thewashingtonpost.
saturday,april4,2020eZ12
cavorting as usual.
If the government sends out
billions of dollars to all U.S.
citizens, we hope everyone
would use the cash to pay their
most basic living expenses. As
for the real estate market, that
money may not do much to help
potential buyers if they can’t
qualify for mortgages because of
job losses. And, it won’t help
homeowners who decide they
don’t want strangers coming to
their homes and so take their
homes off the market.
Unless the coronavirus is
controlled, the problems with
the global economy will directly
affect even the most local of real
estate markets. And if the worst
comes to pass, you might well
see your local real estate market
freeze up along with the rest of
the economy.
We wait to see what our
elected officials in Washington
decide to do, and whom they will
help.Ilyce Glink is the author of “100
Questions every First-time home
Buyer should Ask” (4th edition). she
is also the ceo of Best Money Moves,
an app that employers provide to
employees to measure and dial down
financial stress. samuel J. tamkin is
a chicago-based real estate attorney.
contact Ilyce and sam through her
website, ThinkGlink.com.backed securities. Demand for
bonds won’t help mortgage
interest rates or housing
affordability.
But, this could flip again.
During the Great Recession 10
years ago, the housing market
took huge blows and market
values plummeted. Over the past
decade, real estate values in
many markets recovered and
then soared. But not everywhere.
And that was in a good economy
(at least over the past few years).
Unfortunately, there are dark
clouds on the horizon. With
businesses closed, employees
will be laid off, those
unemployed will have bills to pay
and no income to pay those bills.
The government payouts won’t
be enough to cover everything.
In this downturn, which you
should expect to be severe,
everyone is getting hurt: big
business, small business,
families and individuals. We’re in
uncharted territory, with some
billionaires calling for a
complete halt to the global
economy for 30 days to reduce
the spread of the coronavirus.
No one even knows whether
something so drastic would
work. Can we force everyone to
stop and stay at home? Indeed,
until Miami closed its beaches,
college students were enjoying
an extended spring break,advance, electronically in some
cases.
For now, it appears that
closings and settlements will be
bare-bones, so don’t expect too
many happy faces but, instead,
hard-working real estate
professionals doing the best they
can to get closings completed
quickly with as little personalinteraction as possible. For now,
closings can proceed, but we’ll
have to see for how much longer.
If the banking system shuts
down, closings are likely to be
suspended.
As interest rates fall, the
demand for refinancing seems to
be shooting up. But this is a
volatile market. Last month, 30 -
year fixed-rate mortgages were
hovering around 3.25 percent to
3.5 percent. Then, they were at
4 percent, as investors flocked to
10-year Treasurys, and the
Federal Reserve announced it
would be buying mortgage-through only qualified buyers,
instructing them not to touch
anything, and escorting them the
entire time they are in the home.
Buyers are plenty nervous,
too. Those that left assets in
what was, until a few short
weeks ago, a highflying stock
market, may wind up with a lot
less cash to use to buy homes.
While interest rates are now at
rock-bottom lows, that may not
make up the difference. Sales
will slow. Prices will come down,
as the economy quickly flips
from a strong seller’s market to a
buyer’s market.
How much will the market
slow? The National Association
of Realtors estimated a
10 percent reduction in sales for- We think the true number
could be a lot higher, depending
on how fast unemployment rises
and how quickly people find new
jobs (if they do).
We also see technology taking
an even bigger role. We expect
that electronic signing of
documents will become more
widespread. Paper copies may
become a thing of the past, as
copies of loan documents are
now legally required to be sent to
the buyer by electronic means in
advance of the closing. We
expect more closings will be
done remotely, especially where
documents are signed in
We’ve been
getting only one
question recently,
although it comes
in many forms:
How will the
novel coronavirus
affect the real
estate market?
As of this writing, buyers are
still buying homes and sellers
are still selling. Sam has received
several contracts recently,
although his office phone isn’t
ringing as much as normal. Ilyce
has been talking to would-be
sellers and buyers (and getting
plenty of email), suggesting that
people want to buy or sell, but
they’re nervous. So are brokers,
title companies and everyone
else involved in real estate
transactions.
And when the real estate
market gets nervous, everything
slows down. A lot.
What’s happening now? The
Department of Housing and
Urban Development announced
last month that the Federal
Housing Administration has
been authorized to implement
an immediate foreclosure and
eviction moratorium for single-
family homeowners with FHA-
insured mortgages for the next
60 days. The hope is that the
world will be a little less chaotic,
and if not, HUD will have had 60
days to make some new rules.
Settlement agents, closing
agents and title companies are
all working hard to complete the
closings/settlements that were
already underway. They are
limiting the number of people
who are at closing to comply
with new guidelines from the
federal government and the
World Health Organization.
Normally, buyers, sellers, their
real estate agents and, in states
where attorneys are used in
residential or commercial real
estate closings, real estate
attorneys meet at closing; so, the
closing table can get crowded.
New guidelines indicate that
sellers and their agents and
attorneys should take a pass and
sign closing documents by
electronic signature. The
settlement agent and other
parties will probably (hopefully!)
wipe down surfaces, limit all
contact between people, use
disposable pens and even limit
the paperwork exchange.
What about would-be sellers?
Agents are, for now, taking
listings, but open houses should
be off the table. Sellers don’t
want strangers trekking through
their homes, touching surfaces
and possibly spreading germs.
Agents are trying to reassure
sellers that they will bringHow the coronavirus will change closings, prices and what’s listed
Market Insight
Real
Estate
Mattersilyce Glink
and Samuel
J. Tamkin2007 Photo BY JustIN LANe/ePA-eFe/shutterstock
For now, it appears that closings and settlements will be bare-bones, so don’t expect too many happy faces but, instead, hard-working real
estate professionals doing the best they can to get closings completed quickly with as little personal interaction as possible.We expect that
electronic signing of
documents will become
more widespread.