re still seeing people moving from New York, Boston, Connecticut and D.C.,” she says.
Also, agents like Treem are just beginning to see a few who bought in 2020 reselling. Sometimes they improved the property, but in others, decided the lifestyle was not what they desire or the commute, even for occasional days in the office, was too difficult.
In Tahoe, Watson says, “I believe the intensity has certainly calmed down, and I suspect very few listing agents will accept an offer from a buyer who hasn’t physically viewed the property. That goes for waived inspections … I’d be surprised if many are doing that any longer.”
No Bubbles Here
Bubble talk has become almost a perennial for real estate, but experts such as Rossell do not subscribe to this characterization of the market. Rossell says, “It’s not a bubble. It’s simply real demand bumping up against severe supply constraints. But this doesn’t mean house prices continue to go up. But what it does mean is you’re very unlikely to see the bottom fall out of the market, the way that you did in 2007, 2008.
“September 11 forever changed the way that we thought about terrorism. And I think in the same way, the first round of COVID in March of 2020 forever changed the way that we thought about public health, and pandemics. I think we’re all going to be living with the reality that at any given time something like this could happen, just like terrorism.”
Days on market are increasing, and overblown prices are being reduced. It might be a property receives 20 offers instead of 40, says Katie Treem at Keller Williams Realty in Portland, Maine.
©istockphoto.com / sara_winter
The following is a
Unique Homes Online Exclusive
During the mid-year height of the Covid-19 pandemic, real estate agents comment on how the market stood, and in some cases prevailed, under enormous pressure.
This past Fall, luxury real estate agents from across the country spoke on Unique Homes’ first Zoom panel to discuss topics from the recent article “Space: The New Currency,” from Unique Homes Magazine’s recent Fall issue, written by Camilla McLaughlin. On this exclusive virtual panel, agents were able to discuss how the real estate markets of America endured (and continue to endure) through the turbulence that the Covid-19 pandemic has caused. Throughout the discussion, these experienced panelists spoke on the changes their area(s) have undergone and the how the pandemic has affected the homebuying process. We’ve highlighted some of our distinguished panelists and their unique experiences below.
Mauricio Umansky, Founder/CEO of The Agency
Los Angeles, CA
In the beginning of “Space: The New Currency,” Mauricio Umansky, Founder and CEO of The Agency, notes that in the midst of the pandemic, consumers who were staying at home also found themselves asking impactful questions regarding their homes and their futures: where am I sequestering versus where am I at home? What do I want my home to look like? What do I want my second home to look like?
As one of the opening speakers, Umansky adds that though many of these questions may not be answered right away, the pandemic proved to be a catalyst for many potential home buyers to start a dialogue with their local real estate agents. “Sequestering at home, stay in, shelter in place, whatever it is we want to call it, has caused a conversation that is equal amongst everybody, whether it’s politically driven, whether it’s answering ‘what do I want to do with my life?’ and understanding that we can now work and operate from anywhere.”
Courtney Hampson, Vice President of Marketing
Palmetto Bluff, SC
Palmetto Bluff is a community in coastal South Carolina that caters to a mix of primary and vacation homeowners. Courtney Hampson, Vice President of Marketing for Palmetto Bluff, says on the panel that at the beginning of the pandemic many residents were already staying in Palmetto Bluff due to Spring Break, and were mandated to stay due to the shutdown. Many stayed until May when the state began opening up again, and there were several instances where those who extended their stay ended up moving to Palmetto Bluff full time. About a particular couple from New York with young children, Hampson says “They literally walked down the street into our real estate office, went on our tour, looked at available homes, closed two days later, our fastest closing ever, and that was it. ‘This is where we are,’ they said, ‘This is the plan now.'”
During the panel Hampson also stated that the utilization of virual tours and showings became more widely utilized, so much that they had to include the option on their website right away on their website.” She also noted that in the midst of everything, they found that buyers were buying almost like they were suffering from FOMO, or a Fear of Missing Out. “[Clients] are booking their stay at the hotel first, and … they have almost a fear of missing out. They’re not waiting to get here to look at real estate — they’re doing that virtually, going under contract and seeing their property the first time they come to visit.”
Carrie Wells, Coldwell Banker Mason Morse Real Estate
Though located on the opposite side of the United States, Carrie Wells of Coldwell Banker Mason Morse Real Estate in Aspen, Colorado experienced similar situations as Hampson had in South Carolina. March is typically the latter part of the state’s skiing season, but due to the pandemic the season was cut short, and those visiting found themselves sequestering in Aspen — and staying. She remarked that you can see this reflected in the school district alone, where 175 new students were admitted and a weight list was created for the Aspen Country Day School, Aspen’s main private school. She also noted that with the help of Matterport virtual tour technology many sales were able to happen, as clients wanted to be able to visit openings safely.
Wells remarked about her own experience with a New York family who stayed in Aspen until the summer. “He said, ‘I never realized that Aspen is so enjoyable in April and May,’ which are normally our off-season months. … People have experienced being here year-round, when they normally would not be here, and there’s so much to do other than downhill skiing that I think regardless of what happens with our winter, we’re still going to see our market continue to be strong.”
Russ Lyon Sotheby’s International Realty
The title of the article “Space: The New Currency,” as well as the main point of discussion for the panel, was inspired by profound statement by Frank Aazami of Russ Lyon Sothebby’s International Realty. During the panel Aazami notes that when the pandemic began and people were sequestering, he noticed that areas that were previously difficult to sell beforehand, regions outside of Phoenix and Scottsdale such as Fountains Hills, Cave Creek, etc, were now like beacons that buyers were gravitating towards. Before there were no sales north of $3 million, but eventually there were closings reaching upwards of $4 and $6 million. The reasoning for this market change? Space!
In the article Aazami notes that from his region of Scottsdale, Arizona, his experience during the pandemic that no matter what buyers were generally looking for, a vacation home, relocation refuge, etc., the key point he saw was that consumers were looking for a safe haven, with plenty of space. Not only that, but consumers are also requesting specifics when it comes to this space in order to make their purchases personal and customized to their lifestyles, from multiple offices and indoor gyms to view decks and larger patios.
Chris Bernier, Churchill Properties
Boston’s North Shore, MA
Located just 30 minutes outside of Boston, Chris Bernier of Churchill Properties notes during the Zoom panel that despite the usual trends of buyers looking for smaller, more minimalistic style homes, space really is the new currency. He affirms that many buyers in his market are flocking toward the larger homes. These market shifts are no doubt due to the pandemic shifting priorities, and continues to show
James Torrance, Keller Williams Luxury International
Palm Beach, FL
James Torrance from Palm Beach, Florida has much to say about the pandemic has shifted Florida into more than just a retirement or snowbird refuge, seen in these clips from the Zoom discussion. He notes further that in fact a large wave of buyers from California and more specifically Chicago brought interest to the area and helped close several sales, a rarity in his area. What was also interesting that he notices are the importance of the private schools and districts in South Florida, as he mentions that many buyers were shopping around different homes once they had found a school system they liked, then picking from available homes nearby.
This, alongside his points about the importance of homes with multi-functional spaces such as guesthouses and just the overall outlook on how the market has shifted, highlight just how much action Florida has seen in the past several months due to Covid-19’s effect on real estate.
Roxann Taylor, Engel & Völkers Dallas Forth Worth
As an real estate agent with 40-plus years of selling experience, Roxann Taylor of Engel & Völkers Dallas Forth Worth was a fountain of wisdom toward the end of the virtual panel. She highlighted much of which was similar to what the other panelists had noted, including buyers prioritizing homes with large space as opposed to downsizing, putting houses on the market through a near fully-virtual process, and much more.