The question I am asked over and over again by my clients is: will there be a crash? I believe the answer is no. My opinion is that as restrictions start to ease, some sellers who were on the sidelines will re-enter the market. And some buyers who were poised to purchase earlier in the year may not be the same position to do so. This equation may result in slightly more listings, and a slightly smaller buyer pool, ultimately leveling out home prices. While I don’t think there will be an obvious decline, I think that prices will be more in line with actual home value.
The April 2020 sales data for the California housing market shows sales and listings down strongly with home prices remaining about the same as last month. April’s home sales totaled 277,400 units (which is well below March 2020). According to the California Association of Realtors, Southern California's number of home sales declined 30.2%.
Supply and Demand is still King
Despite the most devastating economic shock possible in the last two months, house prices are still holding. California home prices declined only very slightly from $606,410 which was down 1% from last month. Pending sales due to the stay at home orders, plummeted 43%. Home showings dropped steeply in mid-march and while they are increasing, they’re still well less than April 2019 numbers.
Even as we enter May, CAR’s surveys show homeowners are still withdrawing their homes from the market. And 85% of buyers are backing out of potential deals. However, it appears uncertainty is easing. The most recent stats about loan applications shows California mortgage applications are coming back very strongly the last week. Mortgage applications to purchase a home rose 6% last week from the previous week, according to the Mortgage Bankers Association.
Should I Stay In The Market?
If you were considering selling or buying this year, I think it is still a good time for both. Sellers who were considering listing their homes later in the year might want to consider moving their timeline up to take advantage of low inventory on the market. Buyers, while you may have fewer options at the moment, you also have less competition, and the opportunity to take advantage of the record low-interest rates. The 30-year fixed-rate, as of May 28th, was 3.15%.
Californians are optimists by nature (maybe it’s the weather?!) and the bottom line is there seems to be a lot of enthusiasm among consumers that the Coronavirus can’t crush our spirit – or the housing market.
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