Are any buyer's still looking at homes?

The graph below shows the latest showing activity for the state of Minnesota. This compares the number of showings for the current week to the first week of January. It is a way to compare the demand side of the supply/demand ratio. Showings are when a realtor shows a MLS listed to property to a buyer. Its generally the best way to track how the market is going, at least on the demand side.

As you can see, this week showing activity was about 10% less than the first week of January. That’s not much, especially since the first week of April is historically the beginning of the peak spring season which runs from April - June.

This doesn’t mean that there are no showings. Houses sell every year in January and more than you would think. There are always buyers moving, and sellers needing to sell, so 10% less than January is still a market. And, the buyers that are out there looking for homes right now are not tire kicking. They are serious buyers who need or want a home now. In a normal market, probably 30-50% of showings are buyers that are not prepared to buy a home yet and are just getting information. So, really the market is probably a little better than the showing activity shows.

Now for the supply side. I pulled the new listings in March 2020 and compared it to the new listing data for March of 2019. Listings in March were about 5% below the listing level seen in 2019. Very surprising. After an initial pause in listing inventory, most of the sellers that were intending to sell this year have continued with their plans to list their homes. What does this mean? It means that buyers are acting like its the middle of winter and sellers are acting like its business as usual.

For the past few years we have been in a low inventory market, especially in the lower end price points. So, we will we be able to absorb some of this added inventory and it is even a good thing for a healthy market in some areas to have more supply and create a more balanced market. But, if this scenario continues for months on end, then seller supply will begin to outpace buyer demand and that will lead to a negative pressure on prices.

My guess is that it won’t continue like this. I think a lot of the sellers that are listing their homes right now were all set to go prior to the Corona outbreak. They are thinking, well we are all set to list, what’s the down side to testing the market? And they are probably right. Most of the sellers that were thinking of selling later in the year or would be beginning to think now, probably have had their plans changed. I think that after the initial surge in houses coming on the market, if we go several months of lock down, that the houses listed on the market will begin to decrease. Part of this is just the lockdown itself. While real estate is classified as a necessary business and allowed to work, which includes all the vendors needed to get a house on the market like photographers, painters, handyman, etc., many people have chosen to put a pause on all of that until a later time. The sellers who are listing now had most of this work done prior to the outbreak so it didn’t affect their timelines.

In summary, there are buyers out there but don’t let anyone tell you that its business as normal. Buyer showings are very low right now. There are buyers and they are motivated buyers, but it depends a lot on what area you live in. I looked at showings in the Stillwater School District from March 18th - April 1st, basically the time we have been locked down. There were 7 for 256 homes on the market. That’s scary quiet. Normally the numbers would be in the thousands. As long as sellers eventually get this message and begin to pause their listing activity the market should be able to absorb this shock. If they don’t and inventory grows, we will be in for a new selling market when things get going again.

Showng activity in the stillwater school district since March 18th. 7 total showings on 256 active listings.