Where the Market Has Stalled: 10 Cities With the Steepest Drops in New Listings
Today, the inventory of homes for sale is down across the U.S. We ranked the metros with the greatest drops in new listings in April 2020 versus April 2019. The post Where the Market Has Stalled: 10 Cities With the Steepest Drops in New Listings appeared first on Real Estate News & Insights | realtor.com®.
Springtime in the United States looks a whole lot different this year. No kids playing on playgrounds or filing into classrooms. No groups of friends sitting at sidewalk cafes to enjoy the warmer weather. Beaches and public parks? Roped off.
But few areas are more altered than the process of home buying and selling. In some places, real estate agents can’t even visit a client’s house until stay-at-home orders are lifted.
Since it became apparent that COVID-19 was spreading across the United States, many of the usual spring sellers have opted to hold off listing their properties—whether real estate has been deemed an essential business in their state or not.
“There’s a noticeable change in inventory and market behavior in general,” says Jonathan Miller, president of Miller Samuel Real Estate Appraisers & Consulting.
Although news of the deadly pandemic spreading across Asia had been coming in for weeks, for many Americans the threat didn’t become real until many states closed schools and businesses and instituted stay-at-home rules in early to mid-March. Today, the inventory of homes for sale is down all across the United States, from Portland, ME, to Portland, OR.
But some places have been more deeply affected than others. The metros with the highest COVID-19 infection rates per capita, pervasive fears from a health perspective, and the most stringent shelter-in-place mandates have seen greater numbers of sellers pulling their homes from the market. Considering that the U.S. housing market already had a shortage of homes for sale, this means buyers—many of whom are still motivated to get a new home even amid the pandemic—will have even fewer choices.
In the short to medium term, real estate professionals expect to see more listings enter the market as the spread of the novel coronavirus slows and restrictions on public life are lifted. But the economic and housing recovery will continue to vary from place to place.
“I see a tale of two markets,” says Javier Vivas, director of economic research for realtor.com®. “Those that will have a healthy economic recovery, and markets that will struggle to see buyers come back fast enough because they’ve been impacted by job losses.”
To figure out which parts of the country are currently seeing the sharpest declines, the realtor.com data team pulled listing stats from the 100 largest metros in the United States for the month of April to see where new listings are down the most compared with the year before. To get a better sense of the regions affected, we limited the rankings to just two per state (otherwise, five of the top 10 metros would have been in Pennsylvania). The remaining metros were clustered in the mid-Atlantic area, the Midwest, and the San Francisco Bay Area.
Ready to take a look? Let’s look at some of the trends across the U.S.
Pennsylvania: Challenges in the Rust Belt
On March 18, Pennsylvania Gov. Tom Wolf issued a stay-at-home order commanding all businesses that were not “life-sustaining” to close—including real estate.
“It’s very restrictive,” says Joe Golant, a real estate agent with Weichert Realtors. He says he can no longer meet clients in person, visit homes, or even send a photographer out to market a new listing.
“Some homeowners have made their own arrangements for video and photography,” he adds. “We can’t facilitate that right now.”
Things had been really looking up for Allentown and the greater Lehigh Valley before it became one of the state’s biggest hot spots for COVID-19. Now it’s No. 1 on our list of areas in the U.S. with the steepest year-over-year declines in listings.
Set at the juncture of interstate highways that lead straight to New York City and Philadelphia, the region has been transformed into a logistical transport hub, which has led to a booming economy and a slew of new jobs at companies like Amazon and ADP financial services.
Allentown’s affordable real estate has been booming, a solid seller’s market for the past three years. In March, the median sale price of $235,000 was $66,000 above the median asking price.
But when the state shut down, real estate activity ground to a screeching halt. The metro saw the biggest year-over-year decrease in new listings in the nation, down a whopping 80.5%.
But the few homes that are on the market are going quickly—days on market decreased 20% in March—and the median sales price increased 10.6% for the homes that did sell.
“Things are still happening,” Galant says. “Someone in our office had a listing under contract in two days.”
Nearby Scranton (No. 3) is in a similar position, with easy interstate access as well as a growing population, job market, and real estate market. It has also been deeply affected by the coronavirus lockdown. New listings have dropped 78%, the third-steepest hit in the nation.
The other Pennsylvania metros that would have made it into the ranking if it weren’t capped at two per state were Pittsburgh (minus 74.8%), Harrisburg (minus 74.2%), and Philadelphia (minus 68.8%).
With similar amenities to nearby Chicago and housing that is just a fraction of the price, Milwaukee has been a millennial magnet in recent years. While the city’s economy hasn’t been its strong suit since the Great Recession, it has been growing nicely over the past two years. And it had recently been experiencing a strong seller’s market with a shortage of inventory. But with a COVID-19-related decline in economic activity, recent job losses, and stay-at-home order, few homeowners are putting their places on the market—even though real estate has been deemed an essential business in Wisconsin. Brew City has seen the second-steepest drop in new listings in the pandemic, down 80% year over year.
“We’re still working, and things are selling fast,” says Colleen Prostek, a real estate agent with Homestead Realty. “But we’re in a conservative area where many are, like, ‘let’s wait and see what happens.’”
The state of Michigan, like Pennsylvania, is still on total lockdown, with real estate deemed nonessential. Gov. Gretchen Whitmer signed the Stay Home, Stay Safe executive order on March 23 in response to the dramatic coronavirus spread in Detroit, one of the hardest-hit cities in the nation.
The strict orders and understandable fears of locals—who have already been experiencing long-standing economic difficulties—have led to a decrease in new listings by 75.3% from last year, the fourth-biggest decline in the U.S.
The binding statewide order has also affected metros that haven’t been as affected by the virus. That includes Grand Rapids (No. 6), which has seen a 69.4% drop in new homes on the market.
Agents are not allowed to take photos, hang “For Sale” signs in yards, or place lockboxes on doors. So they have had to use technology, virtual tours, and open houses to bridge the gap on the few listings that have been going live.
And there are still people out there who want to buy a home.
“Three months ago, home values were increasing and there was nothing to buy,” says Steve Volker, a broker with Berkshire Hathaway HomeServices Michigan Real Estate. “So some buyers who couldn’t buy before feel like they might as well get out there before the big buyer pool comes back.”
The tri-state area: Pandemic central
New York City has become the tragic epicenter of America’s COVID-19 pandemic—but the former industrial hub update, Buffalo, has also been deeply affected by the virus. On Wednesday, the home of New York state’s second-largest population is “heading in the wrong direction” in terms of managing the pandemic, Erie County Executive Mark Poloncarz said.
The revitalizing border town already had low inventory—and lots of bidding wars—before the coronavirus spread across the globe. But since New York’s stay-at-home order went into effect on March 22, Buffalo has dropped to fifth place for the largest decline in new listings in the United States, down 69.5% from 2019.
While Buffalo has seen the highest drop in the tri-state area, New York City (No. 7), which has suffered nearly 20,000 deaths from the virus, has experienced a 67.9% drop in new listings. However, given how long and hard the city has already been attacked by the novel coronavirus, experts hope the city and its housing market will begin its recovery shortly.
“We’re at the apex,” says Miller Samuel’s Miller. “There’s some sense we’re moving to the other side. There’s an expectation that as markets wake up from their slumber, you will see inventory ramp up significantly.”
Right behind the Big Apple with the eighth- and ninth-highest drops in new listings are nearby Conecticut metros Bridgeport (minus 67.1%) and, a bit farther out, New Haven (minus 56.3%), both of which are economically aligned with New York City. Between the high infection rates for the region and shelter-in-place mandates, many people do not want potential buyers going in and out of houses in their neighborhoods.
“An agent put up open house signs in mid-March, and someone posted on Nextdoor, ‘How dare these realtors show open houses in this period?” says Matt Murray, real estate salesperson with the Higgins Group.
Given the antipathy toward foot traffic, listings are down and sales have slowed substantially. However, there has been a surge in interest for furnished short-term rentals throughout the more affluent Bridgeport metro burgs. Because of the rush of new people, one community had to strongly suggest that anyone coming in from New York City quarantine for 14 days. The trend has led agents to expect a potential inundation of New Yorkers seeking more room to spread out.
“I’m anticipating that we get an influx of people wanting to buy here,” says Murray. “If we get a second [COVID-19] wave, people will think, ‘Get me out of New York City. I want a house now.’”
Northern California: An early epicenter
San Francisco Mayor London Breed declared a local emergency due to the coronavirus on Feb. 23, following a similar declaration in Santa Clara County, about 40 miles to the south. Although there were no cases in San Francisco at the time and only a handful in Santa Clara County, the greater Bay Area is a major gateway for travel between the United States and China, so the area started to see an uptick in cases weeks before most of the rest of the country.
San Francisco and five other Bay Area counties were the first in the nation to establish a shelter-in-place order, on March 16. This decisive action is credited with flattening the region’s curve—the graph of new cases. On March 19, Gov. Gavin Newsom locked down the rest of California.
Those orders were taken seriously by residents of San Francisco, the second-most densely populated city in the nation. Along with everything else, property showings and contracts came to a dead stop. Many listings were pulled off the market. San Francisco, once one of the hottest housing markets in the country, took the 10th spot on the list of metros where new listings have dropped the most, down 56.1% over last year.
As agents, sellers, and buyers have been getting accustomed to this new normal—with orders slightly relaxed this weekend and extended until the end of May—folks have been starting to pop their heads out of their hiding holes.
“Activity has been ticking up in recent weeks as agents, buyers, and sellers have been slowly figuring out how and how much business can continue in a safe manner,” says Patrick Carlisle, Compass chief market analyst for the Bay Area. “But it is still far below what it would usually be during what is typically the biggest selling season of the year.”
Metros that have seen the biggest drop in new listings
- Allentown, PA, minus 80.5%
- Milwaukee, WI, minus 80%
- Scranton, PA, minus 78%
- Detroit, MI, minus 75.3%
- Buffalo, NY, minus 69.5%
- Grand Rapids, MI, minus 69.4%
- New York City, NY, minus 67.9%
- Bridgeport, CT, minus 67.1%
- New Haven, CT, minus 56.3%
- San Francisco, CA, minus 56.1%
The post Where the Market Has Stalled: 10 Cities With the Steepest Drops in New Listings appeared first on Real Estate News & Insights | realtor.com®.