Coronavirus ‘will change how real estate is marketed, without a doubt’: Barbara Corcoran

The Corcoran Group Founder and ABC Shark Tank Star Barbara Corcoran joins Yahoo Finance’s Zack Guzman and Kristin Myers to discuss her expectations for the real estate market during the coronavirus outbreak.

Video Transcript

ZACK GUZMAN: Meantime, while we're continuing to track the rising amount of coronavirus cases, a lot of homeowners right now are wondering what that means for housing prices. And a lot are actually struggling to even complete home purchases that may have already been underway before the economic downturn hit. As people stay at home, harder and harder to get some these deals to pass through.

For more on that, I want to bring on "Shark Tank's" Barbara Corcoran, the Corcoran Group Founder and, of course, the favorite shark for a lot of you out there. Barbara, it's good to chat with you again. Thank you so much for joining us.

BARBARA CORCORAN: [INAUDIBLE]

ZACK GUZMAN: First, I just want to get your thoughts so far on what we've been seeing, a lot of people right now who work in real estate struggling to complete deals that were already in the pipeline. What have you been hearing?

BARBARA CORCORAN: The real estate market is a very lopsided market right now. And you alluded to, earlier, that a lot of people-- some people are not able to close their deals. That is a problem. Probably one in, I'd say 10 deals-- if there was an average-- people are not able to close. They can't get the appraisal done. They can't get the financing in hand because of the administrative challenges that are happening right now.

But it's been a very lopsided market in one regard, because I've been speaking to people around the country in the trade-- people who have been closed down, people who are still selling. And the high-end market is suffering already. The middle end of the market is clicking on like there's nothing wrong with it. And the low end of the market has actually gotten stronger, surprisingly.

I was speaking with a broker in Louisville this morning, and their average price is about $170,000. And they had a record month of 875 sales. Same is true of Dallas and Fort Worth. But when you look at New York City, the listings are down-- way, way, way down. We had 700 new listings versus 1,700. And deals are just not being made in the city. We had actually four sales in a week. I've never heard of anything in a city like New York.

ZACK GUZMAN: Yeah, I mean, that was kind of the headline that jumped out at me, too. When you look at it, the Olshan Report that tracks the luxury sales-- that would be above-$4 million sales-- only two contracts signed in a week. That was the worst they've seen since August of 2009-- again, one of those other comparisons. We can look back to the financial crisis there.

But you're right. I mean, I guess there are some swings when you look at luxury versus some of the lower end here. But they're all struggling with the same thing. When you think about how many check points that need to get done-- inspectors saying that they don't want to come out to houses. They want to put their workers in harm's way.

So how do you really-- I mean, the data isn't necessarily going to play out here, because home prices we got last clip. But that was for January. So you're not necessarily going to see any real-number impact. But how bad do you think it could get, in terms of the slowdown and what you could see housing prices dipping to later in the year?

BARBARA CORCORAN: You know, it depends more on what the unemployment rate is and how well they roll out the new package that has so many benefits for people. It depends on those two cards more than anything else that is actually happening in the real estate market. But let's say, for example, unemployment rate doesn't go through the roof. And I think there is many people believe it's going to that don't.

Let's say the incentive package comes out and saves a lot of people, but for how long-- two, three months. But the best case scenario is with cheap mortgage rates, constrained inventory, which we definitely have because there's very little new units coming out on the market. And with the help from the stimulus package and the spring market we never experienced converging with the upcoming fall market in the summer-- if that all hits together, you have a possibility that the market will explode in both-- in terms of number of sales and rising prices.

It could be a catch-up and beyond a catch-up. But what is the basis of all that is, you must keep unemployment late-- pardon med must keep unemployment low. And you must have this new package come out and actually get the cash into the hands of the people that need it. And that's the million dollar question, really.

KRISTIN MYERS: Hey, Barbara, Kristin here-- good to chat with you again. I wanted to know-- I know you were talking about the high end. The luxury market is struggling right now, while on the lower end, it's actually booming. If you are a realtor in a place like New York, is this a time where, just to get through the next couple of weeks and months, you have to start pivoting on what you are going to be showing and what you're going to be selling? And if you are a buyer, if you still are getting paid, if you still have a job, is right now a really great time to get into the market?

BARBARA CORCORAN: Well, it's nice. The word "pivoting" is always sexy to hear. But what are you going to pivot to? You can't show the units. Sellers don't want you in. Even the new development units aren't showing-- aren't having open houses. So the most you can pivot is, you could do virtual tours. But do people really buy real estate-- and how often-- without actually walking into the unit?

Very few people will take that kind of risk. Very few people are going to close deals. So what does the average real estate agent in an urban area like New York or Los-- LA or any of the big urban markets actually do? They hope that the stimulus package comes out that's going to recognize independent contractors-- which, the great majority of people are independent contractors-- and they're going to apply for help.

That's exactly what they're going to do. It's very hard to reinvent yourself on a dime in a failing economic market. What are you going to do-- sell something else? These are great salespeople. Nobody's selling anything. So really, they're going to be in line with everybody else, looking for some benefit from the federal government. That's what's going to happen.

ZACK GUZMAN: Yeah, and the other thing, too-- I mean, we've got a couple stories looking into people selling houses digitally-- maybe taking a tour digitally-- looking at houses that way. But this is a big purchase. Is not like you just want to go out. People want to kick the tires out on some of these houses. What do you think about the trend shift there and whether or not that can even replace things like a home purchase?

BARBARA CORCORAN: It's going to help the rental market, and it's going to help the temporary luxury market-- people running from the city, wanting to rent a house in Maine or Northern Connecticut for three months. It's going to help that market because people will commit to a short-term lease and maybe even a one-year lease with a super showing, the apartment on virtual tour, if they really need the apartment.

But once you get outside the rental market, there's no way people are going to be buying units because of a phenomenal virtual tour, unless, of course, those units could be offered at half price. Hey, maybe even I'll jump in there and say, what the heck-- let me take a shot. But it's not the typical buyer by any means.

But this will change the way real estate is marketed, without a doubt. I think you're going to see all the brick-and-mortar stores that are paid for by large real estate brokers probably not exist two years from today, because people are learning to sell real estate at home without a doubt, just as they do in many other businesses. I think it's going to create a new market or no market for commercial sector that previously really needed commercial space and storefront space. it's just going to add to the problem. No, it's going to change the market. But will it make people buy online, just looking at a virtual tour? I just don't see that really happening.