"V" Shapped Recovery?
The S&P 5000 and the NASDAQ have all bounced back into what has been referred to as a "V" shaped recovery. The axiom is the stock market moves in anticipation of the economy. Coming out of Shelter in Place is so unique that it is impossible to forecast a V Shaped Recovery for Silicon Valley.
We are now into our 3rd month of the Shelter in Place. San Mateo County Board of Supervisors have extended the rental freeze on evictions and the terms to it until June 30th. The death of an Afto-American man has created riots in various parts of America and our County. The results have been to further toss back the retail and restaurant industry from the virus lock down.
Rents are collapsing in Silicon Alley. How much they will decline is a guess. The publication linked in the previous sentence also has some 66% of those questioned willing to move from the area to lesser costly place if their jobs will allow. Facebook has already gone that way along with Twitter, and Linked in. I myself joined eXp Realty a cloud based realtor with some 29000 agents nationally and international as other realtors begin lay offs and close or limit operations.
Across the US short term rentals are facing consolidation as start ups and small landlords offload properties.
The most telling effect of the unemployment roles surpassing the 2010 Great Recession is the damage done to communities not expected to suffer. According to the Country Almanac. Atherton and East Palo Alto are now at 12.4%. Atherton is an enormous surprise as the starting price in central Atherton is $8 million and more. Everyone of the 11 industry sectors lost jobs.
When looking at rentals for Redwood City on Zillow the amount is 177. On the multiple listing service there are 14. On "Hotpads" there are 61. 5 rentals closed in May in Redwood City. Trouble ahead in Redwood City? One day ago the SF chronicle stated "Rents Plunge". With people moving out, social media workers able to work from home and Facebook employees ranking some 60% wanting to move out of the area, it makes sense to see rental prices plunge The question is how long? To add to the rental plunge CNBC has put in their comments on the rest of the United States.
Realtor.com says Home Buying activity may heat up fast. Interest rates are at all time lows. If the credit score is there and the 20% down payment is there homes can be gotten.
What is obvious is that Cheaper Cities will gain from "Work at home" now to consider how to make lemonade out of the lemons.
Near term outlook: home prices will soften with rental prices declining. When mom and pop landlords tire of subsidizing rents for unemployed tenants the "For Sale" sign will go up.
Begin to look at offering prices, and watch for price cuts, expired listings and withdrawals. They will be your best gauge to get value for your purchase. For sellers, don't look for a pop. The highs and opportunities are gone, today is today, not yesterday. Look at the price of a recent comparative sale and price it 10% under the comp. Take your profits sit back and wait for opportunity to follow. It may take 5 years for that to occur. If you don't have the patience to wait. Begin to look to cheaper cities. Cheaper cities will stand to gain from our restructuring, The proof will be seen in the New Housing Starts. They are improving and increasing the Hoauing stock at or near at highs should be enough proof that relocation is in order. As people look to relocate many would rent before they buy. This is an opportunity for a 1031 exchange.
The next 6 months to a year will be trying. Riots in the streets, COVID 19 may come back with the rioters, help Chinese land owners maybe wise to liquidate and move their money back home.
Hong Kong tensions will add risk to the world economy. That adds up to opportunity and being prepared to act.
Within the next week the numbers will be ready for new listings, pending and sold. The market direction cold begin to show signs of direction. Look out for reoccurrence of the pandemic from marches and improper contact. The participation looks to be 18-50 and that represents 50% of the infection reports. Close extended contact is the greatest risk for the virus to transfer.
Regards to all and stay healthy
Gary
We are now into our 3rd month of the Shelter in Place. San Mateo County Board of Supervisors have extended the rental freeze on evictions and the terms to it until June 30th. The death of an Afto-American man has created riots in various parts of America and our County. The results have been to further toss back the retail and restaurant industry from the virus lock down.
Rents are collapsing in Silicon Alley. How much they will decline is a guess. The publication linked in the previous sentence also has some 66% of those questioned willing to move from the area to lesser costly place if their jobs will allow. Facebook has already gone that way along with Twitter, and Linked in. I myself joined eXp Realty a cloud based realtor with some 29000 agents nationally and international as other realtors begin lay offs and close or limit operations.
Across the US short term rentals are facing consolidation as start ups and small landlords offload properties.
The most telling effect of the unemployment roles surpassing the 2010 Great Recession is the damage done to communities not expected to suffer. According to the Country Almanac. Atherton and East Palo Alto are now at 12.4%. Atherton is an enormous surprise as the starting price in central Atherton is $8 million and more. Everyone of the 11 industry sectors lost jobs.
When looking at rentals for Redwood City on Zillow the amount is 177. On the multiple listing service there are 14. On "Hotpads" there are 61. 5 rentals closed in May in Redwood City. Trouble ahead in Redwood City? One day ago the SF chronicle stated "Rents Plunge". With people moving out, social media workers able to work from home and Facebook employees ranking some 60% wanting to move out of the area, it makes sense to see rental prices plunge The question is how long? To add to the rental plunge CNBC has put in their comments on the rest of the United States.
Realtor.com says Home Buying activity may heat up fast. Interest rates are at all time lows. If the credit score is there and the 20% down payment is there homes can be gotten.
What is obvious is that Cheaper Cities will gain from "Work at home" now to consider how to make lemonade out of the lemons.
Near term outlook: home prices will soften with rental prices declining. When mom and pop landlords tire of subsidizing rents for unemployed tenants the "For Sale" sign will go up.
Begin to look at offering prices, and watch for price cuts, expired listings and withdrawals. They will be your best gauge to get value for your purchase. For sellers, don't look for a pop. The highs and opportunities are gone, today is today, not yesterday. Look at the price of a recent comparative sale and price it 10% under the comp. Take your profits sit back and wait for opportunity to follow. It may take 5 years for that to occur. If you don't have the patience to wait. Begin to look to cheaper cities. Cheaper cities will stand to gain from our restructuring, The proof will be seen in the New Housing Starts. They are improving and increasing the Hoauing stock at or near at highs should be enough proof that relocation is in order. As people look to relocate many would rent before they buy. This is an opportunity for a 1031 exchange.
The next 6 months to a year will be trying. Riots in the streets, COVID 19 may come back with the rioters, help Chinese land owners maybe wise to liquidate and move their money back home.
Hong Kong tensions will add risk to the world economy. That adds up to opportunity and being prepared to act.
Within the next week the numbers will be ready for new listings, pending and sold. The market direction cold begin to show signs of direction. Look out for reoccurrence of the pandemic from marches and improper contact. The participation looks to be 18-50 and that represents 50% of the infection reports. Close extended contact is the greatest risk for the virus to transfer.
Regards to all and stay healthy
Gary
Comments
Post a Comment