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Only in 2020 would a listing mention a Zoom Room before the wine cellar or hot tub. Other listings cite the extra bedroom as “perfect for a private home office, zoom room or au-pair suite.”
Of course, many smaller home or apartments don’t have the luxury of that “extra room,” but developers are predicting that future condominium developments will over communal workspaces just as they now offer gyms or roof decks.
Certainly, 2020 has been a year like no other to date and all the signs point to this continuing for the foreseeable future. What does this mean for real estate for the remainder of 2020?
First, mortgage rates continue to be abnormally low, with a 2.6 percent rate in June for a 15-year fixed mortgage. This means, of course, that many potential buyers are eager to purchase now before rates start inching upwards. This is good news for sellers. Of course, economic uncertainty has definitely cut down on the number of potential buyers. This is good news for those buyers who are still in the game.
High unemployment will also result in lower home prices. In fact, Fannie Mae is predicting a 15 percent drop in home sales nationwide, which will mean lower home prices. This is certainly good news for buyers.
Buyer or seller? 2020 is a unique year and, depending on your situation, could be the perfect time to buy or sell.
For those looking to buy or sell a home earlier in the year, the pandemic certainly has thrown all plans off track. However, there are still alternatives even as the market trends downward.
If you’re looking to sell, rest assured that there are still people moving to new jobs etc. looking to buy. Setting the correct price point is critical in this market.
Even if you can’t sell, historic low rates make this a great time to refinance as many qualification criteria have been relaxed.
According to a new report by Redfin, 27 percent of prospective homebuyers say they are looking to move out of their current metro area. New York, Los Angeles, and San Francisco all saw a net outflow of homeowners in April and May.
Certainly, the pandemic and work-from-home opportunities are primary factors as well as the high cost of living in many coastal cities.
Analysts point out that the trend out of expensive metro areas had already started before the arrival of COVID-19 but current conditions have accelerated the trend.
If your family is growing or working from home has made condo or starter home feel a little cramped, now may be a good time to upsize. Interest rates remain low and, while there isn’t an abundance of inventory, higher-end home can often be had for a bargain.
Of course, selling your current home for the right price might be a challenge but renting it, at least temporarily, might be a good option.
Finally, given the uncertainties of the current economy, it makes sense to be a bit cautious. However, if you can afford it, this could be a perfect time to upsize.
The latest report by the California Association of Realtors confirmed what many suspected: home sales in the Bay Area dropped by 51.1 percent compared to May 2019 and prices declined by 2.5 percent. Since it takes 30 to 60 days for a sale to close after an offer has been accepted, many sales went into contract in Apil when the state was still on strict lockdown.
Analysts remain optimistic that as the state slowly reopens and the economy rebounds, pending sales will start to creep upwards. Meanwhile, restrictions remain: open houses for realtors and the public are not allowed, while one-on-one showings are permitted if a virtual showing is not possible.
Most realtors report that they continue to get calls from San Francisco residents looking to move to the suburbs as they continue to work from home and the lure of the city is no longer as strong.
Despite the recession, pandemic, and social unrest, realtor.com reports that median prices rose year-over-year by 4.3 percent for the week ending June 6. granted this is lightly below the 5-6 percent increase normally seen this time of year, but it far exceeded many analysts’ expectations.
There are two major reasons for what is going on: lack of inventory and a sizable portion of eager buyers, drawn by record-low interest rates (2.94% according to Mortgage News Daily).
Experts say to expect a competitive buyers market this summer with multiple bids except, perhaps, in the high-end market where inventory remains strong.
Not surprisingly, Californa experienced the worst month-to-month sales decline in April 2020 in over 40 years. The Bay Area saw the biggest decline in California with sales dropping 37 percent. While virtual tools have come in to play, the shelter-in-place orders and the lack of open houses has severely impacted Californa real estate.
Home prices dipped slightly although the difference between April 2020 and April 2019 is statistically flat. Most of the biggest declines were in high-end homes. Even with low inventory and decline interest rates, analysts expect home prices “to be tested” by the economic challenges currently facing the region.
As millions of Americans shift to remote work, the majority don’t have a dedicated home office but it’s now at the top of their wishlist. With the possibility of working from home even after the pandemic subsides, many homeowners are realizing that a repurposed dining room or bedroom is just not ideal.
According to Zillow, the number of online searches for home office space has increased by over 50 percent since May of 2019.
Likewise, sellers are emphasizing home office space in their lists 8.2 percent of the time, an increase of 10 percent over 2019.
The short answer is: who knows?
While many predicted 2020 would be a very strong seller’s market, the coronavirus has turned everything upside-down and all bets are off.
On the one hand, loss of income and the threat of more losses could keep the buyer pool much smaller this year. Since mortgage rates continue to be very low, this could indicate a buyer’s market for those comfortable taking the leap.
On the other hand, housing inventory continues to be low and home prices have not come down.
Seller’s market?
Some analysts see potential buyers delaying their decision for many months. If the demand does increase, expect prices to eventually rise 3% to 5%.
