This story has been updated to reflect the new reality of Gov. Tom Wolf’s stay-at-home order for the Lehigh Valley, which takes effect at 8 p.m. Wednesday.
Rebecca Francis welcomed interested homebuyers to her open house Saturday in Lower Saucon Township like she would at any other: a “Thank you for joining us,” an introduction of herself as an agent with Berkshire Hathaway HomeServices Fox & Roach, an invitation to ask questions along the way.
She talked about the neighborhood, the custom window treatments, the baseboard heating in the basement, the backyard fit for a pool.
Except she was on a livestream video, feet wrapped in booties and hands covered with blue gloves, her potential buyers just a set of initials at the top of the web browser. The seller, nowhere in sight.
After Gov. Tom Wolf ordered all non-life-sustaining businesses to shut down in-person functions last Thursday, that was the new home showing, and virtual was the new home transaction.
But Wednesday, after a stay-at-home order was extended to the Lehigh Valley effective at 8 p.m., even the virtual home showing became moot.
“With Wolf’s directive tonight, everything comes to an absolute crashing halt,” said David Coleman, broker at ReMax in Allentown.
Many questions arose for an industry that relies heavily on third-party services like title companies and inspectors. Redfin and Opendoor have halted their online homebuying services entirely for the time being. Last week, the Greater Lehigh Valley Realtor’s group followed the governor’s directive by canceling all events, postponing classes and asking agents to stop offering in-person real estate services.
Real estate showings plummeted in Pennsylvania the week of March 16-23, down 52% from the same week last year, according to data from ShowingTime. The data service attributes the downturn directly to COVID-19.
Prior to the stay-at-home order, settlements had been going forward, if through circuitous means. Francis’ office had two on Friday. After her livestream, the home on Hilltop Road received multiple offers and went under agreement the next day.
To complete those settlements, they had a seller in one room, a buyer in another, a settlement officer outside the office, and an agent in their car on the phone with the seller, talking them through the transaction.
“It’s still a moving target,” Francis said. “We can do settlements today, but what about next week?”
Very unlikely, Coleman said. Even if one can electronically file deeds, there’s no one in the courthouse to receive them. A seller could sign listing contracts electronically, send pictures of their home to virtual staging company, show their own home through Facebook live, and even get a home under an agreement of sale, but it won’t get inspected or appraised.
“It’s a very tough industry to really do it correctly remotely,” Coleman said. “There’s just too much trust and risk in the process.”
For transactions that cannot be completed because of coronavirus-related roadblocks, such as third-party services becoming unavailable, the Pennsylvania Association of Realtors crafted a new form, the COVID-19 Addendum to the Agreement of Sale, to pause the deal until things settle.
“PAR cannot enforce what members will do in this period of shut-down, but your association and your leadership can certainly explain the situation and take a position in what Realtors should be doing, what is in our nation’s interest and how we can be good soldiers in what is described daily as a war,” James Goldsmith, the association’s legal counsel, wrote in a blog post Tuesday.
It was always a fast-paced industry, but in the age of coronavirus, how they can conduct business changes by the hour, GLVR President Jack Gross said. Some questions, like whether agents qualify for the government’s stimulus package, can’t be answered yet. Other questions, one wonders whether the answers are correct.
There’s one certainty, he said: The business will change.
“I think there’s going to be a new world after we’re all done,” he said.
And the market will undoubtedly see a slow down for the spring, which is usually a hotbed of activity. That hotbed may instead come during the ordinarily sleepy summer months of July and August, Francis said.
The real estate world pre-coronavirus was a busy and saturated one, with homes in a certain price range flying off the market at record pace, leaving extremely low inventory for high numbers of real estate agents.
In February, the last month of normalcy before the coronavirus started sweeping Pennsylvania, the Lehigh Valley had a record-high 2,921 agents — those are just the ones who are members of the local Greater Lehigh Valley Realtors association — working in a market with a record-low inventory of 1,138 homes. That’s more than two agents per potential home transaction.
At a meeting of ReMax agents in Allentown in January, after a presentation of the latest apps and web tools to make themselves more accessible and efficient, Coleman even stood up to warn them that times seemed too good to be true, that there were too many of them.
“It’s been good,” he explained. “A lot of people think they can do this job. Unfortunately, they flooded the marketplace.”
It’s been a trend in real estate for a century that agent numbers tend to swell when times are good and drop off when times are tougher. The pattern usually owes itself to economic circumstances. This time, it’s undoubtedly the virus.
“People are going to fall out of this business because it’s not going to be as easy as it was,” Francis said.
Mike Bernadyn’s ReMax team had done video home tours, but when the stay-at-home order lifts, that may become the norm. He’s always had a protocol of not touching too many surfaces in a home and keeping hand sanitizer in his car to wash up afterward. Everyone in his office is working remotely, but closings are still happening, so long as title companies keep finding a way to do business. Adaptation was key to his business before, as it is now.
“Now you have to adapt to this curveball,” he said. “We’re not sitting at home.”
What will happen to the economy? During a public health crisis, it’s a secondary concern, Gross said.
“We’re all trying to find our way,” Gross said. “Life and family comes first; you’ll sort the business out later.”
Homes may stay on the market longer as people inevitably lose jobs and income due to the coronavirus work stoppage. Foreclosures and house flipping, which had dried up in the last two to three years, may resurge. Deals may get delayed by business closures and thereby extend the average days-on-market figure.
Listings, as agents have already seen anecdotally, will probably drop. It’s too soon to tell what this may do to home prices.
“The market itself is going to rebound,” like it does throughout history, Bernadyn said.
But every day brings a different set of complications, and another round of conference calls to figure out what it means for agents. Gross tries to lighten morale by posting jokes or home project-related memes to his Facebook page — “trying to think of a way to give somebody a laugh, because there wasn’t much to laugh about,” he said. “And there’s not going to be for a little while.”
Morning Call reporter Kayla Dwyer can be reached at 610-820-6554 or at kdwyer@mcall.com.
