There are fewer bidding wars but prices seem to be holding steady. Uncertainty remains high but mortgage rates are low. And prospective buyers are touring homes again -- but only by appointment and with hand sanitizer and face masks at the ready.
As officials relax coronavirus restrictions and restart the economy, many real estate agents active across the Eastside are expressing an encouraging – but cautious – optimism when it comes to the industry of buying and selling real estate.
“These last two weeks [early to mid-May], we have especially seen a lot of movement,” says Deirdre Salomone of the L34 Group, which sells homes across Northeast L.A.
SoCal Homes Sales Plunge but Prices Increased
It appears that the local market mirrors some of the regional real estate trends. While sales of existing homes across Southern California plunged more than 30% in April compared to last year, the median sale prices racked up a modest increase of 3.5% for the month, according to California Association of Realtors.
In comparing her average sales price for April 2020 to April 2019, Northeast L.A real estate agent Tracy King says there was some gain in 4 of the 5 zip codes she represents.
“That’s surprising as all you read about the economy says that we are in a recession,” King wrote in her blog. “In our little corner of the real estate market, Northeast Los Angeles and surrounding areas, it’s always interesting and seldom like the national or even the California picture.”
This sentiment is echoed by other local realtors who agree that agents continued to make deals amid Safer at Home orders.
A big draw for house hunters is the continued low interest rates. “I hear they may even go down lower in the weeks ahead,” said Salomone. She said she is hopeful that “our typical spring season will be our summer season.”
While the number of available homes for sale in the area is down as are the number of buyers, “houses are still being bought and sold,” concurs Mark Mullin with the Tracy Do Real Estate. Fewer potential buyers means fewer bidding wars thus making the process easier in many respects. “A hot property these days means it could garner 5-10 offers instead of 20-30.”
Reassessing How We Live
Mullin hasn’t seen big drops in asking price (single digits if anything) and many “Bridesmaid Houses” (properties that have often overlooked) are getting a second look with some buyers willing to overlook the deficients in floor plan, backyard acreage, etc. because of the availability and very low interest rates.
“Initially people were scratching their heads, ‘Who would buy during a pandemic?’” says Mullin who explains there are many reasons – not just good interest rates – that are luring people.
“If COVID has done anything positive, it is that we are reassessing how we live. We have had a lot of time for reflection on what we want. Young professionals are asking ‘Do we want to continue to share spaces with roommates?’ ‘Do I want a Downtown tower living with elevators?’ “Is it time to move up to a bigger house?’”
The biggest challenge these days for realtors is physically showing properties since the traditional open house is not a realistic option.
“In the beginning we pushed virtual and video tours to prospective buyers, but now it’s back to business in a sense,” says Liz McDonald of Rental Girl. Current restrictions have been loosened when it comes to property viewing, and agents can, through careful planning and scheduling (and with social distancing, hand washing and sanitizing protocols) bring prospective buyers into homes.
Allowing only one buyer at a time into a home may be inefficient, but McDonald emphasizes that “we see buyers who are more serious.” She muses how the open house model could change as the virus waxes and wanes. “Will it be like how we form lines at the grocery stores? Line up and when one leaves, one enters?”
Crises can bring a variety of reactions/responses in the housing market, says Kurt Wisner of Courtney + Kurt. “In 2008, lots of folks just walked away from their homes and handed us the key,” he says. “They lost any equity in their property.”
Wisner describes the “Three Fs” of how homeowners typically deal in a crisis: foreclosure, forbearance and fire sale. “Today, homeowners are turning more to forbearance if they are having trouble making mortgage payments. They will still have their homes, hopefully, at the end of the day. We really aren’t seeing any fire sales at this time.”
Changes in the industry are going to be inevitable, says Wisner who adds that the buying/selling process (especially escrow signing) is becoming more digitized.
In fact, the only time a buyer may see an agent face-to-face could be at a home viewing. The rest of the time communications will be through emails, phone calls and virtual meetings. “Now more than ever, having an experienced realtor is going to be a valuable part of the process,” he says. “I’m seeing important negotiations start with that first phone call.”
For all the positive vibes in their industry, agents are embracing the uncertainty as they move forward. “We’ve withstood the first wave, but we know there will be other waves and ripples,” says Mullin. “The biggest mistake is thinking we know what is going to happen next.”