• All construction projects will be allowed to resume as long as the project complies with safety protocols included with the order. 
• All real estate transactions will also now be able to resume, but with continued restrictions on open houses and limitations on in-person viewings.  
• Certain outdoor businesses can also begin operating again, and people can visit those businesses to perform work or obtain goods, services, or supplies. This includes wholesale and retail nurseries, landscapers, gardeners, and other businesses that primarily provide outdoor services as set forth in the order. 
• Residential moves (and businesses that support them) are now allowed. When moving into or out of the Bay Area region, individuals are strongly urged to quarantine for 14 days.

Here’s our weekly snapshot of key market data for the Week of Wednesday, April 22nd to Tuesday, April 29th, shown as part of the trend over the last 8 weeks.

Tracking Trends

Here’s our weekly snapshot of key market data to inform you on what’s happening in our market.  The following are critical market indicators for the Week of Wednesday, April 15th to Tuesday, April 21st.  For this week, we’ll take a look at the trends we’ve seen in the last couple of months.

Just a few takeaways from the data so far:

•    New Listings: Though we had a steep drop right after the Shelter in Place (SIP), we’ve seen the number stabilize in both counties, even almost doubling in the last in San Mateo County.  It may be that more sellers and listing agents are starting to look forward to some relaxation of the SIP standards in a couple weeks.

•    Under Contract:  YES, there are buyers still out there and putting in offers, and it seems the number of listings going into contract are keeping pace with the number of new listings. Of the 88 listings that went into contract in San Mateo County, 52 (59%) went on the market after SIP.  In Santa Clara County, 113 out of the 173 (65%) listings that went into contract were put on the market after SIP.

•    Withdrawn:  This number has pretty much stabilized after the steep increase that took place immediately after the SIP took effect.  No surprise there.

•    Sold:  San Mateo County closings are also holding steady, while Santa Clara County is actually seeing an uptick in the number of closings.  Out of 57 sales in San Mateo County, 10 were listed after SIP and 27 (47%) went into contract after SIP. Out of the 196 sales in Santa Clara County, 23 were listed after SIP and 95 (48%) in contract after SIP.

While things are far from being back to normal, the market is clearly continuing to move, so if you are thinking to buy in the near future, don’t just sit on the sidelines waiting for a glut of inventory or prices to fall.  And if you were planning to sell this year, don’t be discouraged as we are still experiencing a shortage of inventory and serious buyers are still out there.

Congratulations to all of us on making it through a month of Shelter in Place!  I hope this email finds you and your loved ones in good health and good spirits.  Our office has been conducting meetings and seminars via Zoom, homes are being shown by virtual tours, and we’re all rediscovering old recipes, old hobbies and even our own family members and pets in some cases.  Obviously, though, we’re all looking forward to a time when we can meet in person (from six feet, of course).

This week, we’ll be going back to our monthly newsletter format and recapping the market activity for the month of March.  In San Mateo County, the median sales price for both single family homes and townhomes/condos experienced increases on a month-over-month AND year-over-year basis.  This was also the case for single family homes in Santa Clara County, while townhomes/condos had no change on a month-over-month basis and a moderate decrease compared to last year.  In general, these prices reflect homes that were listed on the market prior to the Shelter in Place directive, so it’s not surprising to see them holding fairly steady or even doing better, as we knew the market was looking very strong in February.

As expected, the number of new listings decreased significantly in March in all categories except for townhomes/condos in Santa Clara County.  As the Shelter in Place directive took effect on March 17th, many sellers chose to hold off going on the market in hopes the situation would improve by late spring or early summer.  Those who have been reading our weekly updates will know that though the number of new listings has decreased significantly, they have not stopped entirely.

“What do you think will happen to the real estate market?”  That is always a hard question to answer, but now even more than ever, as it will all depend on how things progress with the coronavirus situation and the short and long-term impacts on the economy.  But two things are clear:

1. The fundamentals of the housing market were strong before this started and are still strong. Those who are worried about a recession and still have PTSD from 2008 should be clear that we are in a very different environment now, as many homeowners have significant equity in their homes and as there have been stricter lending standards in place since the last recession.
2. The concept of “supply and demand” will continue to dictate the market.  Before the COVID-19 situation, demand was very strong and we were seeing multiple offers over asking on the majority of listings in our area in February.  Taking a look at inventory levels in both counties, we can see that they were in the 1-1.5 month range for March, which is still quite low.  So even if some buyers may need to hold off or cancel their plans to purchase a home, the number of listings has also gone down, creating continued low inventory levels, which means fairly strong home values.

March 2020 Market Data

How “Essential” is Real Estate?

Of course, we at Perisson think real estate is absolutely essential to life and society.  After all, the three main necessities of life are food, SHELTER, and clothing.  Although not originally included in governmental directives, the federal and state government later upgraded residential real estate to “essential” status.  The Bay Area counties have been under stricter guidelines, and on March 31st, revised the order to include residential real estate “under very limited circumstances.”

The main question to consider is:  Is the sale of a particular property ABSOLUTELY NECESSARY during this time?  For example, is it a reverse-mortgage that must be sold in a matter of days? Is the sale of a home for a doctor, healthcare professional, or emergency personnel who was transferred into or out of San Mateo County? Is the sale for someone moving back home from overseas or some other equally essential situation?  If so, then a sale can be considered “essential.”  

There is nothing barring a home from being placed on the market during this time, and some activities for preparing a home for sale, such as photography, are allowed while residential construction is not unless crucial to maintain the safety and habitability of a home. We’re seeing different brokerages handle this differently, but making sure to keep social distancing protocols no matter what.  

What about viewing homes?  In all cases, virtual showings and open houses are strongly advised.  If necessary, showings of vacant homes may take place by appointment only if no more than two people from the same household are in a home at one time.  Showings of occupied homes may NOT take place under any circumstances, even if the owners leave the home for the day. 

These are the current measures required of all REALTORS® in the Bay Area right now, but we are hoping to have more flexibility and adjustments in the coming weeks.

Call for Action – Protect Property Owner Rights

In general, we try to stay away from comments on political issues, but this is one that could have a major impact on the rights of property owners.  While we definitely understand the plight of renters who are going through financial difficulties, there are already tenant protections in place, while there are many “mom and pop” landlords for whom their investment property represents their retirement and legacy to their children, and it’s important to protect them as well.  Even if you don’t currently own investment property, if you own property at all or are thinking to do so in the future, we encourage you to be aware of legislation that may have an impact on your rights as a property owner.

On April 8, Assemblymember Phil Ting (D-San Francisco), along with Assemblymember Kevin Mullin (D-San Mateo County) and Senator Scott Wiener (D-San Francisco) introduced language in the State Legislature dealing with COVID-19 that would be extremely detrimental to small property owners. AB 828 says that property owners must reduce their rents by 25% for the next year, due to the COVID-19 pandemic. It also makes it virtually impossible to evict tenants, even for cause.

The stated intention of the law is to protect tenants who are financially affected by COVID-19, yet it has no requirement that tenants prove that they have actually experienced financial hardship.

AB 828 places a tremendous burden on property owners, some of whom recently purchase their property and have exceedingly high expenses and other who have already been under rent control for decades and don't even receive enough in rent to maintain their properties.

If this concerns you, we encourage you to contact your State Legislators and the Member of the Assembly Public Safety Committee today and ask them to oppose AB 828.  Here is the contact information for your reference:

     Assemblyman Phil Ting (D - San Francisco) - assemblymember.ting@assembly.ca.gov

     Assemblyman Kevin Mullin (D - San Mateo County) - assemblymember.mullin@assembly.ca.gov
     Senator Scott Wiener (D - San Francisco) - senator.wiener@senate.ca.gov

     Assembly Public Safety Committee
     Reginald Byron Jones-Sawyer, Sr (D - Los Angeles) - assemblymember.jones- sawyer@assembly.ca.gov
     Tom Lackey (R - Palmdale) - assemblymember.lackey@assembly.ca.gov
     Rebecca Bauer-Kahan (D - San Ramon) - assemblymember.bauer-kahan@assembly.ca.gov
     Tyler Diep (R - Huntington Beach) - assemblymember.diep@assembly.ca.gov
     Sydney Kamlager (D - Culver City) - assemblymember.kamlager@assembly.ca.gov
     Bill Quirk (D - Hawyard) - assemblymember.quirk@assembly.ca.gov
     Miguel Santiago (D - Los Angeles) - assemblymember.santiago@assembly.ca.gov
     Buffy Wicks (D - Oakland) - assemblymember.wicks@assembly.ca.gov

In addition, last Monday, the California Judicial Council, the policy-making body of the California courts, made all evictions illegal - regardless of cause - for 90 days after the COVID-19 Shelter-In-Place Order is lifted.

Here is an article from last Tuesday, April 7, that explains the 90-day ban on all evictions, regardless of cause.

SAVE THE DATE: Remodeling Seminar (May 13th) and 1031 Exchanges (June 17th)

Be sure to SAVE THE DATE for our upcoming seminars:

Tips & Trends in Remodeling – Wednesday, May 13, 2020         

1031 Exchanges – Wednesday, June 17, 2020          

More information to follow, as we may be holding these virtually via Zoom depending on the coronavirus situation.  These will most likely be held in the evening around 6 or 6:30pm.  

Be sure to check out our Youtube page for recordings of our past seminars!

As the Shelter in Place has been extended another month, I hope you and your loved ones are keeping healthy and in good spirits.

Here’s our weekly snapshot of key market data to give you a better sense of what’s happening in our market.  (Hint: things are actually STILL moving in real estate)

The following are critical market indicators for the Week of Wednesday, March 25th to Tuesday, March 31st.

Interestingly, the number of new listings last week didn’t change significantly from the week before.  Perhaps these sellers are all seeing some benefit to having less competition and some “free” marketing time.  San Mateo County saw a 2.5X increase in the number of canceled or withdrawn listings while Santa Clara County saw much less.  It’s possible that this number will continue to stay the same or decrease as most sellers have decided to withdraw or cancel already or else will be “staying the course” during these Shelter In Place times.

What’s even more interesting is the number of homes that have gone pending or contingent, which tells us that there are still people out there looking for homes and making offers.  We’re needing to be a bit more creative about showings through uses of 3D virtual tours and Zoom open houses, which will probably be here to stay long after the coronavirus threat is diminished.  Buyers are still definitely out there – some that are actively looking and ready & willing to write offers and others who are just delaying their plans.

In lieu of the seminar that was originally scheduled for March 25th, we will have our very first WEBINAR next Wednesday, April 1^st, from 6-7pm.  (Sorry, no dinner provided this time.) 

Accessory Dwelling Units (ADUs) are known by many names: granny flats, in-law units, backyard cottages, secondary units and more. California has passed regulations in recent years to make it easier for homeowners to build these units on their property. Held in partnership with SFBayADU, this seminar will cover:
 
6:00-6:10pm   Introduction (Jean Joh, Perisson Real Estate)

• Real Estate Market Update
• Why consider ADUs?

6:10-6:45pm   ADU Presentation (Spencer Hsu & Kamal Hyder, SFBayADU)

• Updated State Regulations regarding ADUs
  • Exploring Design Options

6:45-7:00pm   Q&A Session
 
Please register online and then you will receive information on how to log in for the webinar.  We strongly advise you sign in 5-10 minutes early, especially if you have not used the Zoom system before. 

Sign Up Link HERE.

Weekly Update
3/25/2020

As events unfold at the local, state and national levels, Perisson remains committed to keeping our clients informed on the impact of the coronavirus on our local real estate market. We will be providing a weekly snapshot of key market data to give you a better sense of what’s happening in our market, without prognostication or conjecture. Just the facts.

The following are critical market indicators for the Week of Wednesday, March 18th to Tuesday, March 24^th.

Not surprisingly, the number of new listings has gone down dramatically, as the Shelter in Place (SIP) directives mean that there can be no open houses or personal showings.  It’s interesting to see that there are still new listings going on the market, and we are seeing more offerings of 3D virtual tours.  The number of listings going into contract (pending/contingent) and closing escrow is mostly indicative of homes that were already on the market and shown before the SIP took effect.
 
The coming week may look very different in terms of new listings and homes under contract.  Will keep you posted!  Stay healthy, and let us know if you need help with anything.

We know you’ve already received a plethora of emails from other companies regarding the current health crisis and the steps they are taking to mitigate the spread.  We didn’t want to unnecessarily add to the flood of emails, but as many have been asking about the possible effect on the real estate market, we thought it important to address this.

Will the coronavirus situation impact the real estate market?  This is a definitive YES.  How significant this impact will be obviously depends on how long this goes and how severe it gets.  Already, we have buyers who are delaying their home search due to financial concerns (stock market losses, job instability, increased financial burdens, possibly needing to provide aid to relatives) as well as sellers who are hesitant about strangers coming through their homes or concerned that the reduction of interested buyers may hurt their home prices.  Just today, we had one transaction that was set to close escrow but is delayed indefinitely because the county of Santa Clara abruptly decided to close the Recorder’s Office until further notice. (Yes, this means no sales can close in the entire county until they figure out what to do!)  By the time you read this, San Mateo & San Francisco may follow suit.

This comes at a time when we usually expect to have our most activity – the “hot spring selling season.”  As noted in the charts below, median sale prices for both San Mateo & Santa Clara county experienced double-digit appreciation on both a year-over-year and month-over-month basis in February (with the exception of condos/townhomes in Santa Clara), and inventory levels are between 1-1.7 in all categories, indicating a solid seller’s market.  We were definitely seeing multiple offer situations everywhere with some homes being sold way over asking and beyond what comps might have indicated.  All indications were for strong market activity and increasing prices, but of course, this is before the coronavirus situation became an issue in our area. 

At the same time, there are people who still need or want to sell their home and those who still want to buy a home or investment property, which is looking more attractive compared to the volatile stock market.  We continue to have low mortgage rates, which helps incentivize buyers, while inventory levels are low as well.  Knowing this, it’s very possible we’ll continue to see fair activity (though somewhat subdued) and if the coronavirus situation is contained within the next month or so, may just see a shift of the usual strong selling season to later in the year, possibly into the summer.

Whatever the case, we would like to invite you to please let us know if we can be of help in any way, even if not real estate related.  I’m involved in my neighborhood’s Nextdoor network, and it’s been amazing to see neighbors stepping up to help each other, volunteering to go shopping or run errands, even offering extra bottles of hand sanitizer.  If you find yourself in need or know someone who could just use a friendly phone call or check-in, please don’t hesitate to let us know.  Also, if you’re bored at home and need something to watch, be sure to check out our Perisson Youtube channel, as we have our seminar and listing videos posted there and are planning to do the ADU seminar for March online as well.

In the meantime, we’ll continue sending out these monthly email updates and keep you posted on the state of the real estate market in our area.  As always, don’t hesitate to email or call us with any specific real estate questions or needs you may have.

Wishing you and your loved ones good health and abundance always!

February 2020 Market Update

Real Estate Market Update

The middle of summer is generally a quiet time for real estate in our area, as many buyers and sellers go on vacation, and this summer has been no exception.  In San Mateo & Santa Clara counties, median sale prices in all categories experienced a decrease on both a year-over-year and month-over-month basis.  Condos & townhomes in Santa Clara county saw the biggest change at a 9.6% decrease from June to July and an 11% drop compared to last July.  The number of new listings decreased for all categories in both counties, except for condos & townhomes, which stayed relatively the same.  Inventory levels remained low at about 1-2 months in all cases, although generally higher for Santa Clara County compared to San Mateo County.

New listings and market activity in general usually increase in September, so we’ll continue to keep you posted as the year progresses.  If you would like more detailed information about the market in your specific neighborhood, please feel free to reach out to me any time!

How a Recession Could Impact the Housing Market

It seems that the prospect of recession is looming ever nearer.  Economists, investors, and market observers have started to sound a little extra gloomy when it comes to their economic predictions in recent days. Bank of America and Goldman Sachs have warned of a rising risk of recession, and the infamous “yield curve” is signaling things might soon get dark. The Dow Jones Industrial Average fell by 800 points on Wednesday, marking its worst day of 2019.  What might this mean for the housing market?

It’s somewhat counter-intuitive, but recessions don’t necessarily mean bad things for the housing market. In fact, they usually don’t.  ATTOM Data Solutions, a leading real estate data provider, looked at home prices during the five recessions since 1980 and found that only twice—in 1990 and 2008—did home prices come down during the recession, and in 1990 it was by less than a percent. During the other three, prices actually went up.

For a recession to impact the housing market, it would need to fundamentally alter the dynamic between supply and demand. A spike in unemployment could negatively impact demand, particularly if an intensifying trade war leads to export tariffs, which could put jobs at risk. But with unemployment already unusually low, it would take a pretty dramatic rise to cause home prices to drop.

It’s even harder to see the supply shortages being alleviated by a recession in a way that impacted prices. If a trade war leads to tariffs on imported construction materials, the cost of new home construction could rise even higher than it already is. Tight immigration policy could make construction labor more scarce as well.  “It really depends on ... the magnitude of [foreign] tariffs, and then how aggressive the federal government is at placing tariffs on imports that go into the housing market,” said Ralph McLaughlin, an economist with CoreLogic.

If a recession hits, the Federal Reserve is almost certain to lower rates in order to jump-start the economy. The Fed has also signaled that in the short term it intends to keep rates where they are, and President Trump has made no secret of his opposition to the rate hikes.

Why this time won’t be another 2008
For a lot of millennials, the only recession they have specific memories of is 2008. That recession not only caused complete chaos in the housing market, but was directly caused by chaos in the housing market. So it’s natural that a lot of people would equate recessions with a housing collapse, but 2008 was a unique case, and today’s housing market in many ways is the complete inverse of the housing market in the run up to 2008.

Primarily, the shoddy mortgage lending practices that flooded the market in 2004 are not present today.  In the years before 2008, mortgage lenders made loans to unqualified buyers, or subprime buyers, without verified income or down payments and pushed those buyers into risky loan products that were destined to fail. When the subprime loans started defaulting on a wide scale, the securities failed, too, leading to a financial collapse on a scale never seen before. Mortgage lending practices today are air-tight, and as a result, subprime mortgage bond issuance is a tiny fraction of it was prior to the crisis.  

Another factor in the 2008 collapse that hasn’t been talked about as much is the oversupply of housing. In the early 2000s, regional home builders consolidated to form large national companies, and started churning out houses in volumes that dwarf the pace of building today.  Real estate speculators often purchased this oversupply, and when the crisis hit, they just let those houses go into default because they hadn’t put any money down on it anyway. This led to massive housing supply for sale during the collapse, which pushed prices into free fall. But today, housing supply today is incredibly tight.

While the specific mechanics of the 2008 collapse won’t play out if there’s another recession, economists have speculated whether the psychological scars of the crisis would lead to unwarranted panic in the housing market if the economy starts turning sour.  “The psychological component I think is absolutely dark horse in what might happen in the next downturn,” McLaughlin said. “The more that we can provide data out there to help such households make more rational decisions in the housing market the better." 

In conclusion, there’s no need to react in fear or anxiety about the future.  More than ever, it’s important to stay informed about the market and then evaluate that in light of your specific goals and situation.

Happy New Year!  Looking back at 2019, the market was pretty much as expected with continued low inventory levels, low interest rates and strong home values.  Despite talk of impending recession, indications are that this year will be more of the same.  We’ll be covering this in detail at our upcoming seminar (more information below), and also in next month’s newsletter.

Let’s first take a look back at 2019 and some trends we saw for sales of single-family homes in our area:

Median Sale Price
As noted in the charts above, the median sale price in San Mateo County started at $1,400,000 in January and ended the year at $1,475,000 with an all-time high at $1,765,000 in May.  In Santa Clara County, the median sale price started at $1,160,000 and ended at $1,220,000 with a high of $1,330,000 in July.  In both cases, median sale prices ended the year slightly higher than they started with the usual increases during late spring, a slight decrease in late summer, then a small boost in the fall. 

Median Days to Sell
In San Mateo County, the median days from “on market” to an accepted offer started at 27 then remained at less than two-week levels for most of the year, going to 24 days in the month of December.  In Santa Clara County, this started at 29, went to less than two weeks in the spring, and then increased to less than three weeks during the second half of the year.  Although we saw some cases of homes staying longer on the market, the majority of homes sold within 2-3 weeks for most of the year.

Months of Inventory

As a reminder, this is a statistic to measure how long it would take to sell all existing inventory at the current rate.  Six months is traditionally considered a balanced market and less than 6 months a seller’s market.  San Mateo & Santa Clara counties followed fairly similar patterns starting over the two-month level, dipping to less than two months over much of the year, and then ending the year with less than one month of inventory!

Again, all indicators are of a strong market that can still be great for sellers and a challenge for home buyers.  For those who are considering selling or buying in the near future, what happens in the coming years may have a significant impact on your real estate goals.  Whatever your personal situation, I will continue to keep you updated on the market through these newsletters, and would be happy to meet with you at any time to discuss your specific market and real estate needs.