Home buying has always been driven by principles of affordability, location, and love. During this COVID-19 pandemic, property search remains consistent. That’s a digital exercise and hasn’t been affected. Home buyers continue to focus on a city or polygon region of an area where they want to live, put in their price range, then consume photos (and videos) of potential candidates to select. This fundamental behavior, the very start of the buying funnel, hasn’t changed. But so much more beyond online search…has.
Almost everything “offline” in the real estate world has been forced to adapt to strict social distancing rules that mitigate the fears of homeowners worried about strangers in their home. Home inventory has been slim for years in normal times – this worry has caused inventory to plunge even further - keeping unit transaction volumes stunningly low for Spring and creating an odd price parity for an almost equal shrinkage of consumer demand for homes as they struggle with the trifecta of job loss, stricter access to (jumbo) mortgage credit, and low consumer confidence. While stock markets are, at the moment, in a surprising rebound – it’s unclear how this might stimulate consumer demand for homes as inventory shrinks.
In many states, real estate workers were considered an essential service. The challenge to our industry was to enable home buying in the safest possible way. A process of a live digital home viewing was inspired. If you have used Apple’s FaceTime feature on your phone, Skype, WhatsApp, etc., you have become familiar with the use of mobile technology that allows a real estate agent, or sometimes a home seller, to provide a live walk through of a property.
Real estate technology companies have responded by adding new data fields that allow real estate agents to indicate if a live showing request is acceptable, and real estate websites - like Redfin and thousands of others - have added a new feature to their consumer search results that allow a consumer to request a live-stream showing. Typically, a real estate agent now makes an appointment with the seller for the live showing and walks through the home (masked & gloved) answering questions in real time for home buyers. This process is successful at allowing home buyers to gather enough information to make offers on homes they love with some new contingencies protecting the offer pending in-person sign-off.
The developments of these new showing paths were not without some confusion on terms that include differentiation between 3D tour, virtual tour, ED Virtual tour, virtual walkthrough. The industry has not agreed on what to call these various iterations and their meanings remain in flux. The coming months will help define and standardize this terminology.
Another key change is stronger adoption of the digital transaction. Transaction management solutions have been available for decades to organize all of the people (and tasks) related to a closing. COVID-19 inspired laggards to adopt these digital solutions out of necessity and there is a strong likelihood that many professionals will stay on the digital track. There remain issues with wet signatures (notary) at various stages in a handful of states. But many legislatures have drafted correcting courses which may soon find their way into law. Security, encryption, and validation has come a long way toward reducing identity fraud.
What we can conclude today is, for the first time, the real estate industry is forced to rethink the in-person showings and open houses that have been the mainstay behavior of home buying for more than 100 years. Now, agents representing home buyers do not need to drive around opening dozens of doors all day long. Home sellers have fewer casual shoppers traipsing through their home. New options are available that may disrupt historic patterns of the home buying process. Fully digital transactions are happening in America and there is a likelihood that COVID-19 may provide a lasting impact on the future of homebuying. While the pandemic has been shocking and (short-term) devastating – the long-term structural changes it forces may drive significant improvement for our industry as a whole.
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