How are you doing? What’s happening with your job? What do you think is going to happen with it post-Corona?
These questions and more are in the air along with all those droplets we are avoiding. We can only ask, actually, on the phone or on those endless Zoom calls (for those of us who are trying to live with the new normal physical distancing, yet stay in touch). We all wish we were Mr. Zoom. He is definitely going to profit from this pandemic.
But you are reading this post because it’s about real estate, right? So what’s going on with the housing market? In our little corner of the real estate market, Northeast Los Angeles and surrounding areas, it’s always interesting and seldom like the national or even the California picture.
(data from the Combined LA-Westside Multiple Listing Service, as of 5/4/2020)
What does all this mean? So far, the average sale price for 4 of the 5 zip codes I looked at had some gain this April (2020) over last April (2019). That’s surprising as all you read about the economy says that we are in a recession. It’s interesting also because the first quarter of this year showed many fewer listings on the market than first quarter last year did. So we can’t say that the Coronavirus pandemic was THE cause of the market contracting. We can’t say yet that it is responsible for a drop in sales price, because we haven’t seen prices drop on average. Eagle Rock saw a big decrease in the average Sales price but I think it's more from sticker shock (there just weren't a number of over $1.2 million sales this year like there were last April). Now I’m sure some individual houses have seen a price drop once in escrow because I personally have heard that from other Realtors. I know that a number of houses have dropped their prices but more because of an initial "exuberant" attitude about pricing on the part of owners and their Realtors rather than a downward market. It’s really too soon to talk about all the effects the pandemic could have on the real estate market because the effects take a few months to work their way through the marketing and sales process.
What I know is this: job loss and salary cuts are the main causes of current price adjustments in escrow or escrows cancelling. This is understandable. But I have also seen a number of attempts to anticipate market drops in an effort to negotiate or renegotiate prices on offers or list prices. This is by and large opportunism. This is what causes recessions that don’t make sense economically. People (would-be Buyers) try to anticipate a market correction and thereby cause one. For awhile.
But around here in Northeast LA and some nearby zip codes, some people who have the resources to buy real estate now find opportunity in having less competition to buy a house—not in having a big price drop. There may be fewer offers on a property now over last year, but that still means you can lose out. After all, to not be chosen when there are two offers gives you the same result as if you lose out in a 20-offer situation—you still don’t have a house.
What I have seen happening often in my thirty years selling real estate as a profession is people thinking that prices are too high and claiming that it’s time for a correction—so they drop out of the market to wait for prices to correct. Someone else jumps into the market because they see an opportunity (possibly the same property the previous person walked away from) and they buy it and live happily ever after. We are all different and not only do we all have different resources, we all use what we have differently because we have different tastes and needs.
If you have any thoughts of selling or buying a house now, please call us for a personal discussion regarding your own situation.