The Market: California housing market in flux
Dated: March 16 2020
With the stock market experiencing its worst day since 1987 last Thursday and the Trump administration declaring a national emergency last Friday, the impact COVID-19 will have on the housing market is still unfolding. C.A.R. expects to revise its 2020 California housing forecast downward, despite the fact that low interest rates (the Fed slashed rates to near zero yesterday) are expected to help offset the effects of a slower economy. Some signs point to this already starting to play out, with refinance and mortgage applications jumping 79 and 55.4 percent respectively two weeks ago after the average rate of a 30-year fixed mortgage fell to just 3.13 percent.
That said, the situation is still uncertain and changing rapidly right now. Joel Singer, CEO of C.A.R., notes that: "From a purely real estate perspective, the current situation will ultimately lower mortgage rates and should fuel demand once the crisis phase is behind us. More broadly, it is a logical reaction to this reality that the global economy will be slowing in historically unprecedented ways for some period of time."
Last week, a C.A.R. flash survey found that around half of California REALTORS® think the virus will have a negative impact on home sales. More than one in four said they had clients who put their home purchase or sale on hold due to the virus’ impact.
Many REALTORS® are wondering what to do about open houses, which by nature go against the tenets of social distancing. Some agents are reporting success with increased virtual showings, while others (about 25 percent of those surveyed by NAR this past week) are requiring buyers to use hand sanitizerbefore entering the home. Some sellers are asking to cancel open housesaltogether, not wanting potentially infected strangers to touch objects in their homes. If you are planning to continue holding open houses, there are basic safety precautions you can take, like regularly cleaning and disinfecting frequently touched surfaces (like doorknobs) and covering coughs and sneezes with a tissue or the inside of your elbow.
Sources: Tech Crunch, The New York Times, CALIFORNIA ASSOCIATION OF REALTORS®, REALTOR® Magazine, Curbed, Realtor.com, Centers for Disease Prevention Control and Prevention