For those of us in the real estate industry, the past 12 months have meant sailing through unchartered waters while doing our best to stay on course – and afloat. When the worse pandemic of our lifetime swept the U.S. in 2020, states across the country were asking citizens to stay at home, and temporarily closing businesses. At the same time, certain professions were categorized as essential and could remain in business, including brokers and real estate agents. But, with large and small companies shutting their doors, and millions of layoffs resulting, there was absolutely no way real estate sales could survive under these circumstances. Right? We braced ourselves for an inevitable market meltdown.
A Fortunate Series of Events
Surprisingly, what happened was quite different from what we expected – in several areas. After the COVID-19 crisis first hit the U.S., we saw a significant drop in residential housing inventories. People understandably did not want strangers coming inside to view their homes, so many sellers took their properties off the market. Additionally, several homeowners who were preparing to list opted out of doing so.
To further exacerbate the shortage of available properties, a number of new home construction projects either slowed down or came to a complete halt during this time. The government issuing a moratorium on evictions for federally backed loans has kept people in homes, but also strained housing inventory.
As a result, the inventory shortage immediately drove up home prices. According to Black Knight data, the annual percent change in the median single-family home price was three to five times higher than during the past several years.*
Record low interest rates also fueled pressure on housing supply as homeowners increasingly chose to stay in their current house and refinance instead of sell, while those ready to buy could now be locked into a much better rate, making purchasing a home more affordable.
With a diminished housing supply, and buyers’ ability to afford more home by leveraging lower rates, sellers were receiving multiple offers for their properties – some up to 40 offers at full price or higher.
Increased MLS Membership
The growth of some MLS organizations was another interesting development that occurred during the pandemic. In discussions with MLS leaders and administrators, many believed a year of uncertainty would yield lower sales and a reduction in membership. Instead, 2020 actually resulted in increased sales and MLS membership growth in several markets.
Some of this growth may have been attributable to real estate brokers and agents being categorized as essential workers. With massive job losses in other professions due to the pandemic, real estate provided income-generating opportunities not available elsewhere.
A Rise in Fraudulent Activity
Unfortunately, criminals seek vulnerabilities to exploit, and the COVID crisis presented additional opportunities for fraudsters to take advantage of others. With more consumers renting or making offers solely from viewing properties online, for example, the marketing of “fake” rental properties and listings has become more prevalent.
The pandemic resulted in some additional real estate trends in 2020 that will continue to affect the market in 2021 and beyond:
- A growing number of people moving from large, densely populated cities to suburban areas**
With the potential for larger yards, pools, access to nature trails and many other amenities not typically found in urban centers, homes in suburban areas became more appealing during an era of social distancing.
- Larger single-family homes outperformed smaller properties
The need for families to have work-from-home spaces became a growing and important priority for homeowners as offices closed and schools transitioned to remote learning.
- An increased interest to move from large cities to medium-sized or small cities
In discussion with several of our MLS clients, there were signs that some people were moving into smaller cities with affordable housing.
Helping Paragon MLS Customers
To help our MLS customers address the industry changes that have been occurring, we implemented a number of important features in the Paragon MLS system, and offered additional support. Paragon is Black Knight’s next-generation MLS platform used by over 200 MLSs and real estate associations across the U.S. and Canada.
Some of the support we have provided to clients include:
- Virtual/livestream open houses and broker tours
For real estate transactions to continue during a time of social distancing, it became clear that brokers and agents needed robust virtual options to support their listings as well as show homes to potential buyers.
While already in the midst of a system release that did not include these features, the Black Knight team identified the need for virtual/livestream open houses and broker tours. As a result, we added these capabilities to the new release, and expedited the implementation timeline, rolling it out within just 10 days!
- Emergency back-up and end user support
As MLS customers began to shut down their offices and implement work-from-home processes, Black Knight provided emergency and back up end-user support to MLSs that requested it.
- Increased training opportunities to address growth in MLS membership
To help train new members on Paragon and get them quickly familiarized with its features, we increased our communications by sending out three weekly emails and increasing the number of social media posts. We also added more complimentary Paragon informational webinars and converted our on-site training to virtual training.
- Addressing fraudulent listings
To help reduce fraud, we encouraged the implementation/more frequent use of listing photo watermarking in Paragon. We also communicated best practices to clientsnotifying their members that fraudulent activities are going on and what to be on the lookout for, as well as getting notice out to their markets via home sites or ads regarding fraudulent listings.
What to expect in 2021?
Black Knight is collaborating closely with our MLS customers so we can continue providing the new and enhanced Paragon capabilities that their broker and agent members need during these challenging times. We are excited about our upcoming implementations, including additional videos for listings via URLs, as well as more data and features for agents, their clients and even affiliates as we continue to navigate a COVID-impacted real estate market.