COVID-19 Real Estate Update & February Numbers
For most of us, COVID-19 is the biggest challenge of our personal and professional lives. Hopefully you’re remaining positive while sheltering in place. As promised, this is the first of many updates as they unfold.
Sereno Group Offices Closed
As a socially-responsible company, Sereno Group has taken appropriate action to ensure the welfare, health and safety of everyone in our community. Real estate sales is not considered an essential activity. Therefore all Sereno Group offices are physically closed. However, I continue to serve my clients virtually. Rest assured, I am literally a phone call away.
Open House Guidelines
The National Association of Realtors informed its members to follow the guidance of federal, state and local authorities. Given that California has declared a state of emergency and established sheltering in place guidelines, here’s the counsel I’ve given my clients:
- For transactions in process that are past the appraisal phase, the process will proceed through electronic closing/recording. For those properties that were waiting for appraisals, those transactions are essentially on hold. Appraisals are considered non-essential and will most likely be delayed until the shelter in place order is lifted or modified.
- Broker tours (groups of Realtors that view new homes placed on MLS) and open houses have been suspended until further notice.
- The MLS suspended the Days on Market (DOM) calculator on March 17th. DOM is the time between when a property is listed and when it is under contract. This is good news for homes currently listed, they aren’t being penalized as everything is on hold. The DOM calculator will resume whenever the shelter in place order is lifted.
- Given the shelter in place guidelines, all in-person meetings have been cancelled. This includes all home showings regardless if they are unoccupied.
February Home Sales
February showed robust year-over-year gains in the median price of single-family homes in most San Francisco Bay Area counties. Santa Clara County experienced a 15% increase in year-over-year median price. Inventory was up 23% from January but was down 16% from February 2019.
Fed Interest Rates Plummet
In an emergency move, the Federal Reserve slashed the federal funds rates by 1.00%. This drop indicates their commitment to stay ahead of disruptions and economic slowdown caused by the rapidly spreading coronavirus.
How does this help home buyers and homeowners who want to refinance?
Mortgage rates typically depend on the 10-year Treasury yield. The Fed rate affects short-term borrowing, encouraging banks to continue lending to consumers. According to Bankrate, mortgage rates are well below the six-month mark before the Great Recession. These rates are low by historical standards. For buyers, low mortgage rates mean more buying power. For homeowners who have equity and a high-rate mortgage, it can translate into lower monthly payments. For those homeowners with an adjustable-rate mortgage (ARM), refinancing can provide the stability of a fixed payment.
I’m not going to sugarcoat what we’re all seeing in the media. We are living in uncertain times. COVID-19 is impacting our confidence as consumers and our sense of job security. Unemployment claims — both nationally and in California — spiked in mid-March. Consumer confidence, unemployment worries, and business shutdowns affect our decision-making, especially when it comes to buying or selling a home. I still believe owning a home in the SF Bay Area is a smart long-term investment. To discuss your real estate options, please reach out to me.
As March comes to a close, I anticipate that home sales statistics will show a dramatic drop as worries over COVID-19 ramp up. Since home valuations are based on previous comparable sales (in the last 3-6 months), I don’t foresee a precipitous drop in median home prices. As new data emerges, I’ll share these reports with you. I remain committed to serving my clients and being your source of the most accurate and current information available.