MAY BLOG: Myths & Truths, Real Estate During the COVID-19 Pandemic
Both home buyer and seller demand have weakened in the last six weeks, as Angelinos stay home to help stop the spread of the coronavirus. While some are still shopping online, doing virtual tours, and limited private showings, the spring season has turned out to be much different than we anticipated heading into 2020.
Although media outlets paint a lackluster picture of the housing market, what we’re observing from our “boots on the ground” experience is that home values are not suffering as much as predicted and there are still real estate opportunities to be found. To shed some light on the current state of the market, here are some truths and myths we’re clearing up.
Truth: Although Activity Has Slowed, Home Values in LA Remain Relatively Stable.
- Gains in values will likely slow, prices will not fall nationally. In early March, median list prices were up 4.4% annually on average. In the first half of April they were up just under 1%.
- In the first two weeks of March, new listings were up 5% annually on average. By the second week of April, they were down 23% in Los Angeles, according to realtor.
- The supply-demand imbalance favors stronger prices in most cases, however buyers shopping for homes priced over $2.5 million may be looking for as much as a 5%-10% price reduction.
- Affordable housing is in extraordinarily short supply so house price declines will be limited in competitively-priced markets.
- The Los Angeles market could see a slight drop in home prices, only due to the fact that affordability was already stretched here, according to a new report by UBS. However, buyers should not expect to see huge decreases in home prices due to COVID-19.
- Read our recent Q1 2020 Market Report for more insight into the Los Angeles real estate market.
Myth: I Can’t List My Home Until the Stay-home-order Is Lifted or There Is a Vaccine for COVID-19
- Real Estate is deemed “essential” and homes continue to go into escrow, despite limitations on showings.
- Our team is working to comply with safety requirements, while still providing you with a high level of service. We’ve utilized virtual showings and private showings, when permitted according to COVID-19 protocols, to assist clients in selling during this time. Since local regulations are changing on a weekly basis, we’re here to guide you through this process and help you make smart and safe decisions when marketing your listing.
- While you can list you home now, we encourage you to consult with our team before putting your home on the market. We can offer valuable insight into whether or not it’s the right time for you.
Truth: Perception Plays a Role in How Prices Will Move.
- Slower gains are indicative of early market response to economic uncertainty and hurdles to completing a transaction, along with lower buyer and seller sentiment.
- Consumer confidence in the economy will play an even bigger role than usual.
- Yes, this is a Storm. And yes, it shall pass. Look for pent up demand in LA markets once consumer confidence rises.
- We currently live in a world in which people’s minds are governed by fear and distress, and it projects in their perceptions — and, more importantly, in their actions. After years of hearing how “the bubble is deflating in the real estate market,” it’s easy for people to assume that the bubble has finally burst. Our advice? Stay calm and stay informed. Our team is here to advise you on real estate decisions amid these uncertainties.
- In both good and uncertain times, there are opportunities to make smart real estate decisions. Our team is here to help you identify these opportunities and move forward with them.