The real estate industry is bracing for a rough second quarter, but top South Florida brokerage executives are optimistic, and said that residential sales are still closing.
Jay Parker, CEO of Douglas Elliman in Florida, Beth Butler, director of new development for Compass’ Southeast region, and Mike Pappas, CEO of The Keyes Company, said during a webinar hosted by The Real Deal on Wednesday that amid the doom and gloom the residential market has not cratered, and it will bounce back stronger than before.
“There are deals being done,” Pappas said.
In fact, Butler said pending residential sales in Miami-Dade County were down 23 percent in March compared to February, and down 27 percent from March 2019. She pointed to that as a good sign.
“It’s not a huge drop from this time last year,” Butler said. “It’s actually a positive that the decrease has only been relatively small.”
Parker said that in the last two weeks at Douglas Elliman the company generated over $105 million in sales volume, even with many of those sales closing virtually.
Yet, it’s hard to deny the stark reality the novel coronavirus presents to the broader economy and to the world. The White House’s coronavirus task force estimates that the virus could kill 100,000 to 200,000 Americans. Unemployment filings have reached record highs across the U.S. and in South Florida, as businesses have shuttered.
On Wednesday, Florida Gov. Ron DeSantis issued a statewide stay-at-home emergency order, mandating that people can only leave their homes for essential activities.
Workers in residential and commercial real estate were included in the Department of Homeland Security’s list of essential workers, which was cited in the governor’s statewide order. Construction is also allowed to continue.
Regardless, the panelists said it is important to tread carefully when showing properties.
“I am not sure… that taking away a mask from a hospital so that we can do a showing is the right thing,” Parker said.
Pappas said the question asked most by agents is how to close a deal. Buyers, sellers and agents are asking about a legal action known as “force majeure,” which allows buyers to get out of a contract or extend the timeline due to a “force of nature” such as a natural disaster.
“People are throwing out force majeure. We believe that this isn’t force majeure,” Pappas said. “We are encouraging our people to extend contracts, but not force majeure because force majeure can end the project in 30 days.”
Deals are increasingly being handled virtually now. Butler said Compass has released a new set of tools called virtual agent services, which help realtors go through the full transaction process virtually.
Pappas said that the residential market won’t fall apart at certain price points because people are pulling listings from the market. The supply of homes priced under $500,000 is at three months, meaning that inventory is low and demand is high, according to Pappas.
“It’s probably one of the tightest markets we’ve ever been in,” he said.
Meanwhile, being locked inside for at least 30 more days could give homeowners and renters a new perspective on where they want to live, according to the panelists. The warm weather and lack of a state income tax will make Florida an even more attractive destination to people from larger cities, they said.
“In Florida, we can be in our backyards and be out on our balconies or at least get some element of fresh air,” Parker said. “In other markets they are glued to their TVs or the internet or their social media pages.”