First and Second Quarter Real Estate Market Update for 2020
By Eric Castongia, Corcoran Global Living
A lot has been going on since the beginning of the year. As you can imagine, Covid-19, with the accompanying shelter in place (SIP) order has had a huge impact on the real estate market. Since March 17th, we’ve been a steep learning curve on how to conduct business.
Shelter in place rules stipulate no public opens and brokers tours, which means it’s harder for buyers and agents to look at property; no more looky loos, curious neighbors looking at the house next door, or buyer’s agents previewing for their clients. In addition, there are forms to sign, a restriction on the number of people who can view a property together, and cleaning between showings. Real estate practitioners have had to look critically at generating comprehensive information for buyers, and to provide seller clients a vehicle to make sure their properties are being considered without being walked into.
Although you’ll hear differing opinions, I believe sale prices have been affected. It has certainly had an effect on what price ranges and types of property people are looking for. A snapshot of the West Portal/Inner Parkside market:
- In the first quarter, we had five transactions; four closed and one withdrawn listing. Three of the four, sold over asking. In a normal market, we would have had nine-12 closings. Figure 30% of normal.
- All the closings were on properties that were in contract before the SIP order took place; only one closed after SIP took effect.
- No new listings came on the market during the first quarter.
- In the second quarter, we had six transactions; three were active, one pending, one closed and one withdrawn. In a normal market, we would have had 12-16 closings. That’s six percent of normal; most likely because there was nothing to carry over from the first quarter.
- The listing that closed, had been on the market since the winter, had a price reduction, went back on the market after the SIP order and then sold again a little over asking.
- The pending listing was very done and desirable; it went into contract quickly, showing that premium properties sell in any market.
- The withdrawn listing was in a price range that is sensitive to question mark markets; it came off quickly and is now back on again at the beginning of the third quarter.
- The first new listing in the second quarter, came on a month after SIP-showing some hesitance to come on not knowing what would happen.
In the past month or so, more listings have started coming onto the market citywide; most likely from sellers who had planned to be on earlier in the year, delayed by SIP. Buyers are becoming more active; my own clients are getting cabin fever, wanting more space and outdoor area – lower interest rates are helping fuel the desire to move also.
I haven’t figured out a clear way to determine property value right now; closed prices prior to SIP are no longer comparable, so seat of your pants seem to be as valid as any method. There are three distinct markers in determining value:
- Closed before SIP (higher than current market)
- In contract before SIP and closed after SIP (probably still higher than current market, unless there was negotiation during the process)
- In contract and closed during SIP (probably the real value, but not much to look at and depends on when it went into contract; earlier in the pandemic is probably lower than now)
For my diagnostic, I’m using list prices and interest in active listings to gauge what may happen. For properties with any question marks, I’m suggesting transparent pricing (the price the seller would take). For bullet proof properties, value pricing and letting market dynamics determine value might work, but it is more challenging now, as you may only get one offer at list price. The market is a moving target, buyers, sellers and agents are learning on the go, so be nimble and stay tuned. And of course, call me with any questions. I’ll do my best to answer.
Eric Castongia, Broker Associate at Corcoran Global Living (BRE Lic. No. 01188380) provided this information. The content of this article is an interpretation of data from the San Francisco Multiple Listing Service, the County Tax Record, the internet and Eric’s observations in the marketplace. Eric can be reached by e-mail at Eric@SFHotBuy.com, or via mobile phone at (415)307-1700.