Amid the fourth week of novel coronavirus-related disruptions in Georgia, fears that a global pandemic would crater metro Atlanta’s housing market—or even cause it to momentarily pause—have not come to fruition.
While it’s too early to know the full scope of the pandemic’s economic impact, those who closely observe Atlanta’s market say signs point to more of a temporary slowdown than a Great Recession-like slump.
“Our market isn’t frozen,” says Jennifer Pino, president of Atlanta Realtors Association. “A lot of work has been happening behind the scenes to ensure that everyone has clear directives as to how you can do something safely,” Pino goes on. “I haven’t left my house, and we’ve been able to keep business going.”
Innovative processes for showing homes, making offers, and completing sales have emerged—aiding in more than 9,000 closings across the metro in recent weeks, according to data from First Multiple Listing Service.
Still, when it comes to buying an Atlanta home, Ray Hill, a senior finance lecturer at Emory University’s Goizueta Business School, says if you can reconsider buying right now, do so. “I would probably wait,” says Hill. “One, I’d want to see what my financial situation was going to be, because there’s some uncertainty about that. And I expect there will be weakness for a couple of months here [in the economy], at least temporarily.”
Have prices come down? Can you get a loan? What do closings look like? We turned to real estate pros to answer these questions and much more, below.
Are sellers reconsidering listing their homes?
Yes and no. In the City of Atlanta, anecdotally speaking, dozens of new properties from studio condos to sprawling estates have continued to list each week—and in some cases, land contracts within hours—despite COVID-19 restrictions.
In an interview with the Atlanta Realtors Association this week, Jeremy Crawford, CEO of First Multiple Listing Service, relays that the 13,000 new listings counted across the region last month were down only about 6 percent over last year, representing “a healthy bit of inventory.”
Last week, however, saw 3,100 new listings, representing a 20 percent dip year-over-year, Crawford notes.
Are we tipping towards a buyer’s market?
The consensus among experts interviewed: It’s still early, but that’s not likely.
“The Atlanta real estate and labor market was extremely strong going into this,” says Emory’s Hill. “New York had problems in the real estate market before the virus even hit. You saw a discounting of prices and things that were on the market for longer than they should have been—that had been ongoing for a number of months. Atlanta is nothing like that.”
Kelly Stephens, managing broker of Engel & Volkers Buckhead Atlanta and Atlanta North Fulton, points to two facets working in buyers’ favor: metro Atlanta’s traditionally lower home prices (average: roughly $300,000) and interest rates for conventional mortgages that remain near historic lows (3.25 percent for a 30-year note, as of Monday). The million-dollar market has slowed considerably, Stephens says, but lower price-points are resulting in favorable deals for buyers, especially as iBuyer companies have backed off locally. One homebuilder that Stephens’s team works with, Rock Haven Homes, reported a record month in March, with 40 closings across the metro.
“The fact that we’re still targeting to close 7,000 home sales in the metro for March is staggering, considering what’s going on,” says Stephens.
How are people touring potential homes right now?
In-person viewings around Atlanta have slowed dramatically in recent weeks. Crawford, the FMLS CEO, reports that showings have slipped more than 50 percent over this year’s peak, but continue to be higher than the national average.
Still, the pandemic has coincided with the beginning of Atlanta’s hottest selling season, and agents continue to show properties in person every day. Clients might be required to carry letters proving they are pre-approved to buy immediately, brokerage leaders say, and virtual home tours—and, soon, virtual agent caravans—have become the norm.
Proprietary tools for virtual home visits abound. Sherry Bailey, a Realtor with Keller Williams Atlanta Intown, includes a Matterport 3D virtual tour with all of her listings. It uses a laptop or VR headset and is marketed as the next best thing to actually seeing a home in person.
Online homebuying platform Bungalo has also launched virtual, app-based 3D tours of Atlanta homes, as well as a digital offer submission process. It’s basically the new open house, says Bungalo president Deborah Bradley.
Todd Emerson, Harry Norman Realtor’s general manager, says a large client base of buyers relocating to Atlanta and time-poor executives meant that existing virtual tools (platforms like Moxi Impress, a marketing automation tool) were already a must, “but the frequency of use has certainly increased in the last month.”
This strong infrastructure of virtual selling tools in Atlanta has helped the market pivot online quickly, says Emerson.
Are homes receiving fewer offers overall? Has competition plummeted?
Homebuyers have adopted the mindset that competition is less during the pandemic, which is true. But Stephens stresses that buyers who remain in the market are largely there out of necessity. “They’re prequalified, willing, and able,” she says. “[Regulators] don’t want us helping buyers that are looking [to buy] six months or a year down the road, just trying to get an idea of what’s out there.”
One indicator of a seller’s market—bidding wars—has lessened in recent weeks, per Stephens’s observations. She notes, however, that the cooling off of a hot market—through February, homes priced under $500,000 were trading in fewer than 60 days, at almost 99 percent of list price—isn’t indicative of a standstill.
Emerson adds that metro Atlanta’s six core counties had a 2.8-month supply of inventory in February, when between five and six months is typical. “While it’s not the spring market we’re used to seeing, people are buying and selling,” says Emerson, noting that FMLS data show about 1,200 homes have gone under contract in the past two weeks.
Are there deals to be had right now? Should buyers make aggressive offers?
Not so fast, say industry observers.
Bailey, who has expertise on Atlanta’s up-and-coming Westside and Southwest Atlanta, says the buyer pool might have shrunk, but all her listings continue to be shown. Pino says Atlanta’s longstanding inventory shortage, a healthy buyer pool, and low rates mean that anyone holding out hope for fire sales could have unrealistic expectations, though only time will tell.
“Maybe buyers have ticked down a little bit, but I still don’t think that means sellers are necessarily desperate,” she says. “I’m not seeing a huge difference in price. The market’s not ticking down in value. I think it’s a very short-term type of viewpoint if someone thinks, because we’re doing through this very short-term type of situation with COVID-19, that prices are going to plummet.”
With Bungalo, Bradley says home tours have nosedived by 53 percent compared to a rolling four-week average in light of stay-at-home restrictions, but that offer submissions recovered by 45 percent as social distancing measures ended their third week.
Overall, March ended as the company’s best month on record, with a 150 percent increase over February, a sign of the seasonal surge. Buyers seem to be “more acclimated to transact under ‘new norms’ during COVID-19,” Bradley notes.
What protections should you put in your contract? Is there a COVID-19 clause?
Industry experts spoke of an uptick in formerly eager homebuyers who are now on the fence, concerned about the country’s economic future or that their jobs may be jeopardized.
To help assuage fears, the Georgia Association of Realtors has worked with attorneys to include a new COVID-19 stipulation in contracts that states, basically, that buyers and sellers can extend deadlines (although not indefinitely) should a coronavirus-related event interfere. It provides an out, for both sides, that didn’t exist before.
“Our contract did not have an act-of-God-type clause in it,” notes Pino. “This helps us to bridge the gap so that—we don’t think this is going to happen—but if, God forbid, the bank closes, or something happens and the closing can’t proceed, it puts framework in place with which to work through those problems.”
Are more offers falling through than before?
Crawford reports that metro-wide listing cancellations and contract withdrawals have not increased over 2019. But nearly 1,000 properties have been moved to “hold” status, he notes, in lieu of being pulled from the market, as sellers take additional precautions or arrange for virtual showings.
Pino says she’s seen both cancellations and the opposite—closings being hastened to accommodate schedules or new societal restrictions.
“It all depends on the individuals’ comfort level with risk,” she says. “I’ve seen many contracts continue, we’re still seeing closings every day, but I have talked to agents who have clients that are well beyond contingencies in contracts and deciding to terminate, even losing their earnest money. Unfortunately, they’re making decisions out of fear, really.”
The metro’s year-over-year sales volume, Crawford says, is still up 7 percent over 2019.
Has the appraisal and inspection process changed?
In a word, yes. The days of warmly greeting appraisers or inspectors for walk-throughs may be over for now, but Atlanta has seen what Pino calls “great developments” on both fronts.
With most home loans that aren’t considered “jumbo”—that is, $510,400 or less right now—lenders are allowing drive-by appraisals that don’t require anyone to leave their vehicles, Pino says.
Paris Pressley, a veteran Georgia Master Home Inspector who covers metro Atlanta, says his inspection firm is abiding by strict new guidelines, including a pre-inspection questionnaire regarding clients’ health and recent travel.
Pressley requires that, in addition to social distancing precautions, all doors and at least some windows be open, light switches flipped on, and HVAC and furnaces turned off during inspections. Inspectors are advised to wear masks, gloves, and shoe-coverings. He requires that inspectors are the only people inside homes during inspections—and all bets are off if inspectors notice signs of sickness. “If there’s cause for health and safety concerns,” says Pressley, “we may use the option to cancel the appointment.”
Are closings being delayed or put on hold due to stay-at-home orders? Are you able to close remotely?
The Atlanta Journal-Constitution reports that some loan programs have been suspended, dashing buyers’ hopes. Still, thousands of closings have been recorded across metro Atlanta in recent weeks, so it’s clear that deals are still getting done. Some have reportedly happened in parking lots.
As of March 31, the Georgia Supreme Court and Governor’s Office have agreed to allow video closings to be temporarily permissible across the state, eliminating the need for closing attorneys to be physically present and documents to be notarized in person.
Because of all the financial uncertainty, are banks tightening up even more?
Hill notes the Fed is currently flooding the banking system with liquidity, as a means of rescuing small businesses. This is also helping smaller brokerages, agents report.
But some banks in metro Atlanta have tightened guidelines in recent weeks, meaning that potential buyers with low credit scores, for example, could be denied.
“A lot of mortgage lenders sell loans once they’ve closed, and the market to buy those loans is not as robust as it has been, so they’re doing what they can to try to make those loans more attractive,” says Stephens. “Lenders don’t have the same appetite for lower credit score loans as they have in the recent past.”
Larger banks, however, have the ability to portfolio home loans and not sell them.
“Their guidelines have not changed,” says Stephens. “The ones that are larger banks, in addition to being mortgage companies, have more bandwidth to be able to hold on to these loans and sell them later.”
Will the closing process take a lot longer?
For the most part, no. However, Stephens says a few days of delay beyond expected closing dates is becoming the new norm.
“Everyone’s working remote, so the people that are pulling the title, doing the inspection, the underwriters—everybody’s really trying to stay on schedule,” says Stephens. “But if there is a delay, it’s very minimal.”
Emerson concurs. “The real estate market has not stopped by any means,” he says. “It’s just requiring an increased amount of patience and understanding on everyone’s part.