Show me the money! Make it rain! Does anyone remember Alan Greenspan’s take on the dot.com bubble in the late 90s? Can you say irrational exuberance? That’s what this has to be right? How can the country have historic unemployment rates and economic turmoil, be in the clutches of a deadly pandemic, be experiencing massive social upheaval and still have a strong housing market? What is wrong with people, shouldn’t the housing market be dropping right now?
If you own a single family home in San Rafael and you are selling in the near future prepare to be delighted. I just closed escrow on 108 Trellis Dr in Terra Linda. We ended up showing it 18 times to agents with buyers. We had 4 great offer, all over the asking price. The offer we choose was all cash and closed in 10 days. What’s not to like about that? Not a thing.
This week I put 551 Tamarack Drive on the market and I’ve scheduled 25 showings. There are several reasons the market is so strong for these homes: low inventory, low interest rates have made buying more affordable and the advent of telecommuting. No longer do people whose offices are in the City need to be in the City. They are working from home, and the commercial real estate industry is going to be decimated as a result of this and a surge in online commerce that has shifted consumers away from brick and mortar stores.
Meanwhile the residential real estate market is humming along with very little inventory. We have had a chronic housing shortage for years. With mortgage rates at historic lows there are lots of qualified buyers vying for few homes on the market. It’s hard to believe when lots of people have lost their jobs or been furloughed, but those people aren’t trying to buy homes. Unfortunately when government assistance runs out there is a possibility we may see some of those homeowners on assistance forced to sell.
Further economic distress is likely. Our economy is in a recession or worse. When the federal government assistance runs out there are a lot of people who will be hurting and that has to have an effect on the overall economy. Nobody has been untouched by the medical and economic tragedies in 2020. We aren’t even out of the first wave of COVID, with new high case numbers being hit nearly every day in America. School will be in session soon which might not be such a good thing during the pandemic and flu season is around the corner. ICUs are filling up in different parts of the country. Reopenings are pausing and even rolling back. Marin has a high case count, and what happens if we have to shelter in place again?
Because real estate is an essential business the lights will stay on and we’ll keep selling homes. The worst case would likely be that we can’t sell or work on occupied homes, as was the case in March when the SIP first went into place. That was pretty bad and led to a very small number of homes being available. If we were to go back to the SIP we’d likely see new inventory chocked off again which would only make it tougher for the buyers.
When the SIP happened it seems like it pushed our spring demand back two months. There is a theory that we are working through our spring demand this summer. What’s happening in July 2020 feels stronger than our typical spring demand. Nobody knows what’s going to happen next with the market. What we do know is that right now the market is creating a lot of hay making sellers.
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