Strong real estate market in South Bend area likely to slow down
Realtors are taking advantage of nearly every type of modern technology to maintain the embers of the real estate market.
Though the market in South Bend, Ind., is still moving pretty well through the first couple of weeks of March, those involved in local real estate believe we're headed for a slowdown because of the fast-moving coronavirus.
The stock market has plunged, mortgage rates have become erratic, businesses have temporarily shut down and unemployment is likely to start going up. But beyond those factors, some would-be sellers are worried about letting strangers in their homes, and some would-be buyers are worried about going into the homes of strangers.
Through the first two months of the year, home sales rose to 11,281 across the state, an increase of 11.8% compared to the same period in 2019. At the same time, the median price of those homes rose 7.7% to $165,000.
And the north-central region of the state has been no exception to that trend with homes sales up 34.4% in the first two months and median prices up 6.5% compared to the same period last year.
The market has been strong for several years, and Realtors were confident that things would remain that way until the news of the virus started getting out. An avid consumer of news, John De Souza, president of locally based Cressy & Everett Real Estate, actually made an ominous prediction at the end of January while assessing the local real estate market heading into 2020.
"Barring any major global event that's beyond our control, people are optimistic and investing in real estate," he said at the time.
Those words, of course, have proven to be true, but De Souza and others involved in local real estate remain optimistic about the future.
Through the first few weeks of March, in fact, there has been little evidence of a slowdown. In just the past seven days, for example, about 100 houses were sold in St. Joseph County and 105 houses came on the market, said Steve Bizzaro, owner of Howard Hanna/SB Real Estate.
And about half those new listings already are under contract, he added.
But Bizzaro and other Realtors also know that as the federal and state governments continue to ramp up controls to contain the spread of the virus, they're likely facing some tough times ahead.
With the shutdown of restaurants, taverns, stores and malls, unemployment will likely spike in the next few weeks and even those who are lucky enough to remain employed have seen their net value take a big hit over the past couple of weeks because of the stock market.
"I had a cancellation on a $900,000 house by a Notre Dame alum," said Bizzaro. "He lost $1.5 million in the market and thought better of making a discretionary purchase right now."
Bizzaro and others, in fact, think the higher end of the market might be most affected right now because those purchases are often more discretionary -- involving a move to a larger home or the purchase of a second home, for example.
But beyond those purchases, there are still a considerable number of people who have to make a move, Bizzaro said.
"Must buys and must sells are still happening," said Bizzaro, pointing out that there are people always moving to and from the area for jobs or whose leases might be expiring. Others might have to proceed right now because they found the perfect house to buy.
For those people who still might need to make a move, Bizzaro and others provide photos, video tours and even live Facetime tours that enable prospective buyers to ask questions while walking through a property.
About five years ago, Cressy & Everett started offering 3D tours of some of its listings, which also are highlighted in its weekly TV show, De Souza said.
"We're lucky that we can still conduct business," De Souza said. "Our Realtors are showing resourcefulness while being safe and respectful of the restrictions."
Because of those restrictions and possible delays that could ensue, the Indiana Association of Realtors recently offered a new contract addendum that would allow a transaction to be delayed for up to 30 days if one of the parties is affected in some way by the virus, said Beau Dunfee, managing broker with South Bend-based Weichert Realtors — Jim Dunfee & Associates.
Both the buyer and the seller have to agree to the addendum, Dunfee explained, adding that it provides a little extra time if, for example, an inspection or title work is delayed because of the virus.
In addition, prospective buyers can make their offer contingent on the sale of their own property, Dunfee added.
With the technology available today and the few human interactions that are actually necessary to conduct business, Dunfee and others are confident Realtors can continue to do business — albeit at a slower pace.
"Those who aren't in the must-buy, must-sell category are likely going to take a step back," Dunfee said. But even if they decide to hold off for awhile, he suggested it would still be a good time to meet with a professional to get a property ready for sale.
Though bad mortgage loans were a chief cause of the last recession, the current strength of the real estate market could be one of the bright spots that help propel the growth of the local economy.
"There's obviously going to be unemployment," Bizzaro said, referring to the business shutdowns that already have taken place. "But I feel that real estate might be the most stable aspect of the economy right now."
That's the continuing optimistic viewpoint of most Realtors.
"This is very different than the last recession," De Souza said. "We're going into this thing with a strong real estate market and when it settles, we will be back to a strong real estate market.
"We have some of the most affordable homes in the nation," he said.