Coronavirus Update: How’s the East Bay’s Spring Real Estate Market?
APRIL 10, 2020 – How’s the market?
Simple question. Not so simple to answer. We are 3+ weeks into shelter-in-place, and we’ve been reading real estate industry news (obsessively, friends and family might say), attending virtual brokers tours, looking at sales data, and learning about lending changes so we can help clients make major decisions in the coming days, weeks, and months.
The burning questions are “Should I sell now?” “Should I buy now?” “Can I get a loan?” “Will I find a deal?” “Will I get lowballed?” and, frankly, “What the heck is going on out there???”
Let’s get into it…
Covid-19 has slowed but not stopped East Bay home sales.
We’re seeing substantially fewer sales. No surprise. People are waiting to see how the market shakes out.
The number of East Bay transactions stumbled in March, but prices remained stable or even rose slightly compared to a year ago. See stats for your city in the graphics below.
April might (probably) be a very different story. Remember that most homes sold in March were listed before Californians were ordered to shelter-in-place (SIP). Until about mid-month, it was business-as-usual with open houses, staging, fast loan approvals, etc.
Home sales data lags by at least 30 days, so it’s going to be a few weeks before we know more. Anecdotally, we are seeing properties get into contract at prices that are not far off our spring market.
Will home prices drop?
No, yes, maybe…
Home prices today are affected by several factors, including the laws of supply and demand and how easy or hard it is to buy and sell.
Supply and demand: Before Covid-19, the Bay Area housing supply was at a historic low. High demand sent prices skyrocketing.
Today, the inventory is shrinking even more because sellers are watching and waiting. Buyers are still out there and competing for this limited number of properties.
Not as many buyers, of course, because of layoffs, furloughs, salary cuts, stock market swings, changing lending guidelines and loan availability, and difficulty seeing properties in-person. But buyers are there. The Bay Area is blessed with a strong tech sector filled with folks who can work from home and aren’t facing job losses.
Does this sound like a perfect set-up for high prices to continue?
Selling and buying a home while SIP isn’t easy: We’re not allowed to make cosmetic upgrades to prepare for sale, and stagers aren’t allowed to work. If your property is not vacant, it can’t be shown. If it is vacant, agents must follow very strict protocols to show it.
Agents are leveraging amazing tech for virtual tours, but it takes some getting used to for prospective buyers.
Anything that’s harder to do will mean less people will do it, which could negatively impact sales prices.
Bottom line: Prices will likely drop a bit this spring, but not at the doom and gloom levels the bargain hunters hope for. Stay tuned.
Can buyers still get a loan?
Lenders are still approving loans. Just be aware that loan requirements have become more stringent as lenders figure out how to quantify the long-term lending risks. Mortgage investors need to do the same thing.
At the same time, banks are falling all over themselves to lend to highly qualified buyers.
We’ve mentioned this before, and it bears repeating: Conforming and FHA interest rates are at all-time record lows, so lock it in now.
Should you buy now?
Now is your time to buy with less competition – and with a fantastic loan.
If you want to buy now, do what you’ve always done. Go online and view the photos, property videos, virtual tours, and disclosures. Drive by and check out the neighborhood. Make sure you are pre-approved for a loan.
Then, when you’re ready, we can talk about a scheduled showing (with strict social distancing precautions).
Should you sell now?
If you want to sell, we recommend you move out if possible. Vacancy makes everything so much easier, and you’ll probably get a bump in price because of it.
Let us work our virtual magic to present your property in the best light and work our contacts to find qualified buyers. You may get fewer people walking through, but those who do will be fully qualified.
You might need to be a bit more patient, and you might not get the stratospheric price you dreamed about. But if your home has what buyers are looking for, and of course it does because you love it, we’ll find your buyer.
There is a lot to be nervous about. We get it! The market indicator charts look like something your 5-year-old drew in art class.
But we still live in one of the most amazing places on Earth, the Bay Area economy makes the virtual world go ‘round, and the real estate market is fundamentally strong.
We will come through this, and we will be stronger.
We’ve got you. Let’s talk.