How Is The Coronavirus Impacting The San Diego County Housing Market?
Let’s face it: we are living in strange times. At least we’re going through it together and can lean on each other (from six feet away, of course).
For the state of California, the COVID-19 situation very quickly went from bumping elbows, to social distancing, to a mandatory stay-at-home order set on March 19th by Gov. Gavin Newsom. This has understandably resulted in growing concerns about our the San Diego housing market.
Let’s backtrack a bit. Spring is typically considered the best time to buy and sell a home, and the market was trending that way. Just days (yes, days) before the outbreak became a serious topic for us, our San Diego housing market was on fire. On any given home for sale, multiple offers were expected, with some receiving 15 or more offers for significantly more than the asking price. Consequently, home values were on the rise.
Panic over the coronavirus caused the stock market, and therefore mortgage rates, to decline. While short term declines in the stock market can sting, borrowers who lock in at low rates will benefit significantly in the long term. Many buyers were taking advantage of these incredible mortgage rates in the 2% to low 3%. To add to this highly competitive market, our monthly supply of homes had been sitting at record lows at about 1 month, much less than previous years.
As the coronavirus cases increase each day, businesses have closed, unemployment is on the rise, and fortunately, more people are taking the stay at home order seriously. It is no surprise that the our housing market is being impacted — following the mandatory stay-at-home order, the California Association of REALTORS® (CAR) also asked all members to follow all CDC and existing local health protocols for protecting against the spread of COVID-19. As a result, many real estate agents are pivoting and offering virtual services.
So how badly is the San Diego housing market being affected and is this still a good time to buy or sell a home? Ultimately, the impact will depend on how long the virus and the mandated stay-at-home order last. For now, the evidence is largely anecdotal — yes, some deals are falling out of escrow due to some buyers getting ‘cold-feet’, but many recent sales are still on track to close. The average days a home is on the market for sale is still about 30 days and home values are holding strong. This is all consistent with what our market had been experiencing before the virus outbreak. We will start to see more data related to the impact of the virus in the coming weeks.
How can real estate agents continue to serve those with immediate needs? Today, the U.S. Department of Homeland Security Cybersecurity and Infrastructure Security Agency (CISA) updated its list of essential services during the COVID-19 crisis and included residential real estate. My team and I have adapted our client interaction and project management tools to virtual platforms. We are able to submit electronic offers, offer virtual home tours and facilitate home buying and selling coaching sessions, all from the comfort and safety of your couch. In addition, to protect our clients, CAR added a coronavirus addendum to contracts, so sellers and buyers can plan for potential delays due to quarantines or the closure of business and government offices.
In summary, the longer the crisis lasts, the harder it will be for businesses to re-open and for everyone to regain financial confidence. However, many out there still have immediate needs for real estate services — sellers will still put their homes up for sale now and show them virtually. As for demand, some buyers could put their search on hold, yet many others who are looking to buy now will adjust to virtual options, take advantage of the current low mortgage rates and if necessary, make use of the addendum and other options available to protect themselves.
Fortunately for all, to prevent some of the expected economic damage, the government and mortgage lenders are providing options. The U.S. Senate passed a $2-trillion relief package that includes business loans, direct cash payments to consumers and increased unemployment benefits. To help homeowners who may be experiencing financial distress during the outbreak — some the nation’s largest banks, including Wells Fargo, US Bank, Citi, and JP Morgan Chase and others have agreed to defer mortgage payments. Although at this point, a recession can no longer be avoided, all of these preventive efforts could support a faster economic rebound.
As for the latest on all of this, as I receive news update, I will share relevant details and continue to keep you informed.
Sources: NAR, CAR, SDAR, Marketwatch.com and professional experience.
Read more about Real Estate now listed as an essential service HERE.
To find out about mortgage payment deferral options available to you, please contact your mortgage servicer directly.
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