October 2020
A First Time for Everything
The number of first-time homebuyers is on the rise. According to NAR's 2020 Home Buyer and Seller Generational Trends Report, more millennials became first-time homebuyers compared to any other age group category, 88% or younger millennial homebuyers and 52% of older millennial homebuyers were first-time homebuyers.
Based on this report, down payment expectations and hurdles to home ownership was the most challenging aspect in the homebuying process. More inventory is needed to assure home prices do not outpace income growth and there will be even fewer listings during this pandemic period. Student debt has been a lingering factor and the issue most likely will continue. The one positive note is that mortgage rates are and most likely will remain at historic lows.
Greener Pastures may be in the Mind of Many
Annual population growth within primary cities vs suburbs within major metropolitan areas from 2010-2019 has declined from 1.07% to .31%, while the opposite has only declined from .91% to .65%. In addition, 37% of Americans said the Covid--9 pandemic makes them want to live in a rural area that is more than 21 miles from a major city.
Major corporations moved their suburban offices to downtown areas and much was written about how millennials, now the largest living adult generation in the country, preferred an urban lifestyle known for their vibrant cultures, robust arts, entertainment districts and walkability.
But as coronavirus began to spread the city life became synonymous with high Covid-19 case counts, cramped quarters, and shuttered businesses. As a result, housing priorities have shifted among buyers and renters alike.
In the country's largest metro areas like New York, San Francisco, LA and Chicago, buyers and renters are looking to move due to the cost of living and the ability to now work from home. Americans who have been laid off or furloughed may find they can no longer afford their monthly mortgage or rent payment forcing them to find a less expensive place to call home.
During this exodus, buyers are looking for, more indoor space, a dedicated home office, a bonus room, large lots, outdoor space, privacy, peace and quiet, and easy access to nature.
The California Market: Supply remains a stumbling block
With mortgage rates once again hovering near all-time lows, buyer demand remains high as requests for private showings last week were up 150% from the previous year. Though mortgage applications did fall 5% from the previous week, new purchase applications were over 21% ahead of 2019's pace.
While homes are continuing to sell quickly and without discounts, the number of new listings is declining; in California statewide, new homes entering the MLS declined 7.6% last week from the previous week. Nationwide, the number of homes on the market has dropped 39% year over year, and that number is even higher for California alone. The lack of supply has put buyers in a tight spot, facing increased costs and competition. Wildfires have put nearly 2 million American homes at extreme risk of property losses and California is home to 76% of those residences.
Presidential election affecting plans for many home buyer/sellers
More than one in five homebuyers and sellers said the presidential election is impacting their plans to buy or sell a home according to a survey of more than 1,400 US residents who planned to buy or sell in the next 12 months. That is down from 32% in November of 2019 most likely due to the pandemic.
13% of respondents to the survey in August said the election is making them more hesitant to buy or sell a home, 9% said the election is making them less hesitant to buy or sell. This is unlikely to have a major impact on the housing market partly because these people will buy or sell once the election has passed.
65% of homebuyers and sellers said the upcoming presidential election is not impacting their plans at all. This means 1/3 of these people believe this is impacting them. What about you???
New California law prioritizes people over corporate homebuyers
Tenants, affordable housing groups and local governments will get first crack at buying foreclosed homes under a measure approved on September 28, 2020 by Gov Gavin Newsom.
The bill is designed to keep corporations from snapping up homes and letting some fall into disrepair as they did during the Great Recession. The issue drew national attention a year ago when several homeless mothers calling themselves Moms 4 Housing moved into a vacant, corporate-owned house in West Oakland.
It was among 15 bills Newsom signed into law as renters and homebuyers again struggle during mass layoffs prompted by the pandemic. The governor said the measures "will directly lead to more affordable opportunities for renters and homeowners."
The law bars sellers of foreclosed homes from bundling them at auction for sale to a single buyer. In addition, it will allow tenants, families, local governments, affordable housing nonprofits and community land trusts 45 days to beat the best auction bid to buy the property. Owners of poorly maintained properties can be fined as much as $2,000 a day under the bill.
Democratic Sen. Nancy Skinner of Berkeley said her measure gives people who want to live in a house a fair shot at buying it. She said the measure that takes effect Jan. 1 sends the message that "California homes are not yours to gobble up; we won't tolerate another corporate takeover of housing."
3rd Quarter Comparisons for Bay Area, Central Coast & Santa Cruz
Comments: As noted new listings have risen 33% over the 1st quarter; number of units sold have risen 57%; the median price has declined 3.1% for all three counties combined; days on market fluctuated but not significantly; the list to sale price ratio remained relatively the same in two counties yet declined in Santa Clara. What does all this mean?? In my opinion, this is a market that is in flux due to low inventory and interest rates, high buyer demand and a disruption to the economy. Until one or all of these factors change, we will continue to see high prices and high demand in the Bay Area and surrounding communities.(Display of MLS data is deemed reliable but is not guaranteed accurate by the MLS)
