I’m Joe Gerrity, local businessman, investor, and Real Estate Broker. For my Yo Joe! column, I’ll be answering real estate questions and providing market information special to New Orleans during this pandemic.
Buying or selling a home can be a daunting prospect as many are wondering what the market will look like, not just in the weeks and months ahead, but in the years to come. While the COVID-19 pandemic has certainly caused a dramatic shift in daily lives, real estate transactions are still happening.
In fact, our analysis of the MLS data shows that March sales actually increased by 8% in March 2020 (452 closings) from March 2019 (417 closings). Also in March, some 30-year mortgage rates dropped below 3%, potentially making it a great time to buy a house in New Orleans, or refinance!
So, what can we expect from a COVID-19 era real estate transaction? From curbside closings to virtual tours, all parties involved have found innovative ways to keep real estate moving. For more information on how local companies have changed their operations in order to serve their customers, we reached out to Robert Bergeron, President of Crescent Title here in New Orleans. Robert has more than 20 years of experience managing residential and commercial real estate transactions.
Thanks for joining us today, Robert!
How have real estate closings changed since the Stay-At-Home order went into effect in March?
We are definitely seeing more powers of attorney being put in place. More people are doing it that way so they don’t have to physically be at closings. The necessary people are arriving separately—the buyer comes, the seller comes, and no one has to make too much contact. Some people also want to be outside to close, so we have two tables set up on the porch outside our office—we also have some tents outside that were meant to be used at this year’s Hogs For A Cause event. Ultimately, we’re doing our best to make it work in a way that is comfortable for the client.
Do you think this will have a long-term impact on the way that real estate transactions are closed?
Yes and no. We don’t have the ability to do totally remote online notarization—you still have to sign before a notary and two witnesses. One of the things that distinguishes us from other states is that we are a table funded state. So, in other words, all involved parties sit at the table and perform the closing together—other states do it separately over the course of a few days.
One thing I can say is that it’s going to be hard in this climate to embrace the little, personal things we usually do for our clients, like bring cookies and create festive environments. We give everyone a brand-new pen instead, so they don’t feel as uncomfortable when receiving things. I believe the lasting effect of all this is that some documents will move forward to being signed remotely to speed up the closing as much as possible.
Have you had a lot of transactions that fell apart in the immediate aftermath of the outbreak?
I thought we’d see a lot more early on, but we are starting to see them. When that happens, I try to get on the phone with the buyer and calm them down. One concern is that you might be in default – and default has a lot of significance with penalties – 10% penalties, attorney’s fees, court costs, and more. At the end of the day, we’ll usually just try and talk to the seller and say, “hey, why don’t we pause”, and then grant a two-week extension to the contract.
It helps the buyer get their feet on the ground. People need to take a second and realize that the world isn’t coming to an end. Any disaster we’ve ever faced, we’ve always come back from it. Right now, with interest rates being as much as a point and a half lower, that can equal to a lot of extra money in your pocket, and that’s a game-changer for most people.
Are you seeing a large uptick in closings for refinancing since rates have been dropping?
The lowest rate for refinances was March 16th, where you could have gotten below 3%. They’ve gone up slightly since. Some people say they’ll go down again, and some say they’ll go back up because investors will only pay so much for a bond. I can tell you that I don’t know what’s going to happen. No one knows when, where, or how, but the reality is that you can’t just sit there and wait to take action. You might regret not making a decision due to the uncertainty in the market.
Do you have any thoughts on the short- and long-term effects on the housing market city of New Orleans?
Long term, the housing market will rebound. Oil is an impactful part of the New Orleans economy, and it’s going to take a hit, but as an industry, it has always come back. Tourism, however, I think will be a bit slower. If I’m someone with a short-term rental property, I’m going to start marketing to people who live near me because driving will probably be more popular than flying, is my guess. I suggest that folks consider marketing regionally to people looking to make quick and easy vacations.
I’d also like to remind everyone that regardless of what comes in the next few months, we will all get back up and running. The most important thing we can do for now is be open and communicate with our clients. If you’re in the real estate industry, be sure to send a message to your clients to let them know that you’re here for them in good and bad times. Stay resilient, stay focused, and stay positive.
Agreed, Robert. New Orleans has faced many challenges in the past, with its economic recessions, and of course, the devastation of Hurricane Katrina, but we’ve always bounced back, and have the grit and resilience to do so again.
The Yo Joe! Real Estate Column is made possible by Joe Gerrity and Satsuma Realtors. To find out more about them, visit wesellnola.com.