Home showings down as much as 60% as North Texas firms prepare for slowdown - The Dallas Morning News

Residential real estate sales firms haven’t wasted any time scaling back business because of the expected slowdowns from the coronavirus pandemic.

Housing economists are predicting a slowing in home purchase activity as consumers hunker down under shelter-in-place orders.

One of the country’s fastest-growing home sales firms — Compass Real Estate — has already pared back its nationwide staff by more than 10%, according to multiple media reports.

Compass, best known for its black yard signs, expanded into North Texas in 2018 and has quickly become a major player in this market.

But CEO Robert Reffkin is reporting that the company has experienced a 60% drop in home showings and expects a substantial decline in revenues.

“We aren’t just facing an economic recession, we are facing an economic standstill,” Reffkin said in a widely reported message to employees. “Many parts of our economy will be completely shut down for months.

“This will almost certainly result in a recession,” he said. “The best we can hope for is a V-shaped recovery as opposed to an extended recession.”

Other so-called disruptors in the real estate sales arena are also shifting gears.

Zillow Group has announced a nationwide halt to its home purchase program.

“Given the concerns for public safety and rapid developments by governments that restrict local real estate activities, we determined it was prudent to pause our homebuying to preserve our capital,” Zillow Group CEO and co-founder Rich Barton said in a statement. “In the meantime, we are working to support our customers and partners in these uncertain times when home has never been more important.”

Home sales firm Redfin, which also operates in the Dallas-Fort Worth area, is cutting back as well.

“This week, homebuying demand took a big hit, with year-over-year growth dropping from nearly 27% in January and February to 1% growth over the past seven days,” Redfin CFO Chris Nielsen said in a filing with the Securities and Exchange Commission. “Traffic growth to Redfin’s website has also slowed from around 20% through the first two months of 2020 to high single digits over the past week.

“Redfin has canceled open houses nationwide for public safety.”

Other companies including Opendoor and Realogy‘s RealSure are also suspending cash offers for homes.

“With the volatility of the current market, we do not believe that RealSure can now provide the value the program was designed to deliver,” the company said in a statement. “To maintain the integrity and future of RealSure, we made the difficult decision to suspend all cash offers at this time.”

The National Association of Realtors last week reported that almost half of its agents have seen a decline in homebuyer interest because of the pandemic and resulting economic impacts.

Along with concerns about the drop in home shopper traffic, the industry is worried about a potential decline in residential values in some markets.

Fitch Ratings in a new report is warning that some major home markets — including those in Texas — could see declines in home prices due to the pandemic and declines in the securities market and pending recession.

Frank Nothaft, chief economist with CoreLogic, said it’s too early to determine whether home prices are headed for a reset.

“Even if demand falls off — and I would expect there would be a big drop in the demand to buy homes — home pries could hold up okay,” Nothaft said. “Inventory for sale is still very low.”

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