Myth or Reality in Realty - Some Misconceptions Debunked During the Pandemic
Updated: Apr 2, 2020
First and foremost, I hope that you and your families are safe and well. I know for many of you that your homes not only serve as your shelter in place, but also your nest egg. I can confidently reassure you that your homes are faring better than your stock portfolio. In the spirit of keeping you informed about your home values in a very fluid situation, I thought I’d debunk some myths that seem to be circulating about real estate.
Myth – Home sales will be in a deep freeze until the shelter in place restrictions are removed and there is a cure to the pandemic.
Reality – Even in this market, deals are closing. Lenders are lending, appraisers are valuing, realtors are negotiating, movers are moving and title officers are finalizing escrows. In fact, the sale of real estate was just identified as an essential service in Alameda County.
Myth – There has been a substantial drop in demand for homes as buyers reassess their financial condition.
Reality - There are still plenty of buyers who continue to look for homes. We continue to have a shortage of inventory which has been heightened with the current environment.The important development is that the selling/buying process is now different. At the moment, there are no public open houses or broker tours. Buyers are identifying their properties online and doing all of their homework upfront. Disclosure packets are reviewed before deciding to see a property. The final step in the process is a private visit to the home under new showing guidelines.
Myth – Prices are dropping as the economy teeters on the brink.
Reality – While there is little debate that a weak economy ultimately impacts housing prices, there is no evidence that we will be in a prolonged recession in our local market. What has changed is the way homes are marketed and priced. Prior to the pandemic, homes were priced below market with the intent to generate multiple offers and a sales price well above list price. In the absence of the ability to market through open houses and confined timeframes, homes are starting to be offered at “transparent prices”… a price that a seller would accept. In this environment, offers are reviewed as presented and often without competitive bidding. The end result is sales prices at or near list prices, a phenomenon that we haven’t experienced in our market in quite some time. While the optics may have changed, values remain near the levels prior to the pandemic. As one buyer said to me, the guessing game is gone and the process is much less complicated.
Myth – As a seller, I should put my sale on hold until the pandemic is fully resolved to achieve the best result.
Reality – It depends. There is a substantial amount of inventory waiting to be released to the market as soon as the Shelter in Place (SIP) restrictions are removed. The timing of the SIP has hit right at the beginning of what is normally our busiest time of year. Based on the specifics of your home, you may realize a better result when there is less competition from other properties. Additionally, now that real estate is considered “essential”, there will be more Realtors out meeting their clients at private showings. This is an important strategic discussion you should have with your Realtor. Despite the troubling state of our world, people still need places to live or the ability to generate liquidity from their nest egg. Although the process may have changed, my commitment to help you navigate through these very uncertain times has not. Don’t hesitate to call, text, email or Zoom me. Signing off from my living room… Best, Dana