The coronavirus pandemic is unlike anything experienced by anyone living today. And along with numerous other sectors of the economy, the real estate industry has been slammed by the economic downturn. Inventory is way down, consumer preferences are changing and agents have been forced to move almost everything they do online.
To get a better sense of what the crisis means to real estate agents and their business, Inman reached out to a number of chief financial officers at high-profile companies and trade groups. Their responses were all different, but the broad consensus was a generally optimistic one: None envision a repeat of the Great Recession, and many also said that they’re already seeing signs of improvement.
Here’s their takes:
John Pierpoint, CFO, National Association of Realtors
The pandemic’s impact on the industry
John Pierpoint
Pierpoint noted that the virus’ impact has varied significantly across different parts of the U.S., which could influence the nature of the recovery. Either way, though, he said it’s not yet clear what kind of economic recovery the country will experience or if it will be a much-hoped-for “V curve.”
“My opinion is that its far too soon to know that,” he said.
The pandemic’s impact on NAR
So far, NAR has not experienced a meaningful decrease in membership. That’s probably in part due to the fact that NAR dues are paid at the beginning of the year, but Pierpoint characterized his organization’s attitude regarding membership as cautious but overall optimistic.
“We’re anticipating a slight decline in membership, just being prudent, but in no way a catastrophic decline,” he explained.
During the Great Recession, NAR did see a drop in membership. But Pierpoint said that drop “wasn’t precipitous, it was gradual.” And by 2019 “we had recovered completely back to pre-recession levels.”
NAR is also unique among the organizations that spoke with Inman for this story because its primary mission is advocacy. Consequently, the pandemic and related economic trouble has spurred the organization to intensify its work in Washington, D.C. Pierpoint said that NAR has always advocated on behalf of the industry, but that the work being done at this moment is “unprecedented.” Among other things, NAR has lobbied in favor of making unemployment benefits and other aid available to Realtors.
Charlotte Simonelli, CFO, Realogy
The pandemic’s impact on the industry
Charlotte Simonelli
Like others who spoke with Inman, Simonelli said that it’s too early to say what the full impacts of the current economic crisis will be. However, she did note that the housing market had strong momentum in the months prior to the coronavirus outbreak. She also said that in discussing the situation with other financial experts, the prevailing view seems to be that the pandemic “is not the same as the housing crisis of 2008 and 2009.”
“This is something that’s more, in their minds, akin to 9/11,” she explained. “There’s an acute thing that happens.”
Simonelli did say, though, that in the “short term I think it is going to be more acute in certain geographies.”
“It’s highly likely that in some of the geographies that are more impacted by COVID you’d see more impact,” she added.
The pandemic’s impact on Realogy
Simonelli spoke to Inman before her company reported earnings this week, which limited what she could discuss, but she did point to the previously reported news that the firm has cut executive pay and furloughed some employees.
She also said that since joining Realogy just over a year ago her focus has been to increase productivity and efficiency. The pandemic may accelerate that process, helping the company be even more efficient once the crisis subsides. But either way, she said that Realogy is currently in a strong position.
“We’re coming at it from a position of strength because we did a bunch of cost-cutting actions last year,” she added.
Karri Callahan, CFO, RE/MAX
The pandemic’s impact on the industry
Karri Callahan
Callahan said that no one today has experienced anything like what is currently happening. But she also ultimately agreed that there will likely be regional differences in the way the U.S. economy recovers.
“Some parts of the country, and some parts of the world for that matter, have been more severely impacted than others and as a result some places are going to take longer to recover,” she explained. “Everybody is watching closely how quickly things fall and rebound. The trajectory is going to differ by location and geography.”
And she, too, said the current crisis doesn’t parallel the economic collapse from a decade ago.
“It looks very different from what we saw in 2007 and 2008 because of the very limited supply that exists from an overall housing perspective,” she added. “We continue to have large demographic tailwinds. There continues to be a supply and demand imbalance today that we didn’t see heading into the last recession.”
The pandemic’s impact on RE/MAX
RE/MAX is still seeing transactions take place, and as of late April its data showed that median sales prices were actually up. Callahan further said that the massive size of the firm “puts us in a position to navigate the recovery” and that RE/MAX “stands well-positioned in terms of the future.”
“We do feel like we have a proven business model that has stood the test of time,” she said, adding that the firm has already weathered seven recessions in the past.
Callahan also believes that professional real estate agents will continue to be in demand going forward.
“We believe that the expertise of skilled agents has really never been more important,” she added.
Mike Leone, CFO, Bright MLS
The pandemic’s impact on the industry
Mike Leone
Leone, too, speculated that the economic recovery from the pandemic will depend on geography. Bright — a multiple listing service — operates across a large swath of the Mid-Atlantic area, and Leone said for example that the housing market in northern Virginia has remained strong and appears “ready to come back.” On the other hand, the market in Pennsylvania is “not so rosy.”
He also said that there is some anxiety in Bright MLS’s service area at the moment.
“There’s uncertainty,” Leone said. “I think that is something that is shared throughout the footprint.”
The pandemic’s impact on Bright MLS
Bright MLS operates on a subscription model, and so far it hasn’t seen large numbers of people canceling or not renewing. In fact, Leone told Inman that Bright MLS’s users appear to be more active than ever.
“We’re getting more usage out of our system than ever before,” he explained. “Our customer counts are still high. We haven’t seen a huge drop off.”
Leone also said that when the pandemic began impacting the economy, Bright MLS braced itself and “prepared for the worst. But that didn’t happen.”
Jeremy Netzel, CFO, @properties
The pandemic’s impact on the industry
Jeremy Netzel
Netzel told Inman that while the final outcome of the pandemic remains uncertain, there are already signs of improvement. And that suggests that there will be “gradual growth throughout the remainder of 2020 and a strong market entering 2021.” Netzel additionally believes the current situation is different from what happened in 2008 and that this crisis won’t ultimately have a “detrimental effect” on home prices.
Netzel also said that buyers and sellers may be more cautious in the short-term, and that while the industry won’t go completely digital, some of the moves in that direction are here to stay.
“As in any downturn, you will see agents getting out of the business, and market share will flow towards the stronger agents and brokerages,” he added.
The pandemic’s impact on @properties
Netzel indicated @properties learned from the 2008 crisis that a key to success in these types of crisis situations is to invest and to innovate. As a result, he said that “we have continued to make investments in our agents and their business,” and that “we will grow and come out stronger in the long run.”
“When you have a crisis of this magnitude, it naturally creates opportunities for some companies,” he added. “We believe we will be one of the fortunate ones.”
