Scarcity Drives Local Real Estate Market
YOUNGSTOWN, Ohio – Despite the coronavirus pandemic that shuttered wide swaths of the economy, the residential real estate market remains active, brokers and real estate agents report.
Still, the environment is hardly business as usual.
Alicia Kosec, northeastern regional vice president of Pittsburgh-based Howard Hanna Real Estate Services, which operates offices in Canfield, Poland and Howland, likens houses that go on the market today to bleach wipes. Like the disinfecting wipes that seem to disappear the moment they go on store shelves, properties priced correctly are purchased quickly.
“I can’t tell you how many multiple offers on homes have been happening,” Kosec says. “There’s been a big increase in buyer demand,” which includes a spike in online activity, she says.
In-person showings recently were permitted again in Pennsylvania, but with restrictions, says Julie Cylenica, manager and associate broker with the Shenango Valley and Greenville offices of Howard Hanna and president of the Greater Mercer County Association of Realtors.
“In Pennsylvania, we went from a level 10 to a level 80 overnight once the doors opened up,” she says. Her office alone has seen an average of 20 to 25 showings per day since in-person showings resumed, she reports.
“I’m sure it’s like that with all the companies,” Cylenica says.
“It’s a very confusing time with what’s going on,” observes Cheryl Stevens, broker/owner with Stevens & Associates, Howland. Stevens, in the industry four decades, has “never seen anything like this,” she says. “You just have to keep adapting.”
In some cases, pending deals are on hold because buyers are furloughed because of the pandemic, and therefore can’t proceed with their loans, Stevens explains.
The onset of the pandemic prompted “a little bit of hesitation” on the part of both buyers and sellers who were “just cautious,” observes Kelly Warren, owner and broker at Kelly Warren & Associates Real Estate Solutions, Boardman. In subsequent weeks, the market has moved closer to normal.
“The buyers’ side of the market has been very busy. Buyers are out looking at houses,” Warren says.
“We’ve definitely seen an uptick recently. Consumer confidence is slowly returning,” agrees Patrick Burgan, co-owner of Burgan Real Estate, Boardman, and 2020 president of the Youngstown Columbiana Association of Realtors.
The demand is reflected by the most recent statistics that show houses are moving off the market more quickly. The average number of days on the market for a house in Mahoning County sold in April was 74 days, down from 85 days a year earlier. In Trumbull County, the average was 79 days, down from 100 days the year before. In Columbiana County, a house sold in April had been on the market for 99 days, down from 104 the previous April.
Days on the market has also changed in western Pennsylvania, according to Cylenica. “Now we’re going into overload with people showing properties – and, yes, their properties are going under contract quickly,” she says.
Some properties are sitting without receiving any offers, but if they are “even in the ballpark they’re definitely moving quickly, a lot of times with multiple offers,” Burgan says.
The real estate agents point to several factors driving demand, among them a shortage in supply. As a consequence of families being confined to their houses because of shelter-in-place orders – with parents working from home and their kids doing distance learning – homebuyers are looking at their spaces differently.
“Home offices are big right now,” Burgan says. Because families are spending more time at home, buyers want finished lower levels as well. “Even having patios and porches just to get some fresh air is very desirable,” he adds.
Buyers are planning for current conditions “being somewhat normal” for a time or planning for the coronavirus to return later this year.
“They want something they can enjoy with their family,” says Yvonne Smith, broker and partner at Real Living Brokers Realty Group, Howland.
“Our biggest problem now is not the COVID. It’s the lack of inventory. That was our biggest problem even before this hit,” Smith says. “We’re seeing pricing and accepted contracts way over list price. And we’re seeing an abundance of buyers excited about the interest rates and ready to move forward as soon as they can find something.”
Because of low interest rates, buyers are looking at properties in “a higher price range,” she adds.
Low inventory is a condition worsened by the pandemic, and has resulted in multiple offers on properties. New listings are down at least 30%, the brokers say.
Fran Cunningham, a real estate agent with William Zamarelli Realtors Inc., Howland, and president of the Warren Area Board of Realtors, describes the market as slow.
“People are afraid to go out. They’re afraid to even put their houses on the market,” she says
“There has been a shortage of listings for quite a while now. But that’s not just here. That’s everywhere,” she continues. “Maybe now that there’s starting to be some [COVID-19] testing, you’ll start to see people put houses on the market.”
Cunningham recently listed two houses that sold above the listed price, one by more than $5,500. “That’s because there’s nothing out there,” she says.
“The biggest problem we have now is getting sellers to list now,” since some sellers are understandably reluctant to let people into their houses, says Howard Hanna’s Kosec.
“We’re still struggling with inventory,” Burgan agrees. “There’s a lot of sellers that were on the market that have temporarily gone out of the market because they don’t want strangers in their home.”
Hopefully, while properties are off the market, owners are doing home-improvement projects so inventory begins to come back on the market and will be more attractive, he says.
“Things are selling well,” Stevens says. “If it gets on the market and it can be shown and is the right price, they’re moving.” On one recent listing, she had about a dozen showings.
“Inventory is very tight” Cylenica agrees. “There are a lot of new listings into the market in the last two or three days, but still a lot of sellers are not comfortable having people come into their home.”
The pandemic has spurred greater use of virtual showings. For instance, before Kelly Warren’s agency puts a house on the market, it compiles full 3D video shoots and professional photography, she says.
“Our website has been modified to allow virtual showings and open houses,” Kosec says, “and the scheduling of such by any buyers.”
“We do a lot of virtual anyway,” Smith says. “We’ve always been a little ahead of that curve. So this didn’t affect us as much as some of the agencies.”
While many tours are now conducted virtually, and real estate agencies have modified their websites to accommodate remote viewing, agents still accompany prospective buyers to houses for in-person visits.
But even these tours have changed. Sellers are asked to leave lights on and interior doors and cupboards open, so the agents and their prospects have to touch as few surfaces as possible, according to agents and brokers.
Prospects are also asked to wear masks and gloves, bring socks to change into while they tour the house and limit those visiting to the decision makers. In addition, they are asked to bring wipes and a spray bottle of alcohol.
In Pennsylvania, buyers and agents are required to fill out paperwork stating that they will adhere to the stipulated requirements, says the Mercer County association’s Cylenica. They also must fill out health assessments that require them to say whether the virus has affected them, if it’s been in their household or if someone close to them had the virus.
“The real estate community is being held to a much higher standard than many of the other businesses,” Cylenica says.
And despite efforts to inform the public, many buyers are showing up for viewings with no protective gear and accompanied by parents or children, she adds.
“We can’t let everybody into the house,” she says. “In some cases the sellers don’t care. They want their house sold. There’s also a big difference between occupied homes and vacant homes as far as how strict everybody is following the rules.”
Agents at Real Living Brokers Realty Group are handing out masks with the company’s logo to buyers who don’t have their own, Smith says.
For property visits, agents are “really trying to encourage just the purchaser and not the extended family,” Burgan says.
Because of the demand, sellers who have their properties listed with realistic expectations of what the property is worth are getting anywhere from 97% to 105% of their asking prices, according to agents and brokers.
A buyer can request an “escalation addendum,” authorizing his bid to increase in a defined increment in response to a competing offer up to a specified ceiling, Burgan says.
“We’re encouraging everyone, if they’re on the fence and they can take the proper precautions, to get your house on the market.”
Copyright 2022 The Business Journal, Youngstown, Ohio.