The New Normal in Real Estate Sales

LIFE AND HOME SALES DURING THE COVID 19 PANDEMIC, WEEK 3

We are now finishing our 3rd week with the Shelter at Home orders by Governor Newsom.  Cities and Counties have followed up with their orders.  It does not appear that the order will expire until after May at this point.  Next week is the height of deaths and infections per the medical community advising our governmental leaders. STAY AT HOME!

The California Association of Realtors have put together forms that require full disclosure of potential issues to protect both the buyer and the seller of real estate in California.  The first is a Quick Guide to Real Estate Transactions in a Safer at Home Environment for Covid 19.  Buyers and sellers should review this link as the realtor must comply.  Being self-informed is far better than word of mouth.  For the seller there is the Listing Agreement Coronavirus Addendum or Amendment.  Whether you are presently listed or planning to list this is an essential form for completion.  Once the buyer has chosen a property to view there is the Coronavirus Property Entry and Advisory  To complete the advisory there is the Notice of Unforeseen Coronavirus Circumstances. Finally there is the Revised Coronavirus Addendum and Amendment to the Purchase Agreement.

There is much more for the real estate agent to manage along with various forms and document review that a brokerage firms may require.  Then there will be the normal packet of disclosure documents that the seller must complete, sign or initial and the buyer to complete, sign or initial.

I had originally thought that prices would decline as buyers would back away.  That was the historic of the real estate price action when related to the S&P 500.  This is not a normal circumstance.  The results of March are in and Menlo Park has seen offers 104% over list with a 27 day inventory of homes for sale.  Palo Alto is 106% over list with 2.1 months of inventory.  Portola Valley is 98% of list and 3.8 months of inventory and sales within 34 days of listing.  Woodside is 98.4% off list after being on the market 33 days with 4.5 months of inventory.  Atherton was 95% of list after being on the market 128 days and 4.4 month inventory of homes for sale.  Redwood City sold 104% over list after 17 days on the market and 30 days of inventory.

Many of the high priced homes have seen cancelled listings.  Over all there have been cancelled, expired and withdrawn listings in the areas stated above, but they do not match the new listings that still are coming onto the market; along with pending/contingent and sold properties.  

The new normal of being at home has lead to buyers looking at virtual tours and cloud based packages to review properties and the disclosure packets.   Once that is done they are ready to view the property, mask on, gloves on, booties too; don't forget to sign all the new forms!  Sales then occur with all the disclosures signed and filed with escrow, all electronically.

Escrow companies are ready too, with online signatures. Notaries in parking lots ready to witness the signature of forms.  We are in a new normal with buyers and sellers that are ready to accept.  Thanks to Zoom, Amazon, Docusign and the bevy of online sources sellers and buyers are fully knowledgeable on the process of kicking real estate into the 21st Century.  I expect the notary to end soon and also become electronic.

Real Estate is one of the last areas of our economy that has hung onto the old generation of administration and operation.  The biggest change and New Normal will be in how your realtor and title/escrow company operate.  The days of Open houses will end.  Realtors will ask buyer to review the virtual tours thoroughly before a home visit is made.  How many times will a buyer complete forms to view a property and a seller accept without a semi-firm commitment of an interested buyer will be an area of interest.  Only time will tell that case.

The next issue I would like to see is how the work at home situation carries itself out.  I have been working at home for over 6 years.  Each year it becomes easier and easier.  The only issue is up-to-date computers and software.  The days of Realtor offices on every corner will soon go.  Real Estate agents are now in the situation of Netflix in the Blockbuster era.  Amazon and the corner store era.  

What will happen to the Campuses of Apple, Google and Facebook?  Will their employees work from home and be on conference meetings via a firm network?  It sounds highly probable to me.  With that the case, will the employees want to live in a high priced Silicon Valley community?  Will the need to be in Menlo Park, Los Altos and Palo Alto because of their downtown areas diminish?  Six foot distancing will impact health clubs, restaurants, football games, baseball games.  WILL THE GRAY TSUNAMI of Baby Boomers occur?  Baby boomers may just feel far more comfortable in their home than a +55 Community or a Senior Center.  When I look at the Real Estate investment Trusts that specialize in Senior Communities drop 70-80% it tells me that there are some major issues are at hand for those communities.  

Looking forward to Week 4 and PRAY that Angel of Death passes us all by.