CORONAVIRUS

Residential real estate sees pause in listings as sellers hesitate during pandemic

Low interest rates make homebuying appealing despite limited inventory

A #x201c;sale pending#x201d; sign is posted on the Murphy family's future home in Coralville on Wednesday, May 27, 2020.
A “sale pending” sign is posted on the Murphy family’s future home in Coralville on Wednesday, May 27, 2020. The Murphy family will close on the house in July, and also sold their Tiffin home this spring. (Liz Martin/The Gazette)
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While residential real estate did not see quite the same damage from coronavirus as some other industries, many residents seem to have paused their plans to sell their home until there’s more certainty around the pandemic.

The amount of new listings plummeted across the Corridor in April, monthly data from the Iowa Realtors Association shows.

New listings for single-family homes dropped by 37.8 percent in the Cedar Rapids metro area and 31.8 percent in the Iowa City area in April 2020 compared to April 2019.

Pending sales for single-family homes have fallen by 25.3 percent in the Cedar Rapids area and 15.8 percent in the Iowa City area.

“People were getting their properties ready to list come spring, and then obviously COVID hit,” said Erik Melloy, owner-broker of EXIT Realty Hawkeye in Coralville. “It made them take a pause.”

In addition, some sellers who already listed their properties took those off the market, Melloy said.

At the same time, low interest rates have made it an appealing time to buy — for those who can.

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Marian Flink, president of the Cedar Rapids Area Association of Realtors and a Realtor with Skogman Realty. has sold houses at 16 percent interest rates in her career. Now, interest rates are at 3.15 percent for a Freddie Mac 30-year fixed-rate mortgage.

Working from home likely has reminded many homeowners of what amenities their house might not offer, Flink said.

“The pandemic may have influenced people who are now all crammed in to their houses together,” Flink said. “Maybe they need a home office now. Maybe they need another space to get away from each other.”

Daniel Kuhlmann, assistant professor of community and regional planning at Iowa State University, also noted the ease of buying a home without having to physically be inside the house or within six feet of a real estate agent.

“We’ve gotten better at creating these online listings,” Kuhlmann said. “In the ’90s, you really needed to go to open houses. Now you can get a pretty good sense of a house virtually before you visit it.”

Melloy, in some cases, has seen homes bought before the buyer physically steps into the house.

The result of that combination? Historically low home inventories.

The Cedar Rapids area has 1.6 months of inventory. A balanced real estate market usually would be around six months of inventory.

Flink doesn’t recall inventory being this low in her four-plus decades working in real estate.

The Iowa City area has 4.3 months of inventory, an 8.5 percent decrease from April 2019. The average home in the Iowa City area spent nine fewer days on the market in April 2020 than in April 2019.

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“Hopefully we’ll see an increase in supply once we come out of this COVID-19,” Melloy said.

Flink, who is based in Marion, has seen some of her houses sell the same day she listed it.

Townhouses and condos, which represent a much smaller part of realt estate agents’ business, have seen similar drops in new listings and pending sales while average and median prices remain steady.

Closed sales increased in April, but the showings for those sales likely came before the pandemic hit. There’s a delay between when an offer is accepted and when the sale is closed, so May closings will more likely show the lack of April activity.

‘Tale of two worlds’

The pause in the market comes after a very active first three months of 2020, when new listings were up by 12.9 percent and pending sales up 13.5 percent in the Cedar Rapids area.

“This year has kind of been the tale of two worlds,” Flink said. “The year started very, very strong.”

Realtors are optimistic, though, as the economy reopens.

“It remains to be seen whether things carry on into the summer, but I think people are generally cautiously optimistic,” Kuhlmann said.

Melloy sees it U-shaped recovery as customers’ comfort level gradually increases.

Flink said she’s expecting the busy season from March to June to be pushed farther into the summer.

Nationwide, that rebound already is visible. New-home sales increased by 0.6 percent in April, according to a Bloomberg survey of economists.

Flink said it’s hard to predict what’s ahead, though, considering the uncertainty around the coronavirus pandemic.

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“This is a little unique for all of us,” Flink said. “We’ve never been through anything quite like this.”

Comments: (319) 398-8394; john.steppe@thegazette.com

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