The Impact of COVID19 on Residential Real Estate and What’s Hot in Home Sales

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In 2019, many predictions were being made about the California real estate market and what to expect in 2020 with many experts predicting a cooler market than previous years. Still predicting an active market, but not as active as it had been in previous years and if you read my previous article, I was predicting something similar. I called it “The Continued Normalization and Stabilization of the Scotts Valley Real Estate Market” and you can read that article here.

But something happened. As 2020 kicked in the real estate market got much hotter than expected and homes were selling off the shelves with many homes selling with multiple offers and some homes were selling for higher than asking price. It was becoming a familiar pattern once again.

• This Scotts Valley home sold for $55,000 over asking price just before Shelter in Place order – click for video, 3D tour and floorplan and website

And then, something else happened. The Pandemic known as Coronavirus or COVID19 hit the entire country like a sledge hammer and many things came to a screeching halt as Santa Cruz County along with neighboring counties declared “Shelter in Place” orders with the state of California following suit shortly after. Along with those orders was a term called “Essential Businesses” which categorized the types of businesses that could remain open and others that needed to close. Thank you Google, for “Shelter in Place” was not a term I had ever heard nor the term “Essential Business”.

So for a few short days messages were being sent back and forth in regards the new orders and new world, if you want to put it that way, because it has been in fact a new world with a “learn as you go” process. And with “Financial Services” categorized as one of the essential businesses, there was some confusion on if it included real estate services because technically it is a financial service. Only until recent direct instructions and guidelines came into play for real estate specific activities, was it all finally spelled out.

And here is what was finally defined regarding residential real estate services and home sales:

“Service providers that enable residential transactions (including rentals, leases, and home sales), including, but not limited to, real estate agents, escrow agents, notaries, and title companies, provided that appointments and other residential viewings must only occur virtually or, if a virtual viewing is not feasible, by appointment with no more than two visitors at a time who reside within the same household or living unit and one individual showing the unit (except that in person visits are not allowed when the occupant is still residing in the residence)…”

So what does this all mean? It means that unless your home is vacant or you are no longer residing in it, your home can no longer be shown. Virtual tours, videos, floorplans and virtual showings by sellers via FaceTime or other similar apps are now the only way to view a home that has someone still living in it.

Vacant Properties Hot

Because of the new restrictions, vacant properties are right now hot properties as those can be shown albeit still by doing so safely by staggering viewing appointments so that no more than one set of buyers is viewing the home at the same time. As it currently stands, no more than 2 people from the same household can view a property and their agent at the same time. But regardless of all these restrictions, let me say this, buyers are definitely out in force and wanting to buy properties.

• This stunning property was recently listed in the Bonny Doon area of Santa Cruz – click for video, 3D tour, floorplan and website

So right now, buyers who hunger for homes up close and personal can only be shown homes that are vacant.

Real Estate an Essential Necessity

For many people, real estate is not a luxury but a necessity as many home sellers are now stuck paying double mortgage payments after having purchased one home before putting their home on the market, or have commitments for other job opportunities, and some even need to sell for other personal reasons. In addition, many buyers have moved to the area before the SIP and need a place to call home and many are in need of housing for various reasons.

In fact, many buyers and their agents are asking to be on my list to call (no kidding) the moment I am able to put properties on the market or have listings that fit the vacant status criteria for showing the homes. Currently I have several properties in the Scotts Valley area and a few in SLV that were about to take off and go on the market right before the shelter in place but now we are waiting until we are able to show properties safely and responsibly as per the new guidelines that kicked in. From townhouses, to single family homes in the $850,000 range, $1,300,000 range and even homes in the close to $2 million range, I have advised all those clients that are residing in their homes to wait until the SIP is lifted. I, like many other local agents have some of my busiest times of the year between March and June. But the wise and legal thing right now is to wait as showing homes is not an option right now with any means other than via virtual showings for homes that are occupied.

However, the local MLS service that we use as REALTORS® are now freezing the days on market if you put your home on the market during the SIP. What this does is create somewhat of a “COMING SOON” for all agents and buyers to see but if your home is not vacant, it cannot be physically shown as stated above. This is not a bad strategy actually, except that some sites like Zillow continue to count days on market and buyers use DOM as a factor when making offers so if your home has many DOM, buyers could use that to bring in lower offers. But I get the feeling that the SIP orders will change that as buyers will know that the reason why homes are on market longer is because they could not be shown.

So should you put your home on the market? Unless you have pictures, virtual tours, website and floorplans all done, I would wait. You never get a second chance for a first impression and some of the pictures I am seeing right now for homes on the market are causing more harm than good as buyers get turned off to properties with bad photography. This is fact.

Where Is Our Market Heading?

That is the question I am asked time and time again, what do I see happening with the local real estate market. And usually I tend to use a lot of stats and numbers in my Scotts Valley real estate market reports because at the end of the day, the numbers do not lie. And if I were to use these numbers, they would be irrelevant because the SIP and Pandemic that we are experiencing is bigger than numbers. Until we are all able to practice our profession with less restrictions while still doing so safely, can we not yet fully understand the effects of the SIP.

Having said that, the demand is there. It definitely is. And every day that the real estate market is somewhat on hold, the more that demand will be pent-up as buyers await the release of homes on the market so that they can get their lives back to “normal”, although I use that term loosely because we do not know what normal is. I happen to think that practicing some sort of social distancing will be the new norm for quite some time to come. While we eventually are able to continue on with our lives and jobs, there will continue to be an underlying factor that we need to maintain proper distancing and continue with the new sanitizing habits that have been forced on many.

And remember, we are adjacent to Silicon Valley which has buyers coming from that area and most of those high tech jobs remain, albeit with some changes in how people report to work. But there is still a serious demand that exists and buyers are waiting for the flood gates to open.

Silicon Valley is its own economy, and while it may takes months or even years for other areas and other states to recover, our area will not. Many people already telecommute and work from home and I think we will see more of it in the future with much of it being a permanent way of working from this point forward for many businesses. And many employees that lost their jobs in the service industry either found other jobs that immediately started hiring as they needed assistance, or will be placed once again back into similar jobs that will open up once the SIP is lifted. But remember, above anything else, Silicon Valley is unique with very few other places in the country having the amount of jobs and opportunities that are available here.

Plus, interest rates are still in the mid 3% range which is about as cheap as it gets to borrow money for a mortgage these days. I expect that to remain and it to be a big factor on the buying power and increased buying desire. And from a lot of the positive news coming from around the country and in California, although way too early to celebrate, the fact that we are getting positive news is coming as a relief which gives hope that whether it be weeks or months, we will get through this and at some point we will see the local real estate market take off again and if not at the rate that it was before the SIP, or very close to it.

Virtual Appointments

One of the things I have been doing is Virtual Appointments where I meet with clients via FaceTime, Zoom or other apps to talk about their plans and putting together a game plan that they can start implementing now such as de-cluttering, packing, etc. This has proven to be a very powerful tool for many clients as they meet with me and discuss their homes, plans, and even show me around as they walk around with their FaceTime app. In 24 years of being a licensed REALTOR®, there are not many things and homes I have not seen and getting a good idea of what a home looks like via phone is a lot easier than you would think. So if you are looking to speak with an agent, insist on this.

In closing, much is still to be determined and no stats or figures, and no cutting and pasting of reports will do any of us good as this is a situation that most have never seen before or may see again. Numbers and surveys don’t mean a lot right now because there still remains a lot of unknown which can steer answers to surveys one way or another. However, with confidence I can say that we are headed in the right direction and our area much like Silicon Valley will bounce back quicker than most other areas. And that is good news to many, but we have to stay the course of sticking to the SIP and Social Distancing as much as possible. Even after the SIP is lifted, as I believe there will be long-term repercussions on how we interact with each other. And it is probably for the better.

As always, Happy Selling and Happy Buying!

Robert Aldana
REALTOR® since 1986

DRE # 00921165
Keller Williams Realty
831-252-3959 Direct Line

[email protected]
www.robertaldana.com

ABOUT ROB: Robert Aldana is a 33+ year licensed real estate veteran with Keller Williams Realty, and also a long-term resident and homeowner here in town.

In 2015, 2016, 2017, 2018 and 2019 Robert was the agent chosen by more Scotts Valley area home sellers and buyers than any agent or team, and Robert was awarded the Santa Cruz Sentinel Readers Choice Award as the Best REALTOR® in Scotts Valley for four straight years 2016, 2017, 2018 and again in 2019. Robert is also the ALL-TIME leading real estate agent in Scotts Valley sales.

Robert is the most recommended real estate agent in the neighborhood social media site NextDoor, and was also voted 2017 Favorite Neighborhood Real Estate Agent in Scotts Valley in the first NextDoor Fav Business Awards by local residents, and was a neighborhood favorite again in 2018.

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