How are Consumers' Buying habits shifting under the Coronavirus Outbreak
First, it was the masks, then hand sanitisers. Now it seems the novel coronavirus outbreak has people rushing to stock up, among other things, an essential item: toilet paper. Shelves have been emptied across the world. In Australia, a newspaper helpfully pointed out an extra eight pages as a "backup loo roll". Fights have broken out, trolleys piled high, and across the United States, Canada and the United Kingdom, most supermarkets imposed a cap to limit the number of rolls a person could buy.
Before the coronavirus outbreak was widespread in the United States, the Portland area's residential real estate market had a robust, early launch in 2020.
Contracts for home sales increased 14.4% in February over January and closed sales rose 14.1%, according to the local listing service RMLS.
Instead of waiting for the traditional spring start, Portland area buyers jumped quickly into a competitive market with low inventory, as they did in 2019, to take advantage of historically low mortgage rates.
Comparing the first two months of 2020 to the same period in 2019, the Portland area's median sale price, in which half of the properties sold at a higher price and the other half at a lower price, increased 3.7% from $393,000 to $407,500. (The average sale price increased 5%, from $438,200 to $460,200).
The coronavirus pandemic, stock market swings and a wide-range of business losses are impacting the economy and adding short-term uncertainty to housing markets, said Matthew Gardner, chief economist of Windermere Real Estate.
"The virus has changed the mentality of both would-be home buyers and home sellers very differently," he said. "I would not be surprised to see a slowdown in the number of homes for sale until we get through the worst of the situation regarding new infections."
Gardner, who is based in Seattle, said home sellers are concerned about opening their residences to strangers who could potentially be carrying the virus, and buyers, while tempted to lock in very low interest rates, are being influenced by more significant economic concerns.
The worldwide spread of the novel coronavirus is leading to some curious side effects: Store shelves are being stripped bare from Singapore to Seattle. Supermarkets in the U.K. have started rationing items. In Hong Kong, a delivery man was reportedly robbed at knife-point of hundreds of toilet paper rolls. Australia has seen brawls break out at supermarkets prompting police to taser one man. And France effectively nationalised all production of face masks after people began depleting the supply.
Panic buying has emerged as reliable a feature of the coronavirus epidemic as a fever or dry cough. Psychologists view control as a fundamental human need. With a disease that's highly infectious and can turn deadly, this epidemic violates a sense of control in significant ways. Unless policymakers can find a way to restore that feeling, the cycle of panic buying, hoarding and scarcity only stand to escalate.
"People are really not equipped psychologically to process this type of thing," said Andrew Stephen, a marketing professor at the University of Oxford's Said Business School. "So that just makes it worse for a lot of people in terms of uncertainty, and then they do whatever they need to do to try and get back some control."
The panic buying is already threatening to do real damage. The U.S. Surgeon General has pleaded with Americans to stop buying face masks to ensure that healthcare workers have them, while Japan has said it will introduce penalties for reselling masks. eBay banned new listings for health products after instances of price gouging became common, with packs of hand sanitizer that usually sell for $10 popping up for $400.
And the prospect of extended confinement at home has sent people scrambling for other items. Oat milk has become a hot commodity due to its longer shelf life than dairy-based products, survivalist gear popularised on the National Geographic show Doomsday Preppers is in demand and Hostess Brands Inc. reports sales of their famously indestructible snack, the Twinkie, are soaring.
As one of the first places the virus touched down, Hong Kong in late January became a case study in how panic buying can escalate. When Rona Lai, a 23-year-old who works in financial services, was first asked by her employer to work from home, she stocked up on about a week's worth of food. But as reports coming out of China grew direr and supermarket shelves ran dry, she began hoarding food in earnest.
Then the rumours started that Hong Kong's supply of toilet paper would be affected by the epidemic spreading in China, from where the city imports most of its goods. So when Lai noticed stores were being cleared of toilet paper, too, she joined the buying. Now boxes of toilet rolls take up her entire sofa, and tissue paper, detergents and snacks are stacked under her dining table." I readied myself for a protracted war against the virus," she said.
In just a few short weeks, the coronavirus outbreak has impacted many aspects of everyday life. Events and conventions have been cancelled and postponed. Public fear of the unknown, along with an abundance of misinformation, has made supplies of personal and healthcare items unavailable, including hand sanitizer and face masks.
Readers expressed frustration at the panic buying sparked by the coronavirus outbreak. "Why are people buying months worth of stuff?" one asked. Some Lehigh Valley shoppers couldn't find toilet paper, hand sanitizer, bottled water and other staples on store shelves. At the Giant at the Lehigh Shopping Center in Bethlehem, a line of 25 people was outside the store at 5 a.m. Friday, an hour before it opened."The bigger problem is people are going nuts in over-purchasing items. Thus there are many people not able to buy any. Come on, people, let's use common sense.
Hillyer Riches is a Caulfield Accountant providing elite taxation advice to business in Caulfield, Melbourne.
Altered consumer purchasing behaviours in the wake of the spreading coronavirus outbreak has food and beverage manufacturers as well as retailers scrambling to keep pace with the changes. While much focus has been on a cleaning and personal care products, some food categories have experienced significant growth, and market researchers see consumer shopping patterns shifting to a new normal.
Sales of staples like dried beans rose 63% for the one-week period ended March 7 when compared to the previous four weeks, according to the market research company Nielsen. Rice sales spiked 58%, chickpeas/garbanzos 47%, powdered milk products 126%, water 42% and canned meat 58%. Products that experienced a dip in sales included apples (-3%), papayas (-7%) and celery (-19%).
Nielsen has broken consumer response to the coronavirus outbreak into six categories – Proactive health-minded buying; reactive health management; pantry preparation; quarantines living development; restricted living; and living a new normal. In an article published March 16, the market researcher placed the United States squarely in category 5 — limited life — and Canada in category 4 — pantry preparation.
Within the restricted living category, there are mass cases of the Coronavirus and communities are ordered into lockdown. At this stage, consumers severely restrict shopping trips, online fulfilment is limited, and price concerns rise as limited stock availability impacts pricing in some cases.
Food delivery, click-and-collect, online shopping and home delivery are all expected to increase as consumers avoid going to areas where there may be large gatherings, according to Information Resources Inc. (IRI), Chicago. The market research company said click-and-collect and home delivery must be every retailer's business priority.
Within the supply chain, IRI said the number of product choices consumers have going forward might be limited as manufacturers focus on the production of top stock-keeping units to meet demand. Food and beverage "stackable" items IRI predicts will continue to be popular are shelf-stable and frozen food items, sports drinks and water.
The Center for Food Integrity (CFI), Kansas City, Mo., sees isolation and social distancing brought on by the Coronavirus is causing unprecedented changes in consumer behaviour.
Low Mortgage Rates Incentivise Buyers
On Thursday, March 3, mortgage rates tumbled to an all-time low. Decreased mortgage rates historically boost home sales. However, between market instability, travel restrictions and a general feeling of public hysteria, it's impossible to predict if low mortgage rates are enough incentive for buyers to make an offer.
No one knows with complete certainty how Coronavirus will impact the real estate market long-term. There are also several other factors to consider."While the election year is a given, the fact that the stock market is rolling and the fear of coronavirus is only eight-nine days old in this country (meaning people here are fearful), it is just a bit too early to see how buyers and sellers will react," Mary Hall Mayer, an agent with Warburg Realty in New York tells me.
It appears that smart buyers are genuinely taking advantage of this situation. Phones are ringing off the hook and inboxes are jammed for anyone working in the mortgage industry right now. Ryan E. Beverage, a senior mortgage advisor with Lenox Financial in Southern California says Coronavirus has been a boon to his business. "I'm working twelve to fourteen hours a day right now and still have things to do when I leave. I've been doing this for over ten years, and I have never been busier than I am now," he says.
Looking for your local Caulfield Tax accounting services? Hillyer Riches provides Accounting services to suit both individuals and businesses.
Coronavirus Won't Stop A Buyer's Market
While travel restrictions might prevent foreign buyers from looking at property in New York, it's status quo for locals. "Thus far, showings by appointment are going forward as are open houses. But if you had three people to an open house, might you have had six?" says Mayer. First-time buyers are particularly savvy to take advantage of the moment. In a relatively short period, Robin Kencel of Compass has experienced an increase in motivation among this demographic.
"I had first-time buyers (newlyweds) out from Manhattan on Sunday who spent the afternoon looking at properties and made an offer on the next day. They did not reference the virus, but their desire to have a home with some elbow room and outdoor space was critical in their rush to leave the city," she says.
The beverage has also seen an influx of first-time buyers who want to take advantage of the current market. "I've noticed a lot of younger people, especially, who have never thought about buying, are now more interested and finding out that they actually do qualify. People think that you have to be a millionaire to buy a house, but that is definitely not the case, especially in this current rate environment," he says.
But Kencel believes it's still too early to make accurate predictions. "Because the markets are up and down so dramatically each day, the mortgage lenders that I spoke with shared that some of their clients are trying to time their activity to reconsider where the assets are being deployed," she says.
She also notes that the uncertainty of financial markets could have investors pulling out of the stock market and funnelling their cash into real estate instead.
Sense of control. "We're poor at learning and good at forgetting. No one alive today has seen a global pandemic of this seriousness. Current measures to manage this pandemic are not nearly enough in most countries," Baker said.
"We are now seeing the world splitting into those countries which are containing this pandemic, notably China, Singapore and South Korea, and those which are not."
Anxiety over a return to a sense of control is another factor behind the widespread panic, said, experts.
"We don't know how long it will last, we don't know much about the virus, it's something new, and we are learning something new about it," Dimitrios Tsivrikos, consumer and business psychologist at the University College London, told Al Jazeera.
"Consumers are trying to gain control and panic buying is essentially our attempt to be in control of a situation. It's quite important to feel that at least we are doing something, we are proactive, and panic buying is exactly that," he said.
Tsivrikos said consumers are also in a position where they are receiving global news, looking at other countries, for instance, Italy on lockdown, and comparing it to local news and directions they are getting, further creating a sense of added uncertainty.
But is our increasing connectivity and heightened awareness a good thing, or is it feeding increasing anxiety among the people?
Factors in the housing market's favour are low mortgage rates and pent-up interest in Oregon, the state with the most significant housing shortage in the nation.
The average 30-year fixed mortgage rate was 3.36% on March 12, a slight increase from the prior week's all-time low of 3.29%. Portland-area inventory, however, which was already low and giving sellers the upper hand, decreased to 1.9 months in February, a drop from January 2020′s list of 2.2 months.
Inventory is calculated by dividing the active residential listings at the end of the month by the number of closed sales and homes proposed and under construction.
About 13% more Portland-area homes were listed for sale in February 2020 compared to last February; still, demand continues to outpace supply. New listings in February 2020 – 2,759 – mirrored the number from January 2020 (2,754).
Looking for your local Caulfield Business Advisory Service? Contact Hillyer Riches today.
Should Coronavirus Be A Cause Of Concern For Sellers?
It's essential to keep in mind that New York City and the surrounding areas were already buyer's markets before the coronavirus outbreak. So, sellers were well aware they didn't have the upper hand, to begin with.
According to Noemi Bitterman of Warburg Realty, the sellers experiencing frustration have either already sold at less than they wanted or taken their properties off the market. So it's safe to assume that the majority of sellers are extra motivated right now. "The properties that are on the market right now are priced to sell. Although sellers do not love the buyer's market, they accept what is and have priced their properties accordingly," she explains.
But beverages think these low prices can ultimately benefit some sellers: "I think that Coronavirus, dropping the 10-year treasury to the lowest level in the history of the mortgage, is going to cause a price war in the home selling market. Prices are going to skyrocket. We will see another bubble again, and then eventually it will pop."