This is the first solid look we’ve had at the post-lockdown real estate market in Charlottesville. We’re not going to truly know COVID-19’s market effect is until we have the benefit of hindsight.
Short takeaways, that have remained true since I started practicing real estate years ago
- If you’re a buyer or seller, ask questions. Challenge the data. The information provided here is a guide to asking better questions that are relevant to you.
- Contract data is somewhat of a better indication than closed data, as the April closings reflect contracts written 30-60 days prior.
- As noted below, contract data reflects a contract written, but not closed. There is no good way in our MLS to accurately track terminated contracts, other than my looking at the data almost all day manually.
- We need hindsight. I think predictions made today about what the real estate market, whether local, state, national, is going to do in X months are made without sufficient insight into tomorrow’s market.
- If a house is priced well, prepared well, and there is buyer demand for that product, it’s very likely to go under contract.
- Ask questions. About everything, and everyone.
Make time to click through and read the whole thing.
While we know that closing dates lag the “meeting of the minds,” we also need to understand that signed contract dates are lagging indicators, often by 2-4 weeks. During this crisis, I’m speculating the failure rate will be high initially, and the time lag will be on the longer end rather than, the shorter end of this 2-4 week range.
Here’s why contract dates are a lagging indicator and not necessarily more insightful than closing data:
1) The “meeting of the minds” occurs when buyers and sellers negotiate price and terms, usually facilitated by a real estate agent or broker.
2) The price and terms are handed off to transaction attorneys who work together to craft language agreeable to both parties.
3) The contract is signed by both parties and often indicated as such in an MLS-type system.
4) In some markets or marketing periods, especially when a market is cooling, many contracts never close, so their initial inclusion makes pending trends reports suspect.
From Mike DelPrete
So is the housing market really already recovering? Where do things really stand? There’s no clear answer for a number of reasons, starting with the data itself. But the big picture suggests that we haven’t started climbing out of the hole just yet.
If you wanted to take a snapshot of the housing market from six months ago, you could string together different data to capture each stage of the homebuying process, from how many people are searching for houses on Zillow to new home sales. Together, the data would provide a complete picture of where things stood in the housing market, and where things were headed in the near-term.
But taking a similar snapshot of the current housing market is practically impossible. First of all, the most recent data on the various stages of homebuying are taken from different time periods, so the data required to string together a complete picture of the housing market simply isn’t available.