Once upon a time, millennials were willing to sacrifice a few stimulus checks (and then some) on each month's rent to live in a closet-sized apartment just to be part of the hustle and bustle of a city. But when all the alluring things about living in a city (like bumping into people on crowded streets, standing in ridiculously long lines for brunch, and cramming your way into packed sports arenas and concert venues) can potentially change, the possible danger of these everyday social interactions could accelerate a trend away from densely populated urban cities and into the suburbs.
After the lockdown, new home sales came to a screeching halt (as did everything else). But in the last two weeks, homebuilders have seen sales start to climb back up, particularly with dual-income first-time buyers wanting to leave their tiny apartments and buy larger move-in ready homes that they find more safety and stability in. More emphasis is now being placed on outdoor areas, functional layouts, and overall MORE SPACE.
The secret is out: Doordash tastes the same from wherever you are.
So how does all of this uncertainty impact the housing market?
Short Term: Despite sellers still needing to sell, inventory will decrease sharply. Listings are still trickling onto the market, but nowhere near the number it would've been had our lives not been turned upside down. While many buyers are in "wait and see what happens" mode, serious ones and those who have been "waiting for the market to go down" remain undeterred and can expect less competition with a slight corona discount.
Long Term: We're going to see a deep recession, but most likely the shortest one in history, with the economy predicted to start recovering towards the end of summer. Prior pandemics showed that while the number of home sales dropped dramatically during an outbreak, home prices only decreased slightly. The pace at which prices were rising will most likely slow down, but nothing like 2008 prices as that was caused by oversupply and we still very much have a housing shortage. When all of this is said and done, the backlog of inventory combined with pent-up demand from buyers will stabilize the market again.
Buuut, disclaimer: things are changing so quickly everyday that this may all be different even by next week. The news is difficult to keep up with these days!
The average U.S. home costs $240,000. But in San Francisco, a two-bedroom apartment costs around $750,000 to build. The costs of construction in SF are 13% higher than New York, 60% more expensive than Chicago, and 75% more than in Houston. But why is it SO expensive?
For starters, the price of land and labor in California is insanely higher than other states. In SF, a construction worker makes about $90 an hour. (Did you just audibly gasp because you had no idea this was a construction worker's average wage and consider maybe you too could work in construction someday? Because same).
But it’s not just that. There are so many costs that go into building affordable housing. Government fees, permits, hiring consulting companies.... So. Many. Things. It literally took the City Council 6 months just to agree on the financing paperwork alone. More attorneys are involved in projects than actual construction workers. And we wonder why it takes SO long to get any sort of traction on building affordable housing (or any housing at all) in the city. *Insert crying face emoji here.*
In non-Corona-related news (does that even exist anymore?), Kaiser cancelled their plans to build out a 1.6 million square foot tower due to delays and the ever-increasing costs of construction and project-related fees (not because of the pandemic, although the timing couldn't have been worse). This would've been Oakland's biggest commercial project, so this is a huge blow to the development of downtown.
Remember when interest rates hit a recent low of about 3.29% a few weeks ago? Well, lots has happened since then. With that drop came a rush of homeowners wanted to refinance their existing homes. Lenders got so overwhelmed that they controlled the sudden influx of refinances by shooting rates back up, and it's been a rollercoaster ride for rates ever since.
The Fed then announced that it would buy back $500 billion in U.S. Treasury bonds and $200 billion in government mortgage-backed securities. I know--what does that even mean?? In layman's terms, this move should help stabilize rates and keep them low. They're already back to 3.5% as of this week!
In an effort to save the world in the most anti-climactic way possible--literally just sit on the couch and do absolutely nothing--somehow a frenzy of chaos and mayhem have followed.
It turns out we are so interconnected in a domino effect way that when we cannot be in close proximity to one another, we cease to function as a society altogether and madness ensues. Jobs are evaporating into thin air (but at least the government is giving us a whole $1200 check to live off of?). We panic buy toilet paper (not me though, I'm dangerously down to my last 3 rolls). And worst of all, as if shelter-in-place wasn't hard enough already, we spend our time at home challenging each other to do push-ups online! (some of us are physically unable to do ten pushups okkk?)
But on the upside, when we don't have the usual busyness of everyday life to distract ourselves, we have time to slow down and reflect on the truly important things in life (liquid soap and hand sanitizer, apparently). We pick up new creative hobbies (eating while cooking is so underrated). We take time to virtually connect with each other (mostly out of sheer boredom but still, that totally counts). And some of us even have social distancing dance parties (full disclosure: I only read about them online because I'm not cool enough to be invited to one in real life).
My long-winded point is this: we actually need each other to have some semblance of normalcy and to simply survive. In order to take care of ourselves, we have to take care of each other, and vice versa. Just like this whole disease spread from one person to the entire planet seemingly overnight, I think kindness, compassion, and shaming people into staying at home can be just as contagious. Once everyone is happy and healthy again, we can finally leave the house and stop doing pushups once and for all!
While a part of me secretly loves living my best quarantined life, I can't wait to purposely see people in real life again. Until then, please feel free to call, text, email, or shout at me from a socially acceptable distance if you ever need anything. I'm here for you, mostly because I have nowhere else to be. :)
In the midst of the biggest growing phases in downtown Oakland history, another tech giant is hopping on the bandwagon and making the move! Credit Karma opted to lease 5 floors with a rooftop deck at 1100 Broadway. Now with two offices, one in Oakland and one in SF, Credit Karma employees will be able to BART back and forth between two locations. New residential towers, offices, and hotels are also expected to pop up in the area within 6-12 months, proving that downtown Oakland's momentum is just getting started.
Is everyone else finding it impossible to read the internet or take part in a conversation without the coronavirus coming up? Well, this post will be no exception.
As someone who thoroughly enjoys the occasional night of self-quarantine (thank you DoorDash and Netflix), the coronavirus is the excuse I've been waiting for my whole life to stay at home wrapped in a blanket for hours on end without feeling guilty. But it turns out that buyers have other plans.
While everyone everywhere seems to be in panic mode—avoiding large crowds, eating out less, working from home more, washing their hands often (ok maybe it's not all bad?), and stocking up on toilet paper like it's the end of days, Bay Area buyers seem unphased and are still going to open houses in droves, determined as ever to make their next move. Maybe it's the ridiculously low interest rates, lack of inventory, rush of activity after holding off last year, ambitious 2020 goals, or all of the above, but buyers have a renewed sense of energy and are back in the market in full force.
Which means the bidding wars are making a comeback, as evidenced by these extreme examples:
This mid-century modern house in Montclair got 21 offers.
An Adams Point penthouse with a 500 sq ft roof terrace got 26 offers.
And one charming house in Fruitvale even got 42 offers. That's FORTY. TWO. OFFERS!
It truly is (March) madness out there, at least for now. With the spring market approaching, virus fears spreading, interest rates falling, important elections coming, stock market rollercoaster-ing, stay tuned to see how everything plays out. TO BE CONTINUED...
In hopes of protecting the economy from this whole coronavirus fiasco, the Fed just slashed interest rates this week and they are now at a record low of 3.29%!
To put it into real-life terms, a $600k loan at today's 3.3% rate vs. last year's 4.5% rate saves you close to $412 a month for the next 30 years. That's like 537 additional rolls of toilet paper each month until you're retired! (Do the math here if you want to calculate your own financial situation and how much uninterrupted bathroom time you can afford.)
But here's the catch: we can’t predict how long this will last. If this whole virus outbreak craze levels off soon, rates would likely bounce back up. On the other hand, if the outbreak continues to spread, it could drive rates down even further. It’s all unpredictable at this point, so you may want to lock in a solid rate now for buying or refi, juuuuust in case they creep up again. Lmk if you need a lender!
As coronavirus outbreaks spread across the world, investors are turning to US real estate as the more seemingly stable and safe place to park their money. Roofstock, a company that sells single-family rental homes online, has seen traffic from Asia recently spike by 500%. Germany, Australia, and the UK also showed a surge in online traffic. Chinese investors noted that our healthcare system was one of the reasons they rated US housing so highly (if only they knew..), which could prove even more valuable in the post-pandemic environment. Crossing fingers we see the other side of this soon!
All things real estate.