Are the many activities that underline the real estate industry – from home construction to title searches – essential services during the coronavirus pandemic?
Christopher Krebs, director of the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA), thinks so.
Earlier this week, Krebs designated “real estate services” as part of the nation’s “critical infrastructure” in a memorandum that serve as a guideline rather than an enforceable federal directive.
Aside from real estate, the 15-page advisory encompasses healthcare, agriculture and transportation, among other economic segments.
“This list is intended to help State, local, tribal and territorial officials as they work to protect their communities, while ensuring continuity of functions critical to public health and safety, as well as economic and national security,” Krebs’ letter says.
Here are the real estate professionals and activities CISA considers essential:
- Residential and commercial real estate services, including settlement services.
- Staff at government offices who perform title search, notary, and recording services in support of mortgage and real estate services and transactions.
- Workers responsible for the leasing of residential properties to provide individuals and families with ready access to available housing.
- Workers responsible for handling property management, maintenance, and related service calls who can coordinate the response to emergency “at-home” situations requiring immediate attention, as well as facilitate the reception of deliveries, mail, and other necessary services.
- Workers performing housing construction related activities to ensure additional units can be made available to combat the nation’s existing housing supply shortage.
- Workers supporting the construction of housing, including those supporting government functions related to the building and development process, such as inspections, permitting and plan review services that can be modified to protect the public health, but fundamentally should continue and serve the construction of housing (e.g., allow qualified private third-party inspections in case of government shutdown).
CISA’s opinion is welcome news to major trade groups, which have pushed for real estate’s essential status as states, counties and cities are enacting “shelter in place” order that shutter non-essential businesses.
“Life’s basic needs are food, water and a roof over your head, which makes real estate an essential service,” Florida Realtors, that state’s largest trade association, wrote late last month.
“Prior homes have been sold, landlords have been given notice and families need to move – housing and finance are critical infrastructure for these families,” the National Association of Realtors, the American Land Title Association, Mortgage Bankers Association and National Association of Home Builders wrote in a joint letter prior to Krebs’ letter.
NAR estimates that every two home sales generate one job in the U.S. In 2018, the economic impact of the typical home sale amounted to nearly $85,000, NAR says.
In a separate letter to DHS, together with 90 organizations and suppliers, NAHB stated, “Housing is currently 14.6% of Gross Domestic Product and a major engine of the economy. Keeping the men and women of the industry building must be a priority. If the construction industry and its supply chain is disrupted, it creates a domino effect leading to dire negative economic repercussions for an already-burdened economy.”
Despite CISA’s letter, Katie Johnson, NAR’s general counsel said, as quoted in Realtor Magazine, that real estate professionals must continue to heed local orders on essential services.
“Being deemed an essential service means that you have a special responsibility and opportunity to continue operations if you choose to but not if you don’t,” she said. “It means you have the special responsibility and mandate to adhere to your state’s executive order regarding ‘essential services.’ ”
According to NAHB, five states currently have orders that postulate the suspension of construction activities. These states are Washington, New York, Pennsylvania, Vermont and Michigan.
Meanwhile, even if in-person home showings and closings have slowed down across the country, virtual tours, curbside appraisals and drive-thru closings have continued to cater to buyers and sellers under social distancing and “stay at home” instructions.
Relaxation of rules in New York
In New York, which is now grappling with the largest COVID-19 outbreak in the U.S., the Empire State Development agency unshackled several real estate activities from an earlier gubernatorial order that had deemed them non-essential.
On Wednesday, ESD stated that residential home and commercial office showings, home inspections, residential appraisals as well as back-office real estate work are essential but must continue to comply with safety directives.
“Our industry has been given a great responsibility in this time of crisis to help meet the needs of New York’s residential and commercial property buyers and owners, and the overall welfare of the local and state economy,” said New York Association of Realtors President Jennifer Stevenson. “But our priority must be to the safety of our customers, clients and indeed for ourselves, as we all continue to practice socially responsible distancing that is helping to flatten the curve during this national health crisis. Our mantra must be ‘safety first, work second.”