June 26, 2020
7 MINUTE READ
There’s a lot going on in the California housing market. April was the first full month of the state-wide shelter in place order in California, due to the coronavirus global pandemic. And while it’s true that the last couple of months have been a roller coaster whirlwind for everyone, the impact has been especially impactful on the real estate industry.
In the beginning, real estate agents weren’t allowed to show any property at all. Then, they could show properties — but only vacant properties. Next, they could show properties that weren’t yet vacant, but everyone was required to follow a long list of CDC guidelines, as well as a number of other guidelines to help ensure the health and safety of all parties involved.
Even today, there are still no open houses being held, and many real estate professionals are advising their clients to hold off on moving, if at all possible, simply to help them avoid any unnecessary risks. What does all of this mean? A significant drop in home sales. In fact, Southern California home sales were down more than forty-one percent, when comparing May 2020 home sales to May 2019, according to the California Association of Realtors. That’s the biggest drop in sales since the 2008 housing market crash. Existing, single-family home sales averaged $588,070 according to the latest stats from CAR, and overall sales were down 13.9 percent lower than the prior month (April 2020), and 41.4 percent lower than the previous year.
What’s more, real estate experts agree that it’s impossible to predict when house sales will come back. And part of that is that because before people will even consider going out and buying a house, they need to feel comfortable with going out at all. One indicator that some insiders are looking at is restaurant reservations. Restaurant reservations can be a great indication of how comfortable people are with going out in public.
Another indicator to watch is the unemployment rate and unemployment data. A high rate of unemployment will almost always suppress the housing market, causing a drop in sales. Another thing to consider when looking at unemployment data is how many of these job losses are temporary — and how many are permanent.
Some experts predict that it may take years for the market and home sales to fully recover. But, as always, it is important to look for the silver lining in these types of conditions. Fortunately, housing prices have remained relatively stable and untouched, since supply and demand have both been lowered and are still acting in equilibrium. In fact, when looking at home prices statewide, the median price in May was $588,070, down 3.0 percent from April 2020 — and down 3.7 percent when compared to May 2019.
The California Association of Realtors reports key points from their May 2020 resale housing report:
Even though aspects of the real estate industry were deemed essential by state leaders, there were restrictions put in place that essentially made the traditional open house impossible. And while sales were down across almost all markets in April, with the coronavirus pandemic disrupting or even negating many deals that were in escrow, home prices still continued to see marginal increases year over year:
While no one really knows the true impact the coronavirus will have on the future, including what that means for the real estate industry. Current conditions have some real estate experts predicting that the public’s fear of contracting COVID-19 could possibly lead to a resurgence in rural real estate markets.
Rural markets almost always have more affordable housing and offer more space, but the downside has always been the major commute that most residents would face to get to work.
However, in current conditions, many employers are realizing that production can be maintained or even increased by employing a remote workforce. And when the quality of life can be improved, it’s no surprise that most people say they would choose to embrace the change. Having the option to avoid a long commute while owning a home where homes are more affordable could very well benefit rural markets.
If you’re ready to search for houses to buy or have questions about the current real estate market, we’re here to help. At Reali, we offer superior service and local agents, combined with the latest in technology.