Bay Area Real Estate: The Effects Of Social Distancing
Here in the Bay Area we are living through the second week of the shelter in place order and cabin fever is running high. It affects all of our lives, and I hope you are staying safe, healthy and well-supplied.
We all need to live somewhere, and the real estate market did not stop with the move toward social distancing. Now we have some real data to start gauging the impact of the unprecedented measures that we are taking to control the spread of the coronavirus.
Let’s compare the week ending on March 22nd, the first week when the shelter in place order took effect against the previous week
We see the largest change in the number of new listings – in Santa Clara and San Mateo counties the number dropped from 566 during the week of March 15th to 227 during the week of March 22nd. That’s almost a 60% decline!
The number of new contracts went from 465 to 321, a 31% decrease. It is too early to talk about the direction of the market from a price point of view – sale prices will become public as these transactions close in the coming weeks.
From our own experience and from conversations with our colleagues, we are seeing mixed signals with some properties receiving multiple offers and selling significantly over asking price while other homes are receiving offers that are being rejected by the sellers.
We don’t know how long the current stay at home order will stand. Confronted with this uncertainty, some sellers decided to take a pause and remove their homes from the market. 351 listings, or 25% of the current inventory, were withdrawn or canceled the week of the 22nd. In comparison, only 69 homes were taken off the market the week before.
An encouraging sign of future health of the real estate market is the number of homes that are advertised as coming soon to the agent community. If not sold, these homes will be on MLS when the shelter in place order is lifted. Most of these properties are available for showings prior to being listed.
We don’t expect the current situation to develop into a housing crisis similar to 2008. Fannie Mae and Freddie Mac announced last week that homeowners who are not able to make their mortgage payments as a result of the coronavirus outbreak may be able to postpone them for up to 12 months. Some banks are also offering to delay mortgage payment for periods ranging from 90 to 120 days.
As always, if you have questions about our real estate market, we'd love to start a conversation. Don't hesitate to reach out at 650.766.6100!