Coronavirus and the San Francisco Real Estate Market

Coronavirus and the San Francisco Real Estate Market

For starters we hope that you and yours are healthy and well as we are all collectively going through this strange moment together. As your real estate agents we are well aware that while health concerns are all of our first priority, once this pandemic is over they are followed very closely by the financial implications that result. On this topic we thought we would offer you some insights and suggestions based on our collective 60 plus years of experience in selling homes in San Francisco.

For homeowners:

We understand that there is great uncertainty in the markets and in the economy as a whole. The first point to know is that the value of SF should hold, especially over time. Our experience tells us that the value of your asset is secure, so long as you have some flexibility in the timing of a sale. As your agents we believe strongly in defending the value of your home and this becomes more important during times of uncertainty. We also see a potential opportunity for a refinancing that can improve your financial outlook. This can save money and also buy time and that is the key to making good decisions regarding real estate.

For those considering buying:

This can be a frightening time to make a bold move like a home purchase. If your down payment is made up of stocks then you have good reason to be hesitant. At the same time, this may be an opportunity for a better buy given the lowering of interest rates This is typically a major factor in determining a buyer's purchasing power and may offset any losses that may be seen in the stock market. We also know that San Francisco Real Estate is considered by many to be a safer bet during uncertain times. While San Francisco real estate has not historically gone down the way it has in other areas of the country, there also may be pricing opportunities coming soon as we see the ripple effects of the stock market downturn and any economic slowdown due to the coronavirus.

For everyone:

What we know:

  • This is an evolving situation and it will be at least a few weeks before we know more about the direction we are heading in.

  • The COVID situation will pass and there will be a demand surge following the period of uncertainty and pent-up demand.

  • Housing needs will remain strong in the city and this virus will not change that fundamental need. Some buyers and sellers will continue to be motivated by circumstances unrelated to the current crisis.

  • There will be some changes in how this virus affects daily life and this will impact how showings are handled for buyers and sellers. It is likely that our marketing strategies will need to adapt to these changes.

  • Houses are still selling and some are getting multiple offers to this day. Agents at Corcoran Global Living announced 28 sales during the week ending March 14th, 22 of which generated multiple offers. How this changes after the 'shelter in place' order will remain to be seen.

  • Some contract cancellations and offer withdrawals have also occurred as buyers are wondering if they should hold off on buying.

  • The real estate market will recover from any effect this COVID-19 is having today. Historically, the SF market has *always* recovered, even from major events fueled as it is by a technology economy, limited housing, and the desire to live in the City.

  • There will need to be fewer public open houses and more alternative approaches to showing property in order to maintain social distancing and the relative comfort of buyers who want to see homes but not expose themselves to any potential virus?

What we don’t know:

  • What will be the severity and spread of the disease?

  • How long will it be before we can verify that infection rates are going down and therefore relieve the fear and uncertainty factor and begin the process of returning to normal life?

  • Is the change in the market affecting it enough that pricing strategies will move away from targeting overbids and instead price at value and a longer sales cycle? For now, the homes we are seeing on the market at this moment have started to move to this strategy, as we do not currently have open houses with lots of people to create competition.

  • How much longer will it take for properties to sell and how will that impact staging and costs associated with longer exposure? For addressing costs we are evaluating ‘virtual staging’ for some properties. For addressing risks in overexposure we are recommending off market approaches to start at a ‘buy it now’ price. A long term exposure to the market that accrues ‘days on market’ tends to bring buyers who are looking for 'deals' and this is not something that we feel is a benefit to our sellers. For our listings immediately coming up, we are suggesting an off market approach with a FIRM buy it now price.

  • How long will it be before we have the full support of the vendors (photographers, stagers, contractors and inspectors, and lenders) who we will rely on to resume our established approach to marketing and closing transactions?

These are the issues at hand as we look at the real estate aspect. As the situation unfolds, we will continue to evaluate these and other questions that arise. We plan to stay in close contact with our network of lenders, escrow officers and other agents so we can keep you updated on what we are seeing on both the buying and selling side of the market. We are always here to answer any questions you have and help you evaluate whether or not making a move now or in the near future makes sense.

For now, be well, and we are here to help if you have any questions.