Have you thought about moving amid the coronavirus pandemic?
Is your Instagram feed littered with captions reading “Surprise! We bought a house!” underneath photos of couples posing with sets of keys and whimsically colored front doors? Have you seen unbearably long lines for open houses in your own neighborhood?
If it seems like the hottest pandemic purchase is a home, well, it’s not just your hunch telling you that.
A shocking volume of homes are selling rapidly, according to recent data. The National Association of Realtors (NAR) released a report in late September finding that existing home sales had hit a 14-year high in August. Separately, Bloomberg reported that if homes continued to sell at that rate, the US would run out of new homes inventory in just over three months, the shortest such time frame in records dating all the way back to 1963.
It’s only been sinking since then.
As the fall progresses, builders have tried to remedy the shortfall, starting construction at a seasonally adjusted annual rate of 1.42 million in September, a 1.9% increase from the previous month and an 11% increase year-over-year, per Census data.
Buying a home right now isn’t nearly as affordable as low mortgage rates promise, with low supply continually ratcheting home prices up. And it’s only going to become more expensive, potentially dashing future homeowners’ dreams.
Houses are selling at an almost unbelievable rate
October was the fifth-straight month that existing home sales trended upward, per NAR. It also found that roughly 6 million homes were sold at a seasonally adjusted annual rate in August —the highest annualized sales rate since 2006. The figure also represents a 10.5% year-over-year increase. In September, 6.5 million homes were sold at a seasonally adjusted annual rate, up 21% from one year ago. In October, 6.85 million homes were sold at a seasonally adjusted annual rate, up 26.6% from one year ago.
New home sales have trended upward recently, too. Bloombergreported that sales of new construction jumped to 342,000 in August — also a high mark since 2006. Inman separately reported that the sale of new single-family homes spike in October, a surprising 41.5% above last year’s estimate.
Those interested in buying new digs, or the perks that accompany the purchase like spacious backyards and comfortable work-from-home locales, are willing to pay more than ever before.
“Buyers are willing to pay more for a house than I’ve ever seen — I’m talking $30,000 to $50,000 over the listing price,” one Baltimore real estate agent told Redfin recently. “They’re desperate because homes are flying off the market so quickly. I’m selling all of the homes I’m listing within three days.” Later, Redfin reported that one-third of homes on the market in September sold above listing price, the highest level ever recorded.
The eagerness to buy a home is also fueled by low mortgage rates — mortgage applications are up 22% compared to last year. Mortgage rates now are among the lowest ever offered — US 30-year mortgage rates have hit a dozen lows in 2020 alone.
But home prices are skyrocketing and homebuying is only expected to get harder
Those low mortgage rates, along with the urge to find shelter during the pandemic, seem to have brought so many homebuyers into a market where bargains are hard to find. Redfin found that as of the end of July, lower mortgage rates had given buyers an extra 6.9% in purchasing power, but house prices were up 8.2% year-over-year at that point — and they’ve kept going up since.
In fact, the 2% appreciation in national home prices between May and July was the biggest two-month jump since at least 1991, which was when the Federal Housing Finance Authority started tracking those changes in an index.
Those who already own homes are holding off on selling, according to Zillow economists, meaning there are fewer homes on the market than normal. There are 20% fewer houses for sale now than there were at this time last year. NAR found that the country’s total housing inventory dropped to 1.47 million in September — enough to last a record-low 2.7 months. In October, it continued to dip down to 2.5 months.
Uncertainty about employment and the economy among other financial concerns may keep housing supply low for some time, and is exacerbated by the US’ failure to keep up with home building needs over the past decade.
Even though record-high numbers of newbuilds were purchased earlier in the pandemic, new-construction listings dropped 33.6% year-over-year in August, according to a Redfin analysis, meaning that not enough homes are being built to keep up with demand.
“Housing demand is robust but supply is not and this imbalance will inevitably harm affordability and hinder ownership opportunities,” NAR’s chief economist, Lawrence Yun, said in the association’s report.
We’re already seeing the effects of this — the FHFA reported that home prices jumped 6.5% nationally in July on a year-over-year basis. Separately, NAR found that the national median home price in August was $310,600, up 11.4% from last August. In September, the national median home price jumped up to $311,800, up almost 15% from last September. In October, the national median home price was even higher still at $313,000, up 15% from last October.
Median home prices of single-family homes and condos are currently less affordable than historical averages in roughly two-thirds of the US, according to a Thursday Attom Data Solutionsreport.
“In a year when nothing is normal, owning a single-family home has become less affordable to average wage earners across the US, despite conditions that would seem to point the opposite way,” Todd Teta, Attom’s chief product officer said in the report, noting that higher wages and lower mortgage rates “should work in favor of home buyers.” The report went on to note that home price appreciation outpaced average weekly wage growth in most — 87% — of the country this month.
Meanwhile, as prices rise due to demand, mortgages are becoming even harder to come by. Lenders are tightening standards due to the coronavirus recession, per the Mortgage Bankers Association. It reportedly hasn’t been this hard to take out a mortgage since 2014.
The unfortunate combination is enough to make homeownership simply unattainable for the average American as the pandemic wears on.
Newly minted homeowners are already regretting their decision, too. A late August LendEDU survey found that more than half of Americans — a whopping 55% — who purchased homes amid the pandemic almost immediately reported buyer’s remorse. Roughly 30% of those respondents cited financial reasons.
By: Taylor Borden
At this time in 2020, Bay Area real estate experts were looking at a bright year ahead. The market was continuing its steady growth year after year, in both the housing market and the rental market. But in March, the market ground to a swift halt and an uncertain rest of the year loomed.
Interestingly, and perhaps surprisingly, it ended up being a fairly good year for the Bay Area housing market — just in a very different way than many predicted. As buyers sought more space, especially private space, single-family homes in both San Francisco and surrounding suburbs soared in price and demand, while rental averages plummeted and downtown condos languished. We asked Bay Area real estate experts what they foresee for the year ahead.
It’s time to buy a condo
Almost every person we spoke with mentioned uncertainty being the continued theme of 2021. The sputtering vaccine rollout is the biggest factor, which will likely dictate how quickly life gets back to “normal.” That said, if you’re in the market for a condo in San Francisco, that means you could get a great deal. “You can buy a condo for 2018 prices right now,” Redfin chief economist Daryl Fairweather said. “I think we will see many more condo listings next year and prices could come down even more this year. As they come down next year, it could be the opportunity for those that have been wanting to buy for a while and were previously priced out.”
She said mom-and-pop landlords may be more likely to sell their rentals after the tumultuous year, increasing inventory further and opening up spaces for even those simply interested in an investment property. “Condo prices are going to drop enough that people will see a good investment opportunity. They’ll be able to get in at a good price. There will be an increase in demand once things open up.” Fairweather said.
Compass real estate agent Emily Beaven said it’s an especially good time to get your foot in the market if you’ve been renting and considering buying. She just advises not to wait too long.“It is a fantastic time to buy a condo,” she said. “I have heard that foreign buyers will be coming back though, and I think they will snatch up all these condos sitting around that are a deal. I think there are savvy people out there. The savvy people that believe in San Francisco are going to wipe out that condo inventory for us.”
The suburbs are still hot hot hot
In their search for home offices, backyards and more space, many homebuyers began to gravitate toward the greater Bay Area in 2020, creating more demand in places where competition usually wasn’t as fierce. Oakland-based Redfin agent Neal Conatser said he’s seen a surge of interest in Lafayette-Moraga-Orinda that he expects to continue in 2021. “[For buyers from San Francisco], instead of immediately focusing on the Oakland and Berkeley area and trying to replicate the lifestyle they were used to, they’re willing to entertain a more dramatic shift,” Conatser said. “That’s opening up different neighborhoods and different options for people.”
Much of this interest is also driven by the availability of remote work, which for some employers has been decided but many have not. But, that doesn’t seem to concern homebuyers. “I’ve even had buyers say, ‘Even if they do require me to come in [to the office] everyday, hey, maybe I’ll find a new job,’” Conatser said. “Buyers seem confident in what they’re looking for and in terms of their employment.”
This could even push people to move outside the Bay Area. “The trend of people moving away from city centers I think will continue this year,” Fairweather said. “Remote work is going to have people looking farther out, even as far as Sacramento.”
Real estate norms are still shifted
Open houses used to be an important part of the home-buying process, but they likely won’t be back in 2021. For both agents and sellers, this is actually a positive change. “We haven’t seen a negative consequence from not having open houses from a seller point of view,” San Francisco real estate agent Danielle Lazier said. “The majority of people that come to an open house are not the people that are going to buy the house.”
We’ll hit the bottom of the rental market, eventually
Experts agree we’re not at the bottom yet, but we’re close. “There are still more renters moving out of the Bay Area than moving in,” Zumper analyst Neil Gerstein said. “What we’re watching as things return to normal: Will renters return or will the Bay Area cities become discounted enough that new people want to come in and take advantage of those prices? No matter what, I don’t think we’re at the bottom yet. Prices will continue to decrease in the short term. I wouldn’t say we’re at the bottom yet, but we could be nearing it.”
Igor Popov, chief economist at Apartment List, said it’s normal for rents to be lower right now and it will likely continue through February. Ultimately, it all depends on the vaccine rollout, he said.
“If the public health progress continues on a good track, the normal thawing of the market is when we may see rents climb again,” Popov said. “We usually see the biggest rent increase in July and August. The moment when people feel safer engaging in urban amenities, and if those times line up with the rental market, those rents could bounce back pretty quickly. If the public health rebound misses that, we could see a frumpier year.”
If you’re looking for a new rental in San Francisco, it’s a good time to search. “It’s a great time to make the Bay Area your home. The city is certainly at a discount,” Gerstein said.
Space is crucial, for renting and buying
Outdoor space and “zoom rooms” were important for house hunters in 2020, but space was essential for renters, too. “We’ve seen a trend of more space per person. Maybe people are less willing to share space with lots of roommates,” Gerstein said. “More space per person could be a trend we continue to see.”
While this was an unexpected year, Popov said the real estate market tends to swing like a pendulum, and we can expect a swing in 2021. “The pendulum really swung from cities toward suburbs last year. Now I think in 2021, and obviously, it depends on public health, naturally, everything will swing back,” he said. “Now everyone will adjust back to a post-vaccine world that hopefully comes soon.”
One thing is certain though, Popov said. “I think we’re going to see a lot of people move in 2021. And the Bay Area will be at the epicenter of the conversation.”
In just a matter of months the coronavirus pandemic dramatically changed the landscape of the housing market, especially in big cities. But now news of a promising vaccine could turn the market on its head again.
Will people return to cities?
Buyers won’t leave the suburbs behind
Will mortgage rates stay low?
The Bay Area will always have its advantages when it comes to our geographical landscapes. I believe that is one of the reasons why the Bay Area will always be the most desirable places to live in the United States. Here are a few of my favorite trails and hikes you should visit during the summer months ahead.
Iron Horse Trail
Lake Chabot Loop
East Ridge to West Ridge Loop
Flag Hill Trail
Point Reyes National
Tilden Regional Park
Drake Estero Trailhead
P.S. Make sure your phone is fully charged, bring water, a snack, and enjoy some of the most beautiful views that the Bay Area has to offer!
Attention! Attention! “Defend Our Front Line Hero’s” are looking for local businesses and individuals to sponsor care packages for our essential hero’s in our community. We must not forget about our Health Care Workers, First Responders, and All of the Essential Workers that are helping and making our lives easier during this trying time. For more information on how you can help please contact John & Vonnie Wilson at DefendOurFrontLineHeroes@yahoo.com | 925-785-5598 or 925-785-5638
A once-in-a-century pandemic, widespread lockdowns and economic woe — none of it was enough to keep Bay Area home prices from going up.
Bay Area single family homes sales fell nearly 10 percent in March, but eager buyers continued to push prices higher despite coronavirus concerns and restrictions.
Median sale prices in the region increased 1.5 percent, led by year-over-year gains in the counties of Alameda (5.1 percent), San Mateo (6.5 percent) and Santa Clara (4.8 percent) , according to a Zillow analysis. Contra Costa County home prices grew 1.9 percent from the previous March. The median sale price for a single family home in seven Bay Area counties was $899,800.
Fewer buyers searching for even fewer homes kept prices elevated for the third straight month. Median prices rose 1.9 percent in January and 2.8 percent in February, according to a Zillow analysis of the entire region.
The pandemic has slowed sales, but buyers and sellers have retreated from the market at an equal pace. Zillow economist Jeff Tucker said that as sellers took their homes off the market, demand remained strong and prices stayed up. “No sign of a slowdown yet,” he said.
New listings in the last week of March fell 50 percent from the previous year in San Francisco and the East Bay, according to Zillow data. New listings in the San Jose metro area dropped 34 percent compared to the previous March. The drops were some of the largest in the country, Tucker said.
“We entered the crisis with pretty much record low inventory,” he said. The pandemic has further cut the number of homes for sale, both nationally and in the Bay Area, he said.
March single family home sales actually grew 5.3 percent, year-over-year, in Contra Costa County, according to Zillow. But sales fell 18 percent in Alameda, 9.3 percent in San Mateo and 9.9 percent in Santa Clara.
The median price hit $668,300 in Contra Costa County, $928,000 in Alameda, $1.52 million in San Mateo, $1.6 million in San Francisco, and $1.25 million in Santa Clara County. Data was unavailable for Napa and Marin counties.
Bay Area shelter in place restrictions limited real estate transactions during the last two weeks of March. Real estate agents were not allowed to show or hold open houses until early April. County recording services were also limited as government workers adjusted to work-at-home routines and security.
Agents reported a chaotic and uncertain business environment. Some continued to show homes, despite restrictions, while others limited their business to calls, texts and video conferencing.
Sandy Jamison of Tuscana Properties in San Jose said Santa Clara County homes have been sitting on the market a bit longer, and some deals have fallen through because of the economic impacts of the pandemic.
But demand remained strong and buyers are looking for deals, Jamison said. She plans to list four or five homes for auction, believing an online sale will generate more interest for her clients.
“The buyers still outnumber the sellers,” she said. “That hasn’t changed.”
Sunil Sethi, a veteran agent in Fremont, has counseled sellers on the new procedures, including clauses in some contracts that make it easier to cancel a deal because of the pandemic. If a seller is worried about the new environment, he said, “there’s no use going through the process.”
Homes listed for more than $2 million in Fremont weren’t selling, according to his analysis of sales data. Most buyers in that range are probably already homeowners, Sethi said, and might not feel compelled to shop during the pandemic.
Matt Rubenstein of East Bay Pro in Walnut Creek said many agents were caught flat-footed, trying to figure out rules for showing and conducting business. But as restrictions lifted, he found demand remained strong for starter homes in Contra Costa County. Most clients came prepared with masks and gloves, and Rubenstein had extra gear and sanitizer if needed.
Rubenstein did five deals in March and April. “I always deliver the keys in person. No more hugs,” he said. “Everything but the hugs are there.”