Even a casual glance at regional economic data following the closure of non-essential businesses is cause for alarm. With staggering numbers of unemployment insurance claims and state agencies bracing for double digit budget cuts, a slowdown in the real-estate market is not an unreasonable forecast.
Erika Lamb, 2020 president of the Reno Sparks Association of Realtors, says that despite the closure of non-essential businesses and associated economic slowdown, the real-estate market is still active, but a difficult question remains: will the robust demand for houses in northern Nevada endure the COVID-19 emergency?
“The real estate market in the Reno Sparks area has been a little bit of a hot spot due to the fact that there’s a lot of growth that’s been going on locally,” Lamb said by phone. “Unfortunately, we don’t have a lot of inventory of properties. Because there has been a high demand with low inventory, a good, nice-priced property that goes on the market can possibly have multiple offers, or it can go off the market pretty quickly.”
According to Zillow, there are roughly 500 houses on the market in the Reno Sparks area. The construction industry has been deemed an essential business and continues to build existing projects. In the time before the COVID-19 outbreak, competition for properties in northern Nevada drove agents to become virtual proxies for buyers. This type of house shopping can still occur under safe social distancing guidelines. As of now, there is a state-mandated prohibition on open houses and restrictions on the showing of occupied properties, so virtual real estate is key for the industry during the COVID-19 pandemic.
According to Lamb, in the heated real estate market before the closure of non-essential businesses, buyers who waited to actually tour a property, lost out.
“After that happens a couple of times buyers are like, okay, we’re feeling like we’re really missing out on these houses,” Lamb said. “If we have to, we’ll just put an offer on the house sight unseen, or you go and do a virtual showing of the house because I can’t get out of work fast enough.”
But no matter how a buyer is able to see a house, they need a job to borrow money. Even though March regional home sales numbers rose from February, the time it takes to actually process a house sale can be months. The effects of the COVID-19 emergency on future home sales will take time to unfold.
For Lamb, the future demand for houses is wait and see. More than 100,000 Nevadans have filed for unemployment insurance benefits. Millions across the nation have lost their jobs. How many will lose them permanently remains to be seen.
Employment is perhaps the single most important factor when a person buys a home and applies for a mortgage. No job, no mortgage. Beyond jobs, the overall health of the economy influences the demand for homes. Factors like manufacturing activity and the price of essential consumer goods broadly underlie the demand for houses, but perhaps more than anything, jobs create home buyers.
Low interest rates and government home buyer tax credits can be incentives to buy homes. Following the 2008 Great Recession, a federal tax credit for first-time home buyers spurred home purchases. Mortgage interest rates have been low for several years and are also responsible for motivating buyers. In the context of the COVID-19 pandemic, Erika Lamb would not make a prediction about future home sales in northern Nevada.
For now, Lamb and the Reno Sparks Association of Realtors, are working to provide training opportunities for their members.
“Not everybody was using it (virtual technology). So there’s a lot of training that’s going on,” Lamb said. “Because there were some realtors who really like to do things the old fashioned way. Not all of them were technically savvy, so there’s a lot of realtors who are learning these technology options that are available to them so that they can continue to serve their clients in the healthiest way possible.”
Because real estate agents are independent contractors, they are typically not eligible for unemployment benefits if a brokerage decides not to retain their services. Lamb says, many of her older and immune-compromised members are not working for safety reasons but are eligible for unemployment benefits under federal emergency relief funding.
“The fact that the stimulus bill for the CARES Act is allowing independent contractors to apply for unemployment is absolutely amazing because there are realtors who will not, cannot work at this moment.”
Brian Bahouth has been a public media journalist since 1994 and has lived in Reno since 2000. He first came to northern Nevada to be news director at KUNR, Reno Public Radio and has subsequently filed scores of reports for National Public Radio, Nevada Public Radio, Capital Public Radio and KVMR in Nevada City, California. He is co-founder of KNVC community radio in Carson City. Support his work.