Last month, JPMorgan Chase raised its requirements for getting a home loan, according to Reuters. The fourth largest residential mortgage lender, Chase is requiring borrowers to put down 20 percent and have a credit score of at least 700. It surely isn’t the only lender wondering how it can protect itself from the costs of being required to issue a forbearance to all borrowers, even as its own payments must be delivered on time to the end investors.
All this, even as mortgage interest rates flirt with their all-time lows, according to the Mortgage Bankers Association.
Banks reported they would see steep losses, as consumers either stopped paying bills or took forbearance. In the past few weeks, iBuyer companies, such as Zillow and OpenDoor, which make automated instant cash offers for homes, have suspended home purchases and, in the case of OpenDoor, experienced significant layoffs. Fannie Mae expects overall home sales to decline by about 15 percent in 2020.
These are significant losses, both personal and commercial. The economy won’t magically rewind itself to where it was in January, and the second quarter will undergo a dramatic contraction. As we receive emails from consumers who are afraid to go into a house for a showing, let alone go back to work with their peers, we wonder what the new “normal” will look like and how long will it take to get here.
Even after stay-at-home restrictions end, will we continue to have virtual showings, virtual open houses and remote closings or settlements? Will home buyers end up signing all home-buying and home-loan documents electronically? What role will attorneys, title companies and settlement agents have in the new normal? Will this crisis accelerate electronic changes to the real estate industry?
And, this is a big one: How will all of this affect the real estate brokerage industry? Will 2 million jobs just disappear?
Over the years, we’ve written about changes to the real estate industry brought on by technology. Real estate agents now use 360-degree technology to take pictures and videos of their listings. But if home buyers get comfortable with purchasing a home without seeing it, what role will real estate agents have on the buying side?
We may well see more significant shifts coming to the real estate industry in the coming months: additional consequences of the coronavirus pandemic.
Ilyce Glink is the author of “100 Questions Every First-Time Home Buyer Should Ask” (Fourth Edition).” She is also the chief executive of Best Money Moves, an app that employers provide to employees to measure and dial down financial stress. Samuel J. Tamkin is a Chicago-based real estate attorney. Contact Ilyce and Sam through her website, ThinkGlink.com.