Real Estate Market Update: What A Year!

As we finish out the year, the month of November experienced some slowdown in activity compared to October, which is to be expected with our usual seasonal trends.  Not as usual is that the activity was brisk compared to last November, but this is in line with the delayed market earlier this year due to the pandemic.  Even with the renewed lockdowns and continuing COVID concerns, buyers are still on the lookout for homes, especially for larger single family homes, and interest rates and low inventory levels are helping to maintain high home prices overall with the median sale price in San Mateo County at $1.65 million. 

While we expect December numbers to show an even further slowdown in activity, all indicators point to a healthy market to come in the spring.

November 2020 Market Data

Real Estate Market Update: A Strong Fall Market

Neither cooler temperatures nor an ongoing epidemic could tamp down the strong real estate market in our area.  Although San Mateo County sales in October showed slight decreases in median sale price on a month-over-month basis, they were higher (9.6% for single family and 2.1% for condos/townhomes) compared to last year.  Santa Clara county sales increased on both month-over-month and year-over-year basis.  Of note, the number of closed sales in all categories increased between 16-35% compared to last October, which is indicative of our usual fall market being pushed later in the year due to COVID. 

In the following chart, we compared the number of sales between January and October over the past six years.  Although this year has had fewer sales, it’s actually not as bad as might have been expected considering the Shelter in Place restrictions that we’ve been under for most of the year.
 

Watch the video as we talked about Proposition 15: Tax on Commercial and Industrial Properties for Education and Local Government Funding Initiative.

Even if these might not impact your personal real estate circumstances right now, it’s still important to be aware of what each entails and what consequences , intended or unintended, may result if passed.

With the ongoing COVID-19 pandemic, record-high heat, wildfires all around and apocalyptic skies, one would think no one would venture out of their homes.  And traditionally, August tends to be one of our slower months with kids going back to school, travelers going on their final trips of the summer, and sellers waiting until after Labor Day to put their homes on the market for the Fall Season.  But as with everything else, 2020 is turning out to be rather different.

In San Mateo County, the median sale price for single family homes hit an ALL TIME HIGH in August at $1.8 million!!  The median sale price in Santa Clara county didn’t quite reach the $1,454,000 peak in March of 2018, but the $1.4 million in August is still an impressive 18% increase compared to last year.  The number of new listings in all categories in both San Mateo and Santa Clara counties increased substantially (16-65%) compared to last August, and the number of homes going into contract had a major increase as well of 25-39%.

On the ground, we’ve definitely seen increased activity all around, which can be a great thing for both buyers and sellers.  With historically low interest rates, loans are taking a bit longer to close and lending standards have become stricter in certain cases, but everyone seems to be adjusting and houses are still selling.  Things have become more challenging and fast-paced overall, so if you are thinking of buying or selling in the near future, be sure to contact me and don’t try to navigate this market alone.

Rental Eviction Moratorium

On August 31st, the last day of the legislative session in California, the state legislature passed measure AB 3088, also known as The Tenant, Homeowner, and Small Landlord Relief and Stabilization Act of 2020.  This was signed by Governor Newsom shortly thereafter and made effective immediately (September 1, 2020), and applies only to residential tenants, not commercial.

AB3088 consists of two main parts:
           COVID-19 Small Landlord and Homeowner Relief Act of 2020
           COVID-19 Tenant Relief Act of 2020

The COVID-19 Small Landlord and Homeowner Relief Act of 2020 extends anti-foreclosure protections in the Homeowner Bill of Rights to small landlords (who own 1-4 units that are non-owner occupied) if the landlord is an individual, the tenant moved in prior to March 4, 2020, and the tenant fails to pay rent due to loss of income due to COVID hardship.  It also provides new accountability and transparency provisions to protect small landlord borrowers who request CARES-compliant forbearance, and provides the borrower who is materially harmed the ability to file a lawsuit.

The COVID-19 Tenant Relief Act of 2020 is more substantial.  Here is an outline of the main provisions:

• Provides protection against unlawful detainer actions (i.e. evictions) for unpaid rent for the period from March 1, 2020 to August 31, 2020 (the “covered” time period) due to COVID-19-related financial distress. 
• For the period from September 1 to January 31, 2021 (the “protected” time period), a COVID-19-impacted tenant will be responsible for at least 25% of the rents due for that period in order to receive such eviction protection. 
• Doesn’t waive unpaid rent but instead converts that amount to consumer debt, collectible in small claims court as of March 1, 2021. 
• For all unpaid rent prior to September 1, 2020, landlords must serve tenants with a written notice with information about this Act and its provisions by September 30, 2020.
• If a tenant does not pay rent after September 1, 2020, landlords must give a 15-day notice to evict instead of the previous 3 days.  Note that this doesn’t include weekends or judicial holidays.
• In addition to the 15-day notice, landlords must provide a Declaration of Hardship Form that tenants must sign and return within the 15 days in order to be protected.  No financial documents are required.
• IF the landlord is aware that the household income exceeds $100K a year, tenants are required to provide documentation to support financial hardship.

Here’s a link to the applicable forms from the state’s website:
           Landlord Notices to Tenants
           Declaration of COVID-19 Related Distress

NOTE: This is just for general information and NOT meant as specific legal advice.  If you have an issue with a tenant, we strongly recommend that you contact a real estate attorney before doing anything.  Keep in mind that there are also local moratoriums that have been put in place by city and county governments as well.

If you own investment property or are planning to do so in the future, it’s important to stay aware of the ever-changing landscape when it comes to landlord-tenant law in California. If you are currently managing your own property, you may want to consider engaging a property manager whose job it is to stay aware of these issues.  And definitely, if you are dealing with any issues with tenants, be sure to speak with an attorney who specializes in landlord-tenant law and will be able to guide you properly.

Join us as we discuss three statewide measures related to real estate that will be on the ballot this November.

Even if these might not impact your personal real estate circumstances right now, it’s still important to be aware of what each entails and what consequences , intended or unintended, may result if passed.

Proposition 15: Tax on Commercial and Industrial Properties for Education and Local Government Funding Initiative

Require commercial and industrial properties to be taxed based on their market value instead of purchase price as currently allowed under Prop 13 from 1978.

Proposition 19: Property Tax Transfers, Exemptions, and Revenue for Wildfire Agencies and Counties Amendment

Portability of property tax within the state, changes to assessment of property tax for inherited properties.

Proposition 21: Local Rent Control Initiative

Replacement of Costa-Hawkins to allow for more local rent control on housing units.

Multiple Sessions Offered!

Please sign up in advance, as we may cancel a session if there are not enough people signed up.

• Wednesday, September 16th – 7:00-8:00pm
• Friday, September 18th – 12:00-1:00pm
• Saturday, September 19th – 9:00-10:00am

This will be held via Zoom, but please sign up to receive the link and reminders.

Sign Up HERE.

Weekly Snapshot

Here’s our weekly snapshot of key market data for the Week of Wednesday, May 13th to Tuesday, May 19th, shown as part of the trend since the beginning of March..

In both counties, we continue to see the number of new listings hold fairly steady and similar to what we were seeing before the Shelter in Place took effect. The number of properties in contract are also holding steady with Santa Clara County at the highest level for this year. The number of canceled and withdrawn listings is also staying steady, while the number of Closed Sales is about level, though somewhat depressed for what we would expect this time of year. This is no surprise as the number of new listings was significantly reduced in March and April. We hope to continue to see this number rise as SIP is relaxed and we see more sellers and buyers out there.

Learn the basics of tax-deferred exchanges for real estate investment property, as well as more complex types of exchange transactions such as Improvement / Build-To-Suit Exchanges, Reverse Exchanges, combining 121 & 1031, seller financing, strategic 1031 investing and solutions for the most challenging transactions.  We’ll also be discussing how the COVID-19 situation has impacted the 1031 Exchange arena.

Speaker: Ron Ricard, CES ®, IPX 1031, Vice President

This will be held via Zoom, but please sign up to receive the link and reminders at: https:/bitly.com/perisson2020-1031exchanges.
 

Takeaways from the data one full month after Shelter in Place orders took effect:

-    Median Sale Price: On a month-over-month basis, single family homes in San Mateo County experienced a moderate decrease of 6% with only a 1.4% decrease in Santa Clara County.   Interestingly, condos & townhomes experienced slight increases in both counties.  On a year-over-year basis, median sale price increased in all categories except for condos/townhomes in Santa Clara County with a decrease of 4.6%.  Considering the current situation, these numbers are actually very promising as they indicate a market that is still fairly stable (no major drop on the horizon).

-    The number of Closed Sales decreased in every category on both month-over-month and year-over-year comparisons, which is no surprise considering Shelter in Place restrictions from mid-May.

-    Likewise, the number of New Listings also experienced a steep decrease of about 40-50%, as many homeowners decided to hold off putting their homes on the market.  The hope is that many of these homeowners just delayed their plans rather than deciding not to sell completely, and most economists and real estate brokers are expecting the number of new listings to “rebound” as restrictions are loosened in the coming weeks and months.  We see this same effect on the Months of Inventory, which are still very low at around 2 months or so, which keeps us in “seller’s market” territory.

-    Days on Market:  This is a statistic that we are keeping for comparison but with a BIG caveat, as the Multiple Listing Service (MLS) stopped the clock from March 17th to May 16th, which means this data is going to be less informative for us.  So, if you’re happy (or stressed out) about the 7-9 days on market datapoint, keep in mind that it may not be a good indicator of what’s happening on the ground.

We will keep you posted with our weekly updates while the coronavirus situation continues to impact our daily routines.  If you are thinking to buy or sell in the coming year, please don’t hesitate to reach out to me to discuss your specific needs, as it’s more important than ever to be strategic in your real estate goals.

As all of us are spending more time in our homes, we’re probably thinking more about our homes and considering updates we’d like to make.  While residential construction is not allowed during the current Shelter in Place, it’s still possible to start the planning and permitting process.  If you’re thinking of remodeling in the near future, be sure to join us for ideas on how to get started as well as tips and trends to consider. 

Speakers:
•    Anders Fung, MAAN Global Development & Collaborated Design Group
•    Christine Lam, Christine Lam Interior Design

The seminar will be held from 6:30PM-8:00PM on Wednesday, May 13, 2020 and we’ll be starting with a brief update on the real estate market by Jean Joh, Broker of Perisson Real Estate, Inc.  This session will be held via Zoom, so be sure to sign up online to get the link here.

Feel free to forward this invitation to your friends and neighbors!

Here’s our weekly snapshot of key market data for the Week of Wednesday, April 30th to Tuesday, May 5th, shown as part of the trend since the beginning of March.

In both counties, we saw an uptick in new listings last week, and it’s encouraging to see this as a sign of more sellers adjusting to the “new abnormal.”  The number of closed sales went down slightly in both counties, which is not surprising as this is more indicative of the reduction in new listings at the beginning of our Shelter in Place period.

We said we would cover April numbers this week, but we’ll actually be doing this next week in order to make sure the data is complete.  This should be interesting as it will be our first full month after the Shelter in Place restrictions took effect, so STAY TUNED!

Until then, stay healthy, and let us know if you need help with anything.  Wishing you good health, joy, peace and friendship in abundance!