Face masks and travel-sized bottles of hand sanitizer are becoming common sights in Los Angeles, where county officials declared a public health emergency Wednesday in response to the presence of six new cases of novel coronavirus.
Since then, four more new cases have been confirmed, and grocery stores are struggling to stock provisions like water and disinfecting wipes.
But so far, says Compass real estate agent Sally Forster Jones, any local anxiety about a potential pandemic hasn’t kept home shoppers away from open houses.
“I don’t know what’s going to happen next week,” she says. “But so far we’ve been extremely busy. We’ve had a number of offers—18 offers—on one property.”
In Seattle, where more than 50 cases of the virus have been confirmed and schools have closed, both buyers and sellers may be getting more wary. Redfin CEO Glenn Kelman wrote Wednesday that at least three homeowners there took their houses off the market this week—possibly because of concerns “about strangers entering their homes.”
Leslie Appleton-Young, chief economist for the California Association of Realtors, says it’s “too soon to tell” whether the virus will have a similar impact in Los Angeles, where open houses in popular areas can draw hundreds of home shoppers.
Now, she suggests, would be a good time for agents to invest in “virtual tours” and other ways to show properties to buyers from afar.
What may be encouraging buyers to keep searching, even as they stock up on beans and oat milk in the event of a quarantine situation, is a rare opportunity to borrow at interest rates that are literally unprecedented.
Average 30-year mortgage interest rates dropped to an all-time low mark of 3.29 percent Thursday, according to the Federal Home Loan Mortgage Corporation (Freddie Mac). These rates play a major role in determining the size of a buyer’s monthly payment, and the lower they get, the higher prospective buyers are able to bid.
“The fact that interest rates have gone down, that really makes a big difference,” says Jones. “It makes the difference between being able to buy and not being able to buy.”
It’s been a tight market for buyers lately, says Jones. Local real estate prices began to plateau around this time last year, but that trend quickly reversed itself. Now, precious few homes are available for sale and prices are climbing quickly. In January of this year, the median home prices in LA County was up 8.5 percent year-over-year.
The chance to lock in a home mortgage at an all-time low rate, particularly when home prices are so steep, could be a hard incentive for buyers to ignore.
On the flip side, says Appleton-Young, the virus is precisely what’s driving down those rates. Wall Street concerns over the spread of coronavirus caused stocks to plummet in the last two weeks, meaning some buyers may be “looking at their portfolios and not feeling as wealthy as they were [last week].”
A recent report from real estate advisor RCLCO notes that the virus could eventually scare off some buyers.
“Many consumers postpone making big decisions in uncertain times, and coronavirus fears could negatively affect consumer confidence,” write RCLCO directors Gregg Logan and Taylor Mammen.
Appleton-Young agrees that a major surge in the number of local cases could derail what’s shaping up to be a busy spring for local realtors. But she doesn’t expect everyone to flee the market.
“Some people always find an opportunity in times of crisis,” she says.