Navigating the economy & housing market through COVID-19
Image courtesy of: Buckhead.com
As much as we’d love to predict what the Silicon Valley real estate market will do through the end of this year and into 2021, unfortunately, our crystal ball is on the fritz. We can, however, continue listening to top economic experts, monitor our Santa Clara County real estate stats daily, and be a resource for any questions/concerns/thoughts YOU may have about buying or a selling a house during these unprecedented times. Honestly, we LOVE talking about this stuff! With 3 months of shelter-in-place under our belts, we’ve compiled the data and have put together a snapshot of Bay Area real estate market trends. Most of the numbers are pretty obvious – the total number of houses for sale are down (not surprising) and 35% of homes that were on the market, have been withdrawn. However, prices are up overall — great for sellers, yet a continued challenge for buyers. That being said, exceptionally low interest rates offset the slight price increase, making it possible now, more than ever, to afford a home (see stats and interest rate info below).
Our advice
New rules/guidelines are being released on a local and federal level every week, if your personal housing situation has been impacted, please feel free to reach out for advice or an introduction to someone who may be able to help. Otherwise:
Home Buyers: If you are a ready, willing and able to purchase a home in the Bay Area right now, there are still homes for sale (many of which are vacant), and somewhat more flexible purchasing terms. Also, interest rates have never been lower, making homeownership in the Silicon Valley more affordable than ever.
Home Sellers: If you were planning to sell this year, or are now needing to given the circumstances, keep in mind that Bay Area real estate inventory is low – we continue to see multiple offers, above-ask, on appropriately-priced homes. There are also several protocols for showing your home safely, including a document that every buyer/seller/realtor must sign before showing or entering a home.
Existing homeowners: If you are not planning to sell your home any time soon, assess whether or not refinancing makes sense, given the historically low interest rates. You can also take advantage of this time to make home improvements that will increase the value of your property, when you are ready to sell in the future.
Silicon Valley sales stats during SIP
The stats are rolling in and we are beginning to see a clearer picture of Covid-19’s impact on the real estate industry. While total sales units are down by about a third compared to last year, it is reassuring to see that listing prices are above 2019 totals.
Mortgage rates hit another all-time low
The average U.S. rate for a 30-year fixed mortgage fell to 3.15% last week, the lowest ever recorded in a Freddie Mac data series that goes back almost five decades.
The Fed is the most influential entity within the mortgage markets, they purchase the most mortgages and have a great deal of control over the interest rate. In other words, the central bank has the ability to stimulate home sales by driving rates lower than people ever thought possible.
“Every economist had doubts about how housing would fare during COVID-19, but what we’ve seen has been absolutely remarkable,” said Chris Low, chief economist of FHN Financial in New York. “Home sales are holding up extraordinarily well, and that’s in large part because of the mortgage rates.”
Need a recommendation for a local mortgage lender? Reach out – we can put you in touch with a couple of lenders we love working with!
Get ready for a fast-evolving real estate market
Pent-up housing demand during state shutdowns is about to be unleashed as many coronavirus-related restrictions to daily life are lifted or relaxed and consumers return to the real estate market, says Lawrence Yun, chief economist for the National Association of REALTORS®. He says home sales are bouncing back from their bottom during the COVID-19 pandemic.
Looking forward, the market is ripe for robust activity. Mortgage applications are defying economists’ expectations, rising 54% since April, the Mortgage Bankers Association reported last week. Mortgage rates for 30-year loans have broken through record lows three times in as many months, making borrowing costs favorable for prospective buyers who are looking to get off the fence and purchase. Meanwhile, home prices continue to rise, even as uncertainty around the pandemic persists.
June is Homeownership Month! New research shows that despite the ongoing risks of the pandemic, 65% of consumers are ready to attend an open house* or tour a home in-person.
*open houses not yet allowed in Santa Clara County as of 6.8.20
Lawrence Yun, Chief Economist for the National Association of REALTORS
