Milwaukee's recently hot housing market has slowed due to coronavirus, which has real-estate agents moving to virtual showings

Having purchased a 6,230-square-foot home in Mequon right before the 2008 housing crash, no one needs to remind Josh Liberman about the ups and downs of the real estate market.

So it was a "pretty nerve-wracking" experience when he listed the same home for sale on March 14  "when the bottom kind of started falling out of the financial world," Liberman said.

"We were starting to get really worried that people wouldn't have the wherewithal to be able to buy a new house," Liberman said. "If people are told to stay at home ... are they even going to be able to visit the house to look at it?"

Liberman was fortunate, though. He got an offer within a week, albeit below the sale price from 2008.

As buyers and sellers like Liberman get nervous, the local real estate market is facing a sudden slowdown.

"It'd be like if we were driving down Capitol Drive on the east side, and we got T-boned by a car going through a stop sign," said Mike Ruzicka, president of the Greater Milwaukee Association of Realtors. "Boom, you just get hit out of the blue, and we don't really know what the damage is yet.

Ruzicka said the impact on the market won't be clear for four to six weeks because of the delay between an accepted offer on a house and the closing.

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That makes the real estate markets difficult to predict for industry experts like Mark Eppli, director of the James A. Graaskamp Center for Real Estate at the University of Wisconsin-Madison.

"We have a lot of uncertainty and not a lot of data," Eppli said.

Ruzicka wouldn't be surprised to see a sales decline of more than 25%.

Before the pandemic, there weren't enough homes to meet an incredibly high demand, especially in the first-time buyer market, leading to multiple-bid houses and higher prices.

The median home price in Milwaukee County was up by 10% with only 2.6 months of inventory in February, according to a report from the Wisconsin Realtors Association. Eppli said a normal market would have more than doubled the inventory.

Interest rates remain low, and the market for first-time home buyers remains competitive although not "red hot" like before, Ruzicka said.

Eppli said many millennials who were putting off starting a family have recently jumped into the market for single-family homes.

But anyone who doesn't need to buy a house will likely hold off.

"This one is going to end up being a demand crisis," Eppli said. "Am I willing to make a 30-year commitment on a new house knowing that maybe my job is far more at risk than I ever thought it'd be?"

Falk Ruvin Gallagher Real Estate, the local branch of Texas-based Keller Williams Realty, has gone from selling about six homes per week to about four per week.

"Buyers who have to buy are still buying," lead partner Richard Ruvin said.

Even in an economic downturn, Ruzicka said some real estate activity — about 5% of households buying or selling — is still necessary because of deaths, divorces and other life circumstances.

"There's a floor that we almost naturally can't go below," Ruzicka said.

Falk Ruvin Gallagher Real Estate is trying to combat any lack of buyer confidence with a plan to cover up to two months of a buyer's mortgage if they become temporarily unemployed because of the coronavirus.

"We're trying to give people the confidence to be able to move ahead," Ruvin said.

Virtually selling homes

While real estate agents are considered essential in Gov. Tony Evers' stay-at-home order, they've needed to dramatically change the way they do everyday business.

Before the Centers for Disease Control and Prevention advised against large gatherings, Ruvin's firm made videos of occupied homes.

On Wednesday, an agent from Falk Ruvin Gallagher went to a Bayside home and called the prospective buyers over FaceTime instead of doing a traditional in-person showing.

The Greater Milwaukee Association of Realtors is advising area agents to do as much business virtually as possible. Ruzicka said members have been "totally on board with that."

The few firms who still do in-person showings of occupied homes, Ruzicka said, have been asking homeowners to leave with all the cabinet doors open so that buyers don't touch anything in the home.

Ruvin has seen some offers from virtual viewings contingent on an in-person viewing after the pandemic.

Varied expectations amid uncertainty

While there is plenty of uncertainty around the whole situation, there is still a sense of optimism.

"The Brewers and Bucks aren't playing, so what do people have to do anyway?" Ruzicka said.

As Ruvin sees it, once the pandemic ends, people will rush to buy the homes they've virtually been looking at.

"We do expect to see a spike (in sales) whenever this lifts," Ruvin said.

Ruzicka said he is hoping for a "fast down and fast up" recession. Ruvin also sees this more as a V-shaped recession than U-shaped recession.

Yet concerns linger about rising unemployment leading to less buying power. 

"That's certainly a concern," Ruzicka said. "If people don't have jobs, they're not going to buy a house. And it's going to be hard to get a loan if they don't have a job."

Ruzicka and others in the real estate industry do not expect it to compare to the 2008 housing crisis, though. In 2008, real estate prompted the financial crisis. In 2020, a disease is prompting the financial crisis.

"I think we're going to take a hit, no doubt," Ruzicka said. "It's going to go down, but it'll come up. ... All the other fundamentals for housing are pretty good."

But Eppli views this as worse than other short-term recessions, like after 9/11.

"We were quickly told by the president (after 9/11) ... it is patriotic to go out and spend, and it's patriotic to go out and be active Americans," Eppli said.

"Fast forward to today, now what we're hearing is it is patriotic to stay at home. ... Effectively, it is patriotic not to spend."