The State of Real Estate
Local professionals discuss the changes during COVID-19, along with what lies ahead.
COVID-19 IS CHANGING THE WAY ALL OF US live our lives, from daily routines to how we conduct business.
The effects of the virus on the real estate industry, both locally and nationally, began shortly after the stock market plunged at the end of February, worsening locally when the “stay-at-home” order was issued by Gov. John Bel Edwards on March 22.
“As soon as the stay-at-home order wasissued, impacts were visible,” said Karl Landreneau, CCIM, SIOR, director of commercial sales and leasing at NAI Latter & Blum. “Construction was halted pretty immediately, property showings had a significant drop, and even contracts were delayed for fear of contamination. It appears the entire pipeline of new business was severed and future projects are now mostly on hold.”
Realtors are experiencing a drop in showings, and a reluctance amongst some sellers, who still occupy their properties, to allow potential buyers into their homes.
“Some of our sellers are uncomfortable with individuals in their homes,” said Leslie Perrin principal partner with the Francher Perrin Group at Gardner Realtors. “I can understand this as my mother, 94 years young, lives with me and I am not letting anyone in my house other than my husband at this time.”
Social distancing is a hard concept for Louisianans to grasp, as it goes against our culture, our way of life. It’s especially hard for those in the real estate game.
“Since the pandemic, home buying has been, at times, awkward,” said Jacques Alfonso, owner and agent of St. Bernard Realty. “It’s odd for a buyer to not shake hands and keep 6 feet apart upon meeting, but we all understand the circumstances for right now. Some clients have even shown up to showings and closings with masks and gloves. I have been placing small hand sanitizer bottles at all of my listings for agents to use during their showings. I’ve also been focusing on transitioning my new construction listings to 3D layouts.
A major fear factor during COVID-19 is the unknown. Many people have lost their jobs, small businesses are losing their income, and experts do not agree on when the shutdown will come to an end.
“The fabric of our neighborhoods could change drastically after this is over,” said Perrin. “We may see an increase in vacancies across the city for our little boutiques and mom-and-pop stores. I just received an email from commercial tenants who have a boutique with men’s and women’s clothing requesting a rent reduction or elimination of rent for April and possibly May. They had stocked their stores with merchandise for French Quarter Festival and Jazz Festival. With these stores being their only source of income, I am totally sympathetic to their situation. It affects them, as well as the landlord, and the community as a whole. We are in a state of economic distress.”
What’s next? No one seems to know, but preparing for a variety of scenarios may be the smartest move for small businesses. “Right now, everything seems to be changing daily on restrictions due to the coronavirus,” said Alfonso in early April.
“Next week could be a full quarantine, and the real estate market could shut down. My advice to buyers is it’s a great time to buy with rates being so low and with less competition. Buyers are in the driver’s seat right now. As for a seller, we have to get creative to market and sell your home for the highest price in the shortest amount of time. If at this time you do not need to sell your home, then don’t. The market will likely rebound later this year and rates will continue to stay low.”
But with 50-year record low-interest rates, some buyers see an opportunity too good to pass up. That said, they should proceed cautiously.
“It is more important than ever to use a qualified, experienced and knowledgeable real estate professional in order to help guide you through the real estate process and to be their advocate,” said Jessica D. LeBlanc, owner of CPA Realty. “Also, a real estate professional can help reduce risks associated
with scammers, as well as to ensure that the appropriate paperwork and available options are discussed with [buyers and sellers].
“Whenever there is a crisis, scammers find ways to take advantage of those in times of need, which could involve the real estate industry in terms of offering places to rent or sell that are not actual listings in order to defraud the consumer for financial gain.”
During this time of social distancing and stay-at-home orders, technology is coming into play more and more. Agents have many tools available, such as 3D layouts, Facebook Live walk-throughs, and digital marketing to help buyers and sellers.
“At NAI Latter & Blum, we have and are continuing to use Matterport technology to offer our clients 360 virtual walk-throughs of property interiors,” said Landreneau. “Drone videos and 360 aerials offer other angles. Remote viewing is essential in our industry, especially now. This allows us to keep with business as usual.”
With more digital meetings via GotoMeeting, Zoom and Google Hangouts,
the real estate industry might be forging a new path.
“We’ll see a new normal for office leasing and acquisitions because people and businesses will learn that they can work remotely and be just as productive,” said Landreneau. “This could change the office footprint and the amount of office space needed to conduct business.”