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‘Be prepared for the Wild West’: As real estate’s busy season winds up, here’s how to buy or sell a home during the coronavirus pandemic

Real estate agent Nykea Pippion McGriff wears a face mask to mitigate the spread of COVID-19 and talks with a colleague while showing a home in the Avondale neighborhood May 2, 2020, in Chicago.
Real estate agent Nykea Pippion McGriff wears a face mask to mitigate the spread of COVID-19 and talks with a colleague while showing a home in the Avondale neighborhood May 2, 2020, in Chicago. (John J. Kim / Chicago Tribune)

Christine Park and her fiancé were thrilled to see his Lakeview condo get a couple of offers within a month of their listing it. They took the best one, signed the contract and sent it to the buyers with a deadline: 5 p.m. Friday, March 20.

As fate would have it, Gov. J.B. Pritzker issued a statewide stay-at-home order that afternoon to fight the rising spread of COVID-19. The buyers, panicking over the financial uncertainty ahead, backed out.

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“Three more hours, and we would have closed it,” Park said Monday.

In the weeks since, real estate agents and experts have cautiously eyed the state of the market as the world economy flew into turmoil. The Illinois Realtors association issued a cautiously optimistic report in late April, highlighting a 4.7% increase in the number of statewide home sales in March, compared with March 2019. The Chicago area saw a similar spike, although home sales within city limits were mostly flat.

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“There’s been some concern about whether prices are going to tank,” said Nykea Pippion McGriff, president-elect of the Chicago Association of Realtors. “But when you have less inventory and a pretty robust group of buyers, that holds the prices steady.”

Available inventory has been on the decline for years — both nationally and in Illinois — and continued to drop 10.6% statewide since March 2019. In the Chicago region, it dipped 12.7%. And prices keep rising: The statewide median price increased 8.5% to $217,000; in Chicago, it grew 10.1% to $320,000.

Still, the March data is “probably the last to reflect the pre-pandemic impact of the economy,” noted Geoffrey Hewings, director of the University of Illinois Regional Economics Applications Laboratory.

And the forecast for May and the months beyond remains fuzzy.

Research from listing site Zillow, which draws from its database of 110 million U.S. homes, suggests a sharp market downturn in early April might already be rebounding. In the Chicago area, the amount of new listings began to plummet March 20, compared with each day the year prior. By the end of March, there were 30% fewer new listings. By April 12, there were 50% fewer.

The drop bottomed out soon after, and by April 19, the most recent Zillow data available, it had rebounded to a 40% drop compared with 2019. That puts the city seventh in the nation for declines in new listings, falling behind Rust Belt metros like Pittsburgh, and those hit hardest by coronavirus, like New York City and Detroit.

“You could infer that sellers are maybe holding off on selling a property right now, until we figure things out a little bit,” said Nykea Pippion McGriff, who noted that CAR data through April 11 also reflected a drop in new listings and homes going under contract.

Real estate agent Nykea Pippion McGriff wears a face mask to mitigate the spread of COVID-19 and puts on shoe covers while showing a home in the Avondale neighborhood May 2, 2020, in Chicago.
Real estate agent Nykea Pippion McGriff wears a face mask to mitigate the spread of COVID-19 and puts on shoe covers while showing a home in the Avondale neighborhood May 2, 2020, in Chicago. (John J. Kim / Chicago Tribune)

Park and her fiancé, for example, took the condo off the market when their deal fell through and leased it to a renter instead.

The shrinking inventory, though, suggests homes aren’t sitting on the market for longer than before the virus, which would indicate a drop in buyer interest. In Illinois, the time it took to sell a home remained stable from last year, at 63 days, according to Illinois Realtors.

But Zillow Research forecasts a roller coaster ahead as the pandemic’s effect on the national economy ripples into 2021. Its team of economists and data scientists predicts national home sales will drop 2% to 3% over the next year, rebounding in spring 2021 to pre-coronavirus levels. The number of home sales could drop by half, and then recover almost completely by the end of 2021.

The research does suggest, however, that a less severe impact hinges on the success of social distancing and containment of the coronavirus, which would prevent a slower economic recovery and potential second wave of infection.

How to prepare for spring homebuying season

Real estate agent Nykea Pippion McGriff wears a face mask to mitigate the spread of COVID-19 as she walks through a hallway while showing a home in the Avondale neighborhood May 2, 2020, in Chicago.
Real estate agent Nykea Pippion McGriff wears a face mask to mitigate the spread of COVID-19 as she walks through a hallway while showing a home in the Avondale neighborhood May 2, 2020, in Chicago. (John J. Kim / Chicago Tribune)

While experts say it’s hard to know just how the market will respond to the pandemic in the months to come, there are steps buyers and sellers can take now to ease the heightened stressors of the peak spring season during the pandemic.

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“We don’t have a crystal ball, but what I do know is that people still have to buy and sell and rent,” Pippion McGriff said. “I think we’re going to see a pent-up demand of buyers who were ready to (start searching) in March and decided to hold off. I think we’re going to see those buyers emerge.”

But social distancing measures, like the state’s ban on open houses and limits of four-person showings, as well as municipalities restricting activity like inspections, prolong the process. And the plunge in inventory means that homes in the Chicago area are getting snapped up even faster than before, leading to lengthy hunts for buyers.

“Any property that does come on the market and is priced well is gone in a matter of hours,” said Sara Acevedo-Schwocher, an agent with Century 21 Affiliated. “There are multiple offers, so you don’t have a shot if you come in on day two or three. It’s an emotional process.”

One of her clients, on active duty in the military, was left in limbo when trying to house hunt, unable to visit Chicago due to the military’s no-fly order, she said. They got permission to fly three weeks before they were to report for duty, but now delayed inspections are holding up a deal on a home.

To ease the process, Acevedo-Schwocher recommends getting financing in order at the start of your search. Getting preapproved for a loan, versus pre-qualifying, also puts buyers in “a much stronger bargaining position,” she said. Most pre-approvals are good for three or four months, meaning buyers can start the process now, so they’re ready to pounce when they find the right home.

Lending guidelines have changed, so it’s important for prospective buyers to follow up on pre-approvals from February or March, said Pippion McGriff, who is also a broker with Dream Town Realty. Some lenders are requiring higher credit scores and bigger down payments, or denying applicants they consider too risky.

Clients of Joe Carcerano, a broker with @properties, experienced this firsthand, he said.

“I had a client who could purchase a home 10 times over in cash, but they were getting a mortgage because it’s easier than paying it all down at once,” he said. “They own multiple restaurants, and they were not able to get preapproved right away, because they were in the hospitality industry.”

As Illinois relaxes its stay-at-home guidelines, sellers who held off in March and April could feel encouraged to get their homes listed in coming months, Carcerano said.

“We’re trying to have people be prepared for the Wild West when this stay-at-home order is lifted,” he said. “We’re going to see a huge uptick in new inventory.”

To get a jump-start, he recommends clients ask real estate agents about homes on the private listing network, which previews homes that will be “coming soon” to the market.

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Agents are also doing what they can while the stay-at-home order is in effect. Curbside closings are more readily available, and notaries are slowly getting approved for electronic services.

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For those readying their homes for sale, tracking down information on past renovations, home services and other features can put them at an advantage. Preparing video tours and offering virtual walk-throughs can also lessen the number of prospective buyers who will want to see the home in person. And once a home is listed, you could find yourself packing up sooner than expected.

“If you price it right, be prepared to move,” Acevedo-Schwocher said. “It’s going to sell fast.”

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