The first confirmed case of coronavirus in the U.S. occurred in Washington State on January 21. Despite initial fears that the state would become a hotbed of the pandemic, its housing market has stayed mostly vibrant.
“We feel like we might possibly have not been quite as impacted because our state is so tech-based that there hasn’t been as much need for face-to-face type of sales,” said Robert Lipston, regional director for the Pacific Northwest at Opes Advisors in Bellevue.
Lipston, who is also board president of the Washington Mortgage Bankers Association, declared that “January and February were on fire in our markets and came out of the gate strong. It felt like the spring homebuying season hit up very early.”
Michael Patterson, 2020 president of the Washington Association of Mortgage Professionals, found many mortgage professionals still working on a glut of January and February transactions.
“We’re still busier than a one-armed paper hanger,” said Patterson, a branch manager with American Pacific Mortgage in Bellevue. “Everybody is super busy, volume-wise, and we had to backfill positions in doctrine funding. I know the analogy has been overused, but the snake that swallowed the pig comes to mind – and we’re kind of actually more like a cow.”
Patterson acknowledged the current economic and regulatory climate has created a playing field where “loan programs and guidelines are changing midstream pretty much every day.”
But a strong lobbying effort by the real estate industry ensured that parts of the housing economy would not be disrupted.
“When the governor made his stay-at-home order effective, real estate was considered nonessential,” said Robert Higgins, executive officer with the Spokane Association of Realtors. “Our state association worked with the governor’s office and got that changed. On March 28, we became an essential service, with stipulations on how to show property.”
Higgins noted the stipulations included the temporary suspension of open houses and showings by appointment only.
“Only the broker and one of the buyers can go through the house at a time, practicing social distancing, and not touching anything,” he continued. “So, if I had a husband and wife and I was showing a property, I could only show one at a time.”
The adjustments to the house-hunting routine – which also included a new popularity for virtual home tours – did not appear to have a negative impact on the market.
“I was on an MBA weekly call that they’ve been holding since COVID-19,” said Lisa Goldsmith, vice president of the board of the WMBA. “And they reported that Washington is actually beginning to lead the country out of the downturn we’ve experienced as a result of the crisis.”
Goldsmith, a regional account manager for correspondent lending at Franklin American Mortgage Co. in Mercer Island, added that she is hearing from clients “who are up to their eyeballs in business.” But most of this current business is on the refinance side – Goldsmith remarked that purchase loans made up 38% of mortgage activity in January but evaporated to 16% within three months.
The state is also dealing with problems from its pre-pandemic period. For starters, Goldsmith observed that affordability remains an elusive commodity “because housing prices haven’t started to dip and people, especially first-time homebuyers, are really suffering from the situation.”
Further complicating matters in the state was a freeze on the construction of new housing since the governor’s stay-at-home order went into effect.
“Washington State was one of the few that stopped residential construction,” said Tony Blodgett, senior vice president of the Northwest region at New American Funding in Everett. “Even now, what they have opened up is only for existing projects. There are no new projects starting, nor have there been since the quarantine started. I think it was a week ago when they opened up for residential and commercial construction to resume, but only for tasks that can be done with adequate social distancing and only on projects that had already been started.”
The freeze on construction did not help an already tight housing inventory, with Blodgett observing that “our current supply of homes on the markets is only 1.4 months of inventory, which is quite low.” Higgins also acknowledged the shortage in his Spokane metro area market.
“We’re at about a month’s supply of inventory and that will probably go down,” he said. “New listings are down 29% for April compared to April last year and closed sales are down 11.7% from last year. I can tell you that if a house is priced at around $300,000 and is priced right and comes on the market, it’s going to be sold quickly, even in today’s market.”
Looking forward, Opes Advisors’ Lipston forecasted stronger activity.
“As we get into spring and summer, we’re going to start seeing businesses open and we’re going to start doing some of the essential activities that we need to be able to do,” he said. “And if we start getting back to work by the end of May or mid-June, I think that we’ll see our markets stay stable. And we won’t see some of the depreciating values that you may see across the country because of our inventory issues”
Blodgett theorized that the arrival of warmer weather will also play a role in bringing more activity to the real estate market.
“Like many of the more seasonal markets, due to our weather and the amount of rain we get in the winter, people do not really come out much,” he said. “We’re going to see a kind of delay of the normal ramp-up that we would typically see in the early spring.”
