What are the predictions for the Destin, Emerald Coast of Florida real estate market? How is the COVID-19 crisis going to affect home sales in the coming months? This I was asked by one of my good clients. Here is what I told him.
February and March home sales were strong, and better than a year ago. However, a major change took place in the Destin-Niceville market after April 1. That’s when the Florida stay-at-home order was implemented in response to the novel Coronavirus. All, but essential services, were allowed to stay open in Florida. Home showings decreased on many listings.
Comments from Realtors who lost sales, cited these reasons:
- Cash buyers lost money in the stock market.
- Commercial buyers were afraid to invest in a new business.
- Equity line buyers had their equity lines frozen.
- Eglin AFB and Hurlburt PCS orders were put on hold.
- Sellers withdrew listings.
Other observations that may affect the housing market are:
There will be a slowdown in mortgage lending, because big banks are increasing credit score requirements and down payment percentages (700 minimum credit score and 20% down). They have lost liquidity from the many forbearance requests from their current borrowers, but they still have to pay their investors. That will make properties harder to sell, as the buyer pool will be reduced.
Builder confidence is at the lowest level in nine years, per the National Association of Home Builders.
Institutional iBuyer companies who buy homes from individual owners are scaling back or stopping completely to preserve capital.
Fannie Mae predicts U.S. home sales will fall by 15% this year. Strangely, though, they also predict that median house prices will go up slightly.
The Small Business Association Paycheck Protection Program (PPP) ran out of money once and will likely again. The SBA Economic Injury Disaster Loan program was changed to reduce grant monies to companies, now capping at $1,000 per employee, up to $10,000, not a full $10,000, as previously stated. The SBA EIDL ran out of money once. Congress is working on these matters, but it is a blow to companies and their employees.
24% of small businesses may close permanently.
Then, there’s unemployment. It’s at the highest level since the Great Depression.
The Emerald Coast is diverse enough to attract multi-million dollar purchasers to Destin and 30-A, and a steady flow of military servicemen and women to Navarre, Fort Walton Beach and Niceville. The luxury buyer and seller, and Eglin Air Force Base and Hurlburt Field buyers and sellers should be able to prop up their market segments. And despite national statistics, some local builders are doing well and custom building should continue. However, small business owners and others whose income has been reduced or eliminated, would cause a slowdown of sales and downward pressure on pricing. Pending sales on the Emerald Coast are down by 43%. The next few months will shed more light on how the Emerald Coast will recover.
Wendy Rulnick, Broker Rulnick Realty, Inc.
direct: 850-259-0422 email: itswendy@rulnickrealty.com
If you are considering selling now or after the COVID-19 crisis, contact me to explore how, whether by traditional sale or short sale.
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