The national real estate market has somewhat slowed in the past few weeks, and that slowdown has included San Diego and the College Area. There was a delay in the decline of closings as there were quite a few deals already in escrow in mid-March when the lockdown steps began. This year was going to be another very busy year in the local real estate market prior to the lockdown, but most of the deals in escrow last month have now closed and new escrows have slowed a bit.
One deal I was working on for a while was with a first-time buyer looking for a duplex and we went into escrow in mid-March. While we were able to get the physical inspections completed just prior to the lockdown, I finished the transaction primarily over Zoom by meeting with the parties over the face-time platform which worked quite well. It was actually quite convenient for all parties as we spent a total of several hours over the final two weeks of the transaction on Zoom discussing the results of the inspection, disclosures, and loan documents. While I had been using the online face to face software for a while, especially with out-of-town clients, I have started using this technology with local clients as well.
The online notary business has also seen a boom in recent business. A five-year-old company that performs real estate closings and notarizations online, Notarize, states it expects to complete $100 billion in real estate closings this year. The real estate industry was already slowly moving more processes to online, but it seems that the current lockdown will accelerate that trend.
The local market has not shut down and real estate transactions continue, new homes are coming on the market currently, banks are writing loans, and deals are closing. The demand for local real estate properties remains fairly strong and the National Association of Realtors only expects a decrease of 10% in closed sales this year from last year.
Many expect this lockdown to end in the next month or so and for real estate transactions to get back to normal. Preapproved buyers are still searching for properties on the internet as usual, and quality properties at a good value are still going into escrow fairly quickly.
The difference between the 2008 to 2010 slowdown compared to now is that buyers and sellers currently expect this slowdown to be temporary. The slowdown 12 years ago was a bit more scary because the length of the downturn was so unknown. Nobody was confident at the time on how long that recession, might last. Two years? Five years? No one really knew at the time and the market prices dropped significantly as buyers dried up.
When buyers sense that prices are expected to decrease in the near-term, buyers will move to the sidelines. That is what happened in 2008, and home prices did then drop. However, currently, most feel this is just a very temporary slowdown, resulting in prices and transactions actually staying fairly steady for now.
For the month of March, 2020, closed sales for single family homes in 92115 was 18 compared to 37 this time last year. End of month inventory of homes available for sale was 25 homes compared to 62 this time last year, but the median sale price reached an all-time high of $607,000 compared to $530,000 year over year.
If the lockdown ends soon, I would expect a fairly steady and strong residential real estate market this summer as buyer demand will likely remain durable. If the lockdown continues into the summer, I will expect significant property price erosion.
—Sarah Ward is a Realtor with College Area Realty. Reach her at [email protected], or at 858-431-6043.