While Americans overwhelmingly support the idea of social distancing to slow the spread of COVID-19, the economic impacts of the pandemic and measures to decelerate it have been widespread and immediate. Americans are already feeling the financial burden, and the housing market is far from immune.
The first state-mandated limits on social gatherings went into effect in mid-March, and many states have enacted various forms of stay-at-home and shelter-in-place mandates since.
Unemployment skyrocketed to 4.4% over the month of March, and 45% of Americans who were employed prior to the pandemic are now either unemployed or are working fewer hours, according to a survey conducted by Clever Real Estate, a free online service connecting consumers with real estate agents.
Half of Americans say any savings they had will be depleted by the end of this month, according to Clever Real Estate. The survey was conducted March 31, meaning just two weeks after the very first state mandates went into place, Americans were already seeing their savings depleted.
About 30% of homeowners reported having less than $1,000 in emergency savings before the pandemic, and 22% say they don’t have enough in savings to cover even one month of their mortgage payment. As a result, 27% say they are concerned about defaulting on their mortgage loan.
However, things are even grimmer among renters. Half of renters said they have already run out of savings or they never had any to begin with, and 25% lost their income due to COVID-19.
About 46% of renters said they had less than $500 in emergency savings prior to the pandemic, and 45% say they don’t have enough savings to cover just one month of rent.
The federal stimulus plan, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, will help hold over some struggling Americans. Many will receive stimulus funds, and people with mortgages backed by the federal government are eligible for forbearance on their monthly payments. Of course, people with mortgages that are not backed by the government are not covered by the act, but some lenders may offer their own forbearance plans.
So far, 16% of homeowners have worked out forbearance or lower monthly payments with their lenders. However, another 12% are behind on payments but without any approved forbearance from their lender.
The CARES Act also protects renters from evictions and payment penalties for 60 days, but this only applies to properties that are federally financed. Some local governments may have their own mandates that apply to all renters, not just those living in federally-financed properties.
With immediate financial implications for many Americans and an uncertain road ahead for the overall economy, the housing market too is already feeling the impacts of the COVID-19 pandemic.
The pandemic has impacted 85% of homeowners who had previous plans to sell their homes. Close to one-fourth have taken their homes off the market, and slightly more than one-fourth are dropping their listing price. Another 31% of homeowners who had plans to sell but had not yet listed their homes say they are holding off on listing their home for now.
Homebuyers are also changing plans amid the current conditions. Close to half of prospective buyers say they are delaying their home search, while 7% say they have stopped shopping altogether.
However, 28% say they are continuing their home search but will look for a lower price than originally planned.
“Considering 27% of sellers said they’ve already dropped the listing price of their home, buyers willing to continue searching for homes might be able to get more for their money,” said Francesca Ortegren, data scientist for Clever Real Estate.
While not all Americans support widespread stay-at-home orders, 96% support social distancing, and 73% say slowing the spread of the coronavirus should be a higher priority than the economy right now.
Three-quarters of Americans believe the full effects of the pandemic will be worse than the Great Recession of 2008.