Real Estate Market Snapshot 4.4.2020
You may have heard that Real Estate is being considered an “essential” business. To the extent that people need a home to stay safe in, that makes sense. But this is not the time for most people to be either buying or selling.
Agents have been instructed to not do any face to face showings or hold open houses. To the extent we can conduct business it is supposed to be done virtually even though there is no data leading anyone to believe that is a viable option to sell homes.
And yes, with banks, title companies, escrow companies and others in the chain also being considered essential, it is possible in some circumstances to close transactions.
I see some agents inexplicably trying to conduct business as usual. Maybe that shouldn’t surprise me because agents have a unique ability to block out anything they don’t want to acknowledge. Unfortunately some of the thought leaders in the industry are encouraging agents to do business and I even saw one email classifying Covid 19 as a sales “objection” to be overcome. Really? I sent a not very nice email to that person. I’ll spare you the expletives.
Here’s the reality of the situation:
Most Sellers do not want strangers coming into their homes at this time.
Buyers are for the most part staying on the sidelines until they get a clear picture of the economy as well as their personal finances when this is over.
And let me add what I’ve written previously on this site and others: the lower the inventory is when this is over, the more likely it is that prices don’t plunge. No one wants to see 2008 again.
The Real Estate market does not react anywhere as quickly as the stock market. It takes time to put deals together, open escrow, cancel listings or just about anything else. It takes one click to sell a stock.
So to get a sense of what’s really going on and get beyond agent happy talk, let’s take a look at activity from Monday March 30th through Friday April 3rd. Elsewhere I’ve been tracking from 3/20/2020, the day after Gavin Newsom’s Stay at Home Order.
Presumably by the 30th buyers and sellers had the opportunity to process the new world we are living in.
Here’s where the rubber meets the road and gets beyond the BS, newly signed purchase contracts. Let’s take a look at most of the Los Angeles South Bay
NEW ESCROWS
Redondo Beach 90277: 3
Redondo Beach 90278: 2
Hermosa Beach 9025: 0
Manhattan Beach 90266: 2
Rancho Palos Verdes 90275: 4
Palos Verdes Estates 90274: 0
Rolling Hills Estates 90274: 1
Rolling Hills 90274: 0
Torrance 90505: 1
Torrance 90504: 0
Torrance 90503: 2
Torrance 90502: 2
Torrance 90501: 2
Hawthorne 90250: 0
Gardena 90249: 1
Gardena 90247: 5
Lawndale 90260: 1
Lomita 90717: 2
El Segundo 90245: 0
Hopefully you get the point, not a lot of activity unless you were selling a house in Gardena 90247.
Now let’s take a look at some of these zip codes as to what came on the market, what was taken off (combining canceled, hold, and withdrawn) and what went into escrow.
New Listings, Escrows and Removed 3.30-4.3
So clearly we are seeing a flow of new listings which are outstripping new escrows in every instance.
That’s exactly the opposite of what I want to see happen.
What I’m looking for is what we are seeing in Manhattan Beach 90266 and Rancho Palos Verdes 90275. That is the properties taken off the market by a change of status to hold, canceled or withdrawn is greater than the number of new listings.
To end on a positive note, at this point I do not believe that we are going to see a repeat of 2008 with a wave of foreclosures and short sales. I think the banks are smarter about handling this situation and most people had decent equity going into this so if they have to sell, they will walk away with some money.
But if we start seeing inventory pile up there might be a negative effect on housing prices when we come out of this.