With 2020 half over, and the pandemic a fixed part of the landscape, what should we know about real estate now?
Where We Were:
Our local real estate market in 2020 began as we would expect in any normal year. The typical trend begins with a slow, post-holidaze start in January with extremely low inventory and a brisk turnover; followed by a mild increase in inventory in February and March, and an expectation of rapidly rising inventory and sales benchmarks as the sale season takes off through Memorial Day, tapering off to a quiet period by Independence Day. In the first quarter, buyers out in full force made for a very competitive marketplace and we achieved strong sales prices with approximately 10% Year Over Year (*?) increases across the market during this period.
Alas, our typical sales cycle was interrupted by the arrival of Covid-19 and a Shelter in Place order on March 17, and confusion around the real estate industry being essential in some areas (banks, lenders, title companies and county recorders), yet non-essential in a general sense (real estate, realtors, construction, contractors and other vendors).
Thankfully, Real Estate has been deemed as an essential service as of April with some critical limitations:
- Sunday Open Houses are an illegal gathering and no longer in practice;
- Monday and Thursday in-person Broker’s Open are an illegal gathering and now take place virtually on Zoom;
- Support vendors are now allowed (stagers, photographers, painters, landscapers, etc.), which facilitates bringing new inventory to market;
- Safety protocols are in place for any in-person viewing of a home, by appointment and with pre-signature of an entry form;
Where We Are Now:
As with work and school, exercise, and book clubs, we are now bringing you the very best in real estate with a strong online presentation of homes. We are proud to be master ambassadors of a whole new way to showcase homes for sale and engage with the public. Buyers have been looking at homes online for years, and now we are serving up beautiful videos, mini-movies, and visual treats. Here are a few elements that make up the new normal:
- Property video
- Drone footage and photos
- 3-D Matterport tours (interactive)
- Floor plan sketches
- Virtual Open House and previews
- Livestream Virtual Open House
- Livestream Virtual Broker’s Tours
- Dedicated property websites
- Tried and true photo tours
- And finally, in-person showings by appointment only with strict safety protocols in place.
As you might expect, the number of units sold is more than 30% down across the market. Albany and Kensington have seen only single digit declines in unit volume. Montclair is the one bright spot in Oakland with unit volume up 7% over last year. As a result, total dollar volume is also down 23%-40% depending on the area.
What few people expected is that Median Price is actually up in most areas of our market. Some areas have seen as much as 17% Year over Year price increases. And in those areas that have experienced Median Price declines, those declines are in the low single digits.
And inventory has begun to rise. In May we were down 35% in Active Listings over last year. In June we were down only about 25% in Active Listings.
So why the big surprise in price strength during a Pandemic? There are two main reasons:
1. Downside Stickiness is certainly holding true at this time.
- This relates to the fact that housing is not an immediately liquid asset.
- In addition, shelter is a primary necessity.
2. What everyone remembered from the recession in 2008 is that Real Estate caused a financial crisis.
- Today a health crisis has caused a financial crisis.
- Prior to the pandemic, both Real Estate and Financial Institutions were healthy and in good shape.
- In fact, it is my opinion that the health of Real Estate is going to be bright light leading us out of this current financial crisis.
So, the good news is that, during this pandemic lockdown, prices are surprisingly strong, our inventory is rising and we have all gained a greater appreciation of either the homes that we have, or the home we want during these unusual times.
We miss interacting with you in person at our weekend open houses, out and about in our favorite local restaurant, or our many hidden local haunts. Find us at one of our many virtual open houses every single weekend or reach out anytime, with questions or a quick hello, would love to hear from you!
~ May you walk in beauty.