Cailan and Holly Harper moved from Detroit for work last year and needed to sell their home in Corktown. In late February, the couple signed a purchase agreement. Originally, they were hoping for a mid- to late-March closing, but the buyer wanted to get a construction loan to do some extra renovations and they had to move it back a month.
Still, everything seemed to be on track. Then coronavirus hit. Then the buyer stopped returning their messages. Then they found out that the buyer’s financing fell through—the deal was off.
“It was frustrating, but we can’t really blame the buyer. It was out of their control,” Cailan Harper says. “But it leaves us in a bit of a pinch, too. We were relying on this income coming in.”
“It was a gut punch,” Holly Harper adds. “It’s stretching us to have two households like this.”
The novel coronavirus (COVID-19) pandemic has cast a shadow of uncertainty over most economic sectors across the globe, as various stay-at-home orders and business closures have ceased all nonessential work.
For the housing market, especially in Detroit, the pandemic has resulted in a virtual pause. Very few new homes have been listed. Showings are almost nonexistent. Only transactions with a purchase agreement in place prior to the outbreak have closed. Even then, in some cases like the Harpers’, it’s been called off.
The drop-off in inventory began around the middle of March. According to data obtained by the Detroit News from the Greater Metropolitan Association of Realtors for Metro Detroit...
During the week ending March 9-10 there were 367 new listings and 132 listings that went off the market for various reasons, including closings. ... Last week only 229 new listings were recorded and 210 properties went off the market, including numerous properties that were withdrawn.
According to realtor.com, active listings year-over-year in Metro Detroit for March dropped 11.3 percent, in what was expected to be a huge spring selling season.
“The end of spring, early summer was going to be pretty strong,” says Matt O’Laughin, partner at Alexander Real Estate Detroit. “January and February were the best months we’ve seen in a decade as far as sales go.”
But the market has become even less active in April and realtors are expecting a trickle of new listings for the duration of the pandemic.
“Since this started, our office has gotten only a handful of phone calls from people interested in listing something,” says Ryan Cooley, owner of O’Connor Real Estate.
From start to finish, almost every aspect of the homebuying process has been strained by COVID-19, as many facets are deemed “nonessential” by Gov. Gretchen Whitmer’s stay-at-home order.
Photographers aren’t taking attractive, staged shots of homes. Brokers have stopped open houses and even private showings. Banks are still issuing mortgages, but have stopped construction loans. Appraisals are now done remotely or from the outside only. Extra precautions have to be taken for inspections, including clearing out and sanitizing the home if it’s occupied—and that’s also the only time a buyer may get their chance to see the house in-person. Closings have been moved to remote settings, in highly sanitized offices one party at a time, or even “curbside” between cars.
For someone willing to go through all the trouble, then it’s still possible to buy. And realtors are getting creative, moving as much of the process to virtual settings to keep things moving.
“If buyers are willing to take the risk or if they feel comfortable enough with a virtual walkthrough or have an inspector do a Zoom call for two to three hours, then this is an amazing time to get a competitive price on a property from sellers that are extremely motivated,” says Nika Jusufi, realtor and founder of Nika & Co.
But all those obstacles have also made the entire process trickier and less likely of success. “We’ve gotten some inquiries, but ultimately no offers,” Jusufi says of the homes that have listed through her office in the last two weeks. “It’s not that they’re not interested—it’s just that the market is at a standstill.”
The uncertainty has also made it hard to know how it will affect housing long-term. Because the market has effectively been put on pause, there hasn’t yet been any noticeable change in property values.
“No one’s making a move yet on pricing,” O’Laughlin says.
Traditionally, the health of the housing market hasn’t been strongly correlated to the economy at large. But the economic impact of coronavirus could be significant. At minimum, sellers are losing a month or more during the prime spring season.
“Frankly, as a realtor right now, it’s extremely hard to give advice because nobody knows. If anybody says they do, they’re just guessing,” Cooley says. “That’s the tough part because people want direct answers on what a place is worth or how long it will take to find something, but everyone’s just winging it right now.”
The Harpers are considering renting or taking their Corktown home off-market and trying again when the situation calms down. But ultimately, they’re just not sure what the best option is.
“It seems like the home will have to come off the market because it’s tough to show it,” Cailan Harper says. “But we’re kind of at a standstill at the moment.”
Much like Detroit’s housing market.