July 2020
Buying a Home without Ever Stepping Inside
Buyers are growing increasingly comfortable purchasing a home sight-unseen, with 36% saying they would buy a home entirely online, while 43% would sell a home that way, according to a Zillow survey taken in mid-May. With the pandemic limiting travel and home viewing options, and more people contemplating moves because they can work remotely now, the practice is likely to become more common, according to Zillow.
A growing number of online listings are now designed to give shoppers a more holistic experience. Between February and early April, virtual tours created on Zillow climbed by nearly 600%. Listings with a 3D tour also garnered more interest, drawing 66% more visitors and 90% more saves in April than those without.
Knowing the red flags of homebuying can be hard, even when visiting a home in person. But the concerns can be compounded when you are doing everything online.
To make sure you don't miss anything, have an agent or friend tour the home in person with you via video chat to show you every nook and cranny, they can alert you to a smell, what the natural light is like or how strong the water pressure is.
It can be challenging to get a feel for the neighborhood without being there, but location is the most important thing to look for since it will have the biggest impact on the value and is something you cannot change about a house.
Take note of when the roof was last replaced and updates to other systems in the home, but don't feel like you have to be the expert, you will have the home professionally inspected before closing to make sure there are no surprises.Portions taken from an article on CNBC:
I am happy to report a recent sale in Santa Cruz for some longtime clients who were relocating out-of-state due to a new position at the University. We listed the home on May 12, 2020, accepted an offer on May 22, 2020 and closed on June 23, 2020. Nice result for being in the middle of a pandemic and having to abide by SIP and Covid-19 restrictions. So thankful and happy for them for the quick turnaround and that my clients are on to their next adventure in life. Stay Well, Stay Safe!
The Move is On to Less Expensive Areas
The places home searchers are looking to leave and those they are looking to move into remain largely the same as before the pandemic took hold: Redfin users want to leave expensive coastal metros for affordable inland areas.
San Francisco and Los Angeles had the biggest net outflow of Redfin users in April and May. A net outflow means more people are looking to leave than move in, while a net inflow means more people are looking to move in than leave.
San Francisco, Washington, DC, Chicago, Seattle, Denver and Boston have all seen small (less than 2 percentage points) increases in the share of people looking to move away since last year. People have always left the Bay Area for less expensive places, and Las Vegas and Lake Tahoe have always been popular destinations because home prices are lower and there's no state income tax in Nevada. As more companies follow in the footsteps of Facebook, Twitter and Slack in announcing permanent remote work policies, some tech workers are moving to different parts of the country-but most of them have other reasons to stay put, like friends, family and culture.
Migration out of expensive coastal parts of California is driving interest. The Bay Area residents make up the largest portion of migrants looking to Sacramento and Austin, with 72.4% and 17.3% of respective out-of-town searches in those places originating in the San Francisco area.
Local Redfin agent Kellee Davis, who moved from the San Francisco area to Sacramento in 2003 says, "Most of the homebuyers I meet are moving into town from other places because Sacramento gives them the best bang for their buck. In the Bay Area, the size, quality and land that comes with properties do not come close to what they can get for moving just an hour and a half away. While I haven't noticed an uptick in telecommuters from the Bay Area looking to move in, I have seen a lot of folks moving in because of job opportunities in Sacramento and nearby Davis, particularly in healthcare at Kaiser and UC Davis. Portions taken from an article on Redfin:
Update on Coronavirus Market Impacts
The housing market continues to recover with pent-up demand surging at the national level and mortgage applications rising as buyers capitalize on record low rates, according to the National Association of Realtors (NAR). While the outlook for the real estate industry is looking more positive than before, the negative impact of the coronavirus pandemic on the economy will linger on for a while. There are encouraging signs that the economic downturn has reached the bottom. Even so, the resurgence in coronavirus infections in recent weeks suggest that the pandemic is far from over.
U.S. pending home sales surged. The U.S. housing market mounted a record comeback in contract signing in May after two consecutive months of sales declines. NAR reported that the Pending Home Sales Index surged 44.3 percent in May, registering the biggest month-to-month increase since NAR started reporting the series in January 2001.
Showings remain well above 2019 levels. As of June 30, 2020, showing activity was 56.2 percent above the same time of last year.
Weekly mortgage applications ticked down but still higher than a year ago. Purchase applications declined on a week-to-week basis for the second week in a row after nine consecutive weeks of solid gain, according to Mortgage Bankers Association (MBA). Despite the weekly slowdown, the index continued to improve from a year ago and it has had a double-digit year-over-year gain for five consecutive weeks since the last week of May.
Consumer spending rebounded. Consumer spending rose 8.2 percent in May from a month earlier, double the prior all-time high since record-keeping began in 1959. Whether Americans will continue to spend at May's pace is unclear, as recent surges in virus infections could curtail consumer spending in coming months.
Personal income fell. While spending increased, household incomes dipped on a month-over-month basis by 4.2 percent in May but were still up 3.8 percent compared with February. For now, household finances are holding up as Americans are still saving a big chunk of their money.
Consumer confidence jumped more than expected. The loosening of the stay-at-home order restrictions and the relative improvement in jobless claims increased consumer confidence in June to 98.1 from 85.9 in May.
Market pulled back in the latest week. Closed sales, pending sales and new listings in California all declined from the prior week. Is the pullback a blip or the beginning of a slowdown? It is too soon to tell what the real reason is behind the pullback. It could be a leveling off as the market got through the pent-up demand built up during the shutdown. It could be a slowdown in activity as market participants became concerned about the recent coronavirus resurgence. It could be an indication that the homebuying season is coming to an end and the market is transitioning into the off-season. The pullback could also be due to a lack of supply, as the level of new listings hit the lowest in the past four weeks. Only time will tell.
Market activities appear to be leveling off as both supply and demand slowed in our latest weekly readings. However, the lack of new listings to supply from both existing housing stock and new constructions continues to be an obstacle to the recovery process and the latest coronavirus resurgence will add more uncertainty to the overall big picture.
1st & 2nd Quarter Comparisons for Bay Area, Central Coast, Santa Cruz
Comments: Total sales in Santa Cruz County increased 43% mainly due to much improved weather. Monterey County experienced a minor increase most likely due to a longer SIP requirement and Santa Clara County only saw a 19% increase in sales. Similarly, Santa Cruz County saw an average Median Price increase with a decline in Monterey and Santa Clara counties. The Days on Market declined across the board and the list to sale price ratio decreased in all three counties signaling a good time to buy. Display of MLS data is deemed reliable but is not guaranteed accurate by the MLS.
