Back in March, realquantum polled our community of readers to gain an understanding of current market conditions. Because of the coronavirus pandemic’s unpredictability, we sent the commercial appraiser market survey again. The results were mostly from the US and show movement, though not all positive, in the current market.
Firstly, about half (45%) of people said their business was changed by the pandemic. This percentage is down from March’s survey where 67% said they were being affected. While that number is lower, the amount of people who said their business was much slower than normal is up from 30% to 45% in a month’s time. Notably, this survey came after the CARES economic stimulus funds were distributed and the fund depleted. Further, the unemployment rate is the highest it’s been since the Great Depression, affecting nearly every industry.
Certainly, clients prefer appraisers do both interior and exterior inspections. Due to federal and state mandates, interior inspections haven’t been an option for some appraisers. The number of clients who have accepted exterior-only inspections has only risen slightly from 62% to 68%. This coming after multiple updated mandates from Fannie Mae and Freddie Mac since March to permit more exterior-only inspections.
Meanwhile, surveyors noted the specific market activity they have observed. In short, 45% blame COVID-19 for sales that are either terminated or being renegotiated. This is a significant jump from 30% back in March. More lenders withdrew financing (36%) and more leases terminated (31%). Also on the rise was the percentage of surveyors who blame the pandemic on halting construction projects (43%).
Further, the pandemic is causing new construction, as well as existing building owners to rethink their amenities. What once attracted tenants could now detour them. This forces developers to think of a plan to allow social distancing and wellness. This could mean more space per unit, resulting in fewer units and less tenants.
There was little movement in the commercial appraiser market survey results when it came to real estate values. When asked whether residential values have dropped, 32% said yes. (Compared to 36% in March). However, there was an increase in the commercial side. 56% of responders felt commercial real estate had dropped in value. This number is up 8% from March.
When it comes to purchasing a home, hard-hit areas such as New York have banned in-person home viewings. However, buying a home is still possible during the pandemic. With the use of video chats, homebuyers can virtually see listings. As far as closings, states are moving to “curbside” closings. But is now a good time to buy a home? The benefit of low-interest rates is definitely a plus. Unfortunately for anyone looking for a steal, inventory is low.
We asked how long it might take for the market to return to pre-COVID-19 conditions. Similarly to March results, the numbers were all over the place. The biggest group was those who felt it would take 9-12 months (26%). This differs from March’s survey where most people thought it would take only 4-6 months. The rest of the results were fairly evenly distributed. 20% saw a recovery in 15+ months and 19% in 4-6 months. While no one really knows, the results say more people feel it’ll take longer than originally thought.
Looking at property types most impacted, both Lodging and Retail remain the hardest hit. Apartments remained in the lesser impacted group, but this survey shows many feel that Industrial properties will fare the best.
Market conditions are going to continue to change, especially as states begin opening back up. Plans for another CARES stimulus check is in the works. People are going to continue to be out of work and requiring assistance. The general consensus from responders to this commercial appraiser market survey was that only time will tell. Many noted it’s too early to know what how the market will be affected and what the future holds. As for commercial appraisers, they will continue looking for how to get more productive during this lull in work before the work pace increases.
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