DEJA VU PART 2
The ability to look back to give an indication of what the future could or will bring is essential when one looks to plan one's future. That could not be more the case in real estate than it is now.
2009 is the most recent period we can look at. Remember the term "Black Swan", an unlikely event that occured? At that time it was the mis pricing of real estate values due to the packaging of bonds created from mortgages. The mis pricing that occured in that the risk was improperly recognized. What followed was foreclosures, unemployment, lack of mortgage money and to a certain extend illiquidity in real estate. It also created the best opportunity to buy real estate.
It took the stock market as we measure it in the S&P 500 to gain back a 58% drop in value about 4 years to hit the peak from the collapse. During that period, great opportunities in real estate occured.
What we have now is something that is close but far from the crisis level that was created in 2009. We are beginning to see some of the crisis markers of 2009. Mortgages are becoming tight. 20% down is a must, jumbo mortgages are rare, credit score 700+, employers are being asked to sign a document attesting to the lender will not be laid off.
In 2 months we have gone from 4% unemployment to 15%+ unemployment of 30 million people. The government is sending money to citizens to help them get by while a battle goes on to end the pandemic caused by COVID 19. We dare not to leave our homes, if so we wear a mask and gloves, wash our hands regularly and whenever possible use hand sanitisers.
To add to the financial issues affecting real estate the new normal has changed the old normal. Open houses and brokers tours ceased. They are replaced by Virtual Tours. Flyers are no longer allowed, only mail and electronic distribution allowed. In person showings can only occur when the occupants are gone to a maximum of two persons wearing masks, booties and gloves. Interior doors must be opened. A form called a PEAD, which I previously sent you in a prior Blog, must be signed by all parties before viewing and new forms warning of COVID 19 signed at the close of escrow. Additional form to note that lender could cancel financing commitments if they determine it necessary. Review the past Blog and you will find the new forms.
That will and has had an effect on real estate inventory and sales. Many sellers want to wait until the Shelter in Place ends. Buyers will do so also. So who is left.
Those willing to use opportunity to buy will be left to look for value and discounts. Sellers who must do so for personal or financial reasons are left in creating inventory. This is the one month Snapshot as of April 27, 2020 for our area
Consumer Confidence is falling.
We are going through an large adjustment in both how we live our lives and how we will live our lives in the future. To those of you who are buyers, I urge you to begin and finish your search before the Shelter in Place ends. For sellers please realise that things change and how it was 2 months ago it is not the same today nor will it be tomorrow and the tomorrow's in the future.
2009 is the most recent period we can look at. Remember the term "Black Swan", an unlikely event that occured? At that time it was the mis pricing of real estate values due to the packaging of bonds created from mortgages. The mis pricing that occured in that the risk was improperly recognized. What followed was foreclosures, unemployment, lack of mortgage money and to a certain extend illiquidity in real estate. It also created the best opportunity to buy real estate.
It took the stock market as we measure it in the S&P 500 to gain back a 58% drop in value about 4 years to hit the peak from the collapse. During that period, great opportunities in real estate occured.
What we have now is something that is close but far from the crisis level that was created in 2009. We are beginning to see some of the crisis markers of 2009. Mortgages are becoming tight. 20% down is a must, jumbo mortgages are rare, credit score 700+, employers are being asked to sign a document attesting to the lender will not be laid off.
In 2 months we have gone from 4% unemployment to 15%+ unemployment of 30 million people. The government is sending money to citizens to help them get by while a battle goes on to end the pandemic caused by COVID 19. We dare not to leave our homes, if so we wear a mask and gloves, wash our hands regularly and whenever possible use hand sanitisers.
To add to the financial issues affecting real estate the new normal has changed the old normal. Open houses and brokers tours ceased. They are replaced by Virtual Tours. Flyers are no longer allowed, only mail and electronic distribution allowed. In person showings can only occur when the occupants are gone to a maximum of two persons wearing masks, booties and gloves. Interior doors must be opened. A form called a PEAD, which I previously sent you in a prior Blog, must be signed by all parties before viewing and new forms warning of COVID 19 signed at the close of escrow. Additional form to note that lender could cancel financing commitments if they determine it necessary. Review the past Blog and you will find the new forms.
That will and has had an effect on real estate inventory and sales. Many sellers want to wait until the Shelter in Place ends. Buyers will do so also. So who is left.
Those willing to use opportunity to buy will be left to look for value and discounts. Sellers who must do so for personal or financial reasons are left in creating inventory. This is the one month Snapshot as of April 27, 2020 for our area
| Housing Inventory Snapshot | April 27, 2020 | |||||||
| Average List Price | 30 Day Trend | Average Sold Price | 30 Day Trend | Average DOM: active/sold | 30 Day Trend | Number of Active Listings | 30 Day Trend | |
| Santa Clara County, CA | ||||||||
| Single Family | $1,398,393 | -4.55% | $1,420,438 | -2.54% | 20 / 14 | -16 / -4 | 695 | 152 |
| Luxury Single Family | $5,049,660 | -16.28% | $3,504,232 | -4.42% | 55 / 30 | -29 / 7 | 219 | 53 |
| Condo/Townhome | $750,519 | +1.19% | $750,605 | +4.13% | 12 / 16 | -12 / -6 | 301 | 74 |
| Luxury Condo/Townhome | $1,479,064 | -0.80% | $1,443,951 | +2.56% | 12 / 12 | -9 / -8 | 92 | 18 |
| San Mateo County, CA | ||||||||
| Single Family | $1,826,489 | -4.88% | $1,721,686 | -8.12% | 14 / 16 | -14 / -1 | 324 | 64 |
| Luxury Single Family | $8,125,348 | -10.84% | $8,483,750 | +39.86% | 101 / 113 | -22 / 33 | 105 | 22 |
| Condo/Townhome | $872,562 | +3.99% | $936,502 | -1.06% | 24 / 15 | -11 / -3 | 83 | 17 |
| Luxury Condo/Townhome | $1,656,610 | +2.74% | $1,652,778 | -0.35% | 24 / 23 | -17 / 13 | 23 | 5 |
| Santa Cruz County, CA | ||||||||
| Single Family | $976,093 | +2.70% | $948,852 | +0.43% | 29 / 27 | -15 / -22 | 206 | 30 |
| Luxury Single Family | $3,133,233 | -4.12% | $3,017,500 | N/A | 67 / 50 | -27 / -77 | 64 | 7 |
| Condo/Townhome | $657,739 | +2.75% | $600,122 | +0.52% | 36 / 14 | -26 / -36 | 60 | -1 |
| Luxury Condo/Townhome | $1,141,765 | +0.72% | $1,097,667 | +15.67% | 65 / 37 | -26 / 13 | 17 | -2 |
| Monterey County, CA | ||||||||
| Single Family | $1,133,841 | -4.63% | $814,848 | -5.18% | 63 / 30 | -16 / -25 | 353 | 7 |
| Luxury Single Family | $6,042,414 | -3.34% | $4,485,786 | +8.90% | 125 / 120 | -16 / -66 | 124 | 3 |
| Condo/Townhome | $539,992 | -1.71% | $441,000 | +2.77% | 40 / 55 | -18 / 28 | 59 | 0 |
| San Benito County, CA | ||||||||
| Single Family | $628,048 | -1.81% | $595,927 | -3.42% | 22 / 67 | -23 / 21 | 96 | 16 |
| Luxury Single Family | $1,504,853 | -8.95% | $1,120,000 | +4.55% | 69 / 9 | -5 / -91 | 30 | 6 |
| Alameda County, CA | ||||||||
| Single Family | $897,769 | +1.07% | $968,415 | +5.09% | 18 / 16 | -12 / -2 | 514 | 115 |
| Luxury Single Family | $2,140,945 | -5.66% | $1,907,994 | -11.35% | 41 / 18 | -20 / -6 | 166 | 34 |
| Condo/Townhome | $609,321 | +1.38% | $605,644 | +2.64% | 18 / 27 | -11 / 3 | 242 | 45 |
| Luxury Condo/Townhome | $1,008,356 | -0.43% | $981,895 | +0.51% | 19 / 12 | -16 / -10 | 78 | 13 |
| Contra Costa County, CA | ||||||||
| Single Family | $709,488 | -0.61% | $695,347 | -2.66% | 20 / 21 | -13 / -6 | 725 | 118 |
| Luxury Single Family | $2,339,796 | -8.74% | $1,673,640 | -10.96% | 40 / 13 | -16 / -11 | 231 | 31 |
| Condo/Townhome | $455,852 | +4.69% | $428,030 | -3.96% | 20 / 21 | -11 / -7 | 198 | 13 |
| Luxury Condo/Townhome | $989,991 | -0.12% | $875,458 | -2.54% | 21 / 25 | -16 / 9 | 61 | 6 |
Consumer Confidence is falling.
We are going through an large adjustment in both how we live our lives and how we will live our lives in the future. To those of you who are buyers, I urge you to begin and finish your search before the Shelter in Place ends. For sellers please realise that things change and how it was 2 months ago it is not the same today nor will it be tomorrow and the tomorrow's in the future.
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