ST. LOUIS — The coronavirus pandemic has jolted the U.S. housing market back to levels last seen during the depths of the Great Recession and is wiping billions in potential sales commissions off the table for real estate brokers.
A Business Journals analysis of pricing and supply data provided by Zillow Group Inc. makes clear the COVID-19 crisis has reversed what was shaping up to be a banner year for the residential real estate sector. As of April 5, daily new home listings had plummeted 27% nationally from where they were a year earlier, with some of the country's largest and strongest markets seeing declines ranging from 36.4% in San Francisco to 56.6% in New York City.
In St. Louis, new daily listings are down 30.4%, leaving the industry continuing to confront pesky, low housing inventory that has persisted for multiple years. However, a pair of local agents said that the slim stock is helping keep prices steady amid the coronavirus pandemic.
“We have not seen a correlated pricing decrease yet, which I think is important to note. It’s not like people are going to come in and steal homes right now. The reason is, it goes back to our inventory. There is just limited inventory," said Mark Gellman of the Gellman Team at Coldwell Banker Premier.
LISTING IN THE WRONG DIRECTION
The U.S. metros with the largest year-over-year declines in new daily listings of homes for sale as of April 5. Cities are ranked by year-over-year percentage decline in daily listings.
The fallout has immediate implications for the hundreds of thousands of real estate professionals who earn much of their annual compensation during the busy spring selling season. Nationally, the Business Journals estimated the drop in home listings could equate to as much as $81 million in lost sale commissions per day for real estate brokers, with major metros such as New York ($14 million per day), Los Angeles ($4.8 million) and Chicago ($3.8 million) topping the list with the most at stake. St. Louis brokers are facing $594,740 in lost sale commissions per day.
In most cities, the spring can account for as much as half the annual compensation doled out to brokers, listing agents and the various staff at real estate firms, according to data from Zillow and the U.S. Census Bureau. And the prognosis for a near-term recovery does not look great. Moody's Investors Service said last week it was adjusting its housing outlook due to the coronavirus and is predicting home sales will fall about 25% below targets for the year.
REAL ESTATE COMMISSION OMISSION
The U.S. metros with the largest estimated daily loss in real estate commissions as of April 5.*
The credit-ratings firm said the new forecast of 4 million unit sales would be on par with the lows registered during the 2008 recession.
"The spring home-buying season will be marked with few open houses and risks are rising that the early portion of the summer home-buying season will be uncharacteristically poor," wrote Moody's economist Brent Campbell.
CORONAVIRUS AND HOUSING: IT'S NOT ALL BLEAK
During an interview this week, Skylar Olsen, Zillow director of economic research, cautioned that all is not lost and signs point to a robust rebound when the U.S. economy regains its footing. Olsen also noted a number of significant differences between now and the housing crisis that was central to the 2008 downturn, namely that housing inventories already were tight leading up to the COVID-19 crisis versus the oversupply leading up to the last recession.
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