Though some sectors of the economy might be in for a more prolonged recovery after the coronavirus shutdown, the housing market in the South Bend, Ind., area appears poised for a quick rebound.
That's because buyers are motivated by the record-low interest rates on mortgages and perhaps are even looking for additional space for home offices and home-schooling should there be another lockdown.
Realtors wish only there was more inventory to show prospective buyers.
A thinning supply of houses has only exacerbated a market imbalance that's been growing since around 2007, said John De Souza, president of Cressy & Everett Real Estate.
Since the country has emerged from the Great Recession, there have been fewer home builders adding inventory to the market and the homes that are now being built are typically priced well above $300,000.
That's because the cost of building materials continues to go up, and there are a lot fewer people in the home-building trades. In addition, there continues to be strong demand for high-priced new homes.
"If you're a builder with a limited number of crews, it makes sense to focus on luxury homes since they come with a higher profit margin," De Souza said. "The demand remains strong for new homes at those price points."
But that focus at the higher end of the housing spectrum has resulted in inventory shortages at more modest price points, resulting in escalating prices and bidding wars, in some cases.
"The inventory has really become tight in the past couple of months," said Tim Murray, a broker with Coldwell Banker Real Estate Group in South Bend. "There hasn't been the normal flow of new listings that usually come on the market this time of year."
That's likely the result of concerns among potential sellers — especially those who aren't highly motivated to sell — about letting strangers into their homes during the coronavirus pandemic, according to Murray.
And it's tamped down what would otherwise be a robust market.
According to the Indiana Association of Realtors, the number of new listings statewide dropped 18.5% in May compared to the same month a year ago and is now down 10.4% for the year. The end result is that the median price of homes sold in the state rose 7% to $184,000 in May, up from $172,000 last year, and is now up 6.7% for the year.
The story is similar across the state and beyond.
In St. Joseph County, listings in May dropped 23.6% to 411 from the same month a year ago while the median selling price went up 4.2% to $150,000. Because demand is exceeding supply, there is now only 1.7 months of housing inventory available compared to 2.9 months a year ago.
In Elkhart County, listings dropped by 4.5% in May while the median selling price jumped by 8%, and in Marshall County, new listings dropped by 30.2% while prices rose by 2.5%.
"Inventory has been tight for years, but we're reaching new lows," De Souza said. "It's certainly as low as I can ever remember for this time of year."
But it doesn't need to be, according to real estate experts.
Even during the coronavirus lockdown, real estate agents were able to conduct business with little to no human contact, thanks to advancements in technology over the past few years.
Buyers can get a pretty good idea about a property with a virtual 3D tour, and agents can also provide live tours via FaceTime and other apps while potential clients are asking questions.
The use of technology has resulted in a significant reduction in the number of properties that might be visited by a prospective buyer before they make an offer.
"We used to say that the average buyer wanted to look at eight to 10 properties before making an offer," said Beau Dunfee, managing broker with South Bend-based Weichert Realtors — Jim Dunfee & Associates. "Today, it's about half that amount."
Even before the pandemic, the use of live and virtual tours was employed by out-of-town buyers looking for desirable locations on one of the region's many lakes or near the University of Notre Dame.
"Those types of buyers recognized that they had to act fast to get the property that they wanted," Dunfee said. "And it's catching on locally because people realize they might have to act quickly to get the house they want in today's market."
The use of technology can cut down on the time it takes to complete a transaction while also eliminating the need for human contact.
Nearly all aspects of a real estate transaction can be conducted curbside — outside of financial institutions or title companies — or in a sanitized office where clients are walked through the process via video conference.
And experts expect that trend of being able to conduct business remotely and with a minimum amount of human contact will continue to expand as Indiana recently began allowing the use of electronic signatures for real estate transactions.
Now, it's just a matter of getting more potential sellers to enter the market, said De Souza, who explained that Cressy & Everett is among those companies targeting fliers to homeowners in the desired price points.
"We try to remind them that it's the perfect time to sell," De Souza said. "We don't know what it will be like in a few months, but right now, interest rates are at a historic low and there are buyers."
And for peace of mind, DeSouza pointed out potential sellers can set up ground rules for visitors -- for example, stipulating that gloves and masks must be worn by anyone in their home.
If they can just get more houses on the market, real estate professionals believe the industry could at least provide some propulsion as the nation tries to work out of the Covid-19 recession, which officially began in February.
"This time," Dunfee said, "we could be the bright spot in the economy."
