California Housing Market Predictions: 2020
Have you had enough of your pesky neighbor? Are you over paying someone else’s entire mortgage while paying rent and collecting zero equity? The barking dogs at 5:00 AM, The leaky sink, the backed up plumbing… Do you want more yard space? Do you love working from home and want more office space? Have you come up with a list of your dream home features but you are sitting there wondering… is now the right time? Will the market crash? Does my current home have value in the Covid market?
Currently Los Angeles County is historically low on housing inventory. For the week ending May 2, total listings were down 19% annually, and new listings were down 39%. We are working in a sellers market, with multiple eager buyers putting in offers on properties - creating bidding wars and driving up home values nationwide; even in beautiful sunny California. At Compass, we saw our average number of listings under contract bottom on April 12th and were down 40% from the average before the shelter-in-place orders that began in March. By April 20, Compass saw the average number of contracts back to where they were before the shutdown. By the end of April, contracts were 24% higher than before the shutdown, and up 64% from the April 12 bottom. So it’s safe to say, it’s a good time to sell and you should have no fear of achieving the desired valuation out of a home sale right now.
The real estate market is white hot, we just need more sellers to help fill in the massive demand for available homes. As we slowly move into the reopenings and loosening of safer-at-home orders, many homes are in forbearance (8-10% of all mortgages) and some of you may be banking on folks not being able to pay their large balloon payments. As foreclosures begin taking place, will this crash the market? Well… I am here to tell you it’s unlikely that the uptick in availability will drive down home prices or cause anything close to a market crash, as we resume the new normal. If you were hoping to be an opportunistic buyer, banking on the advantage of a bad situation, Covid doesn’t seem to be providing that alternative in 2020.
How are people buying without viewing in person? Even amid the safer-at-home orders the housing market has found ways to adapt to sanitation and new rules with virtual tours. With each in-person viewing, the buyers have to sign the PEAD form (Coronavirus Property Entry Advisory) only three people can enter the property at a time and masks and gloves are mandatory so in-person showings haven’t stopped amid the growing popularity of virtual tours.
Mortgage lenders have tightened up and become even more stringent under the pandemic, Fico scores now typically need to be above 700- If you have a good credit rating, very little debt, a good savings, lenders are finding ways to continue to work with people. I know many creatives, restaurant and boutique owners have been struggling to sort out how to stay financially ahead in this crisis, but there are many who have adapted and found new ways to keep the revenue for their businesses going. If you believe you are ready to buy or sell - give me a call as soon as you can while interest rates are still historically low.
