March 2020 Market Update: Impact of Covid-19
March housing data is in. Through all of the uncertainty it is helpful to take a look at the facts. Whether you are a buyer looking to find a deal, or a seller looking to sell your home efficiently, this information is for you. Jordan G. Levine, the Deputy Chief Economists for the California Association of Realtors, shared a market update on May 6, 2020 shedding light on facts and figures from the past March. Here are some key takeaways from the valuable data that he shared.
Pre Covid-19 Stay In Place Orders
- Prior to Covid-19 the California housing market was stable, strong, and showing signs of a promising year.
During Stay In Place Orders
- Since the stay in place (SIP) orders the housing market and general economy is definitely feeling the Covid crunch.
- The economy shrunk approximately 5% the last 2 weeks of March (Q1)
- 2 out of 5 Realtors reported offers were withdrawn due to Covid and SIP orders.
- 1 out of 2 Realtors reported sellers had withdrawn listings since SIP orders
- Cancellations for March topped 30%. A staggering 84% of these cancellations were initiated by the buyer which signals buyers lack of confidence in the market.
- Buyers are expecting lower prices, however, sellers have seen very minimal impacts to list prices.
- Sales volume was down by 28% since March.
- Mortgage applications declined in March.
Post Stay In Place Orders
- Q2 numbers are expected to be grim.
- New listings have been increasing. A sign that sellers are still confident that they can sell their homes.
- Impacts to listing prices should remain in the single digits.
- Mortgage applications have begun rebounding throughout April.
Overview
The most important fact in all of this is that the economy and housing market is being impacted by Covid-19 and the symptoms that it has caused are unemployment, furloughs, shut down businesses, mortgage forbearances, etc. The moment that Covid-19 is controlled the economy can get back to business, but it won’t be business as usual. With the outlook being 18 months before we get our arms around Covid-19, there are still many uncertainties that we will experience in the interim.
One thing that many economists agree on is that the housing market will not reach the lows of the 2008 Great Recession. If you are a buyer waiting for these lows please do not hold your breath. Remember, prior to Covid-19 there was a housing shortage. Although times are uncertain, the demand is still high.
The ideal buyer in this Covid-19 market is considering a long-term investment (10-20 years) and enjoys stable employment. The ideal buyer can see past this 1-2 year window of uncertainty. The ideal buyer understands the value of appreciation, lifestyle & health impacts, as well as the concept of generational wealth that homeownership can provide. The ideal seller has a solid understanding of the economic implications of listing their home in this climate & will price their home strategically utilizing the latest comparables and market data. Sellers should remember that the market you sell in is the market you buy in. Play nice.
With sellers having left the market in higher numbers than buyers since SIP, and buyers activity remaining consistent, the market is still teetering to a sellers market. SIP orders are gradually being lifted, buyers are showing up to private and virtual showings, mortgage applications are increasing, and listings are hitting the market again. It looks as though buyer will definitely gear up to hit the market, especially as rental agreements begin to expire and they are confronted with the option of renewing their lease or owning their home.
There are still many unanswered questions. We will not get any more clarity until we see April and May facts and figures. In the meantime, if you are a buyer or seller looking to navigate the Bay Area real estate market, contact me below.