How to Move While Social Distancing

Summer is one of the most popular times to move, but how do you gather your friends, family, or hired movers together safely while practicing safe social distancing? Whoever you recruit to help move your belongings from point a to point b, here are some tips to help you and your family stay safe.

Provide Essentials. Make sure you have soap, water, hand sanitizer, masks, gloves, and shoe covers available during your move. These items, when used correctly, can help prevent the spread of germs.

Set Some Ground Rules. Whether the people helping you move are there as volunteers or earning a living, you should take charge and outline basic precautions you want everyone to use. Ask your helpers to wear a mask, wash or sanitize their hands often, and stay 6 feet apart whenever possible.

Use New Boxes Experts estimate that cardboard can carry COVID-19 for 24 hours, so it may be best to invest in new boxes instead of opting for used boxes for your next move. You can purchase moving boxes from most moving or storage companies.

Sanitize Before and After the Move Sanitize your furniture, boxes, and household touch points before your moving help arrives to help create a safe moving environment. You should also sanitize these items after unloading them at your new house.

What You Need to Know about Gift Letters

Buying a house can involve a lot of up front expenses. It can be hard to save up enough cash to cover inspections, closing costs, and down payments all on your own, especially while paying other expenses such as rent, student loans, and car payments. It’s not uncommon for loved ones to offer to help ease the financial burden, but before you accept cash to help buy your home, you’re going to need a gift letter.

Gift letters are documents stating that someone, often a parent or other family member, is giving a mortgage applicant money to help them purchase a home. The gift letter will typically include who is giving the money, who is receiving the money, the amount being gifted, and a statement declaring that the sum is being given with no expectation of the money being repaid.

The gift letter shows your mortgage lender where that money came from and lets them know that the gifter will not be able to claim they are a lender, and therefore cannot issue a lien on the property.

If you are planning to use gifted funds to help purchase your next home, make sure your lender is aware sooner, rather than later.

Protecting Your Family During Cold and Flu Season

You may already have your home’s sanitation plan up and running, but if not, here are some easy tips to help keep your home spic and span during cold and flu season.

Clean Common Touch Points Often! Some of the most commonly touched places in your home may be ones that aren’t on your cleaning list. Make sure door handles, stair railings, light switches, faucet handles, and drawer pulls are being cleaned at least as often as your tables and countertops.

Don’t Share. Sharing doesn’t always mean caring. Make sure everyone in the household is using their own cups and utensils for eating and drinking. Also, make sure no one’s toothbrushes are touching to prevent the spread of germs.

Wash Overlooked Items Purses, backpacks, shoes, and other items that make frequent trips outside your home should be washed or sanitized to ensure they aren’t harboring germs, viruses, or bacteria. Other overlooked items that could use some sanitizing include your phone, tablet, keyboard, remotes, and other electronic devices. Just remember to use an electronic safe cleaning pad to wipe down those surfaces to avoid damaging your devices.

Whatever your plans look like this month, I wish you the best! And, remember, if you or someone you know is looking to buy or sell a home, let me know. I’m here to help.

It appears as if the shock of COVID-19 and its impact on demand bottomed two weeks ago and is now on the rise. Expect demand to continue to rise going forward, especially with the added inventive of record low mortgage rates. In fact, they reached an all-time low last week, dropping to an average of 3.23% across the country. With lower rates, homes become much more affordable.

For example, in looking at a $700,000 mortgage, the monthly payment at 3.25% is $3,046 per month. That is a $712 per month savings, or $8,544 per year, compared to where rates were in November 2018, just a year-and-a-half ago. The savings are staggering, which helps explain why demand is starting to rise. It is hard to ignore the impact on affordability as rates hit these unprecedented levels.

Even with the large increase in demand over the past couple of weeks, demand is still muted. Its current level was last seen in January 2018, a snapshot of what happens to the velocity of pending sales when rates rose to 5%. Demand is also off by 56% compared to last year. So, COVID-19 is absolutely suppressing demand.

Within the last couple of weeks, the inventory grew by 6%, adding 281 homes, and it now totals 4,625. Yet, COVID-19 is also suppressing the active listing inventory. 54% fewer homes were placed on the market within the last four weeks compared to the 5-year average, 1,807 homes versus 3,889.

With demand increasing at a faster pace than the supply of homes, the Expected Market Time (the amount of time from hammering in the FOR SALE sign to opening escrow down the road) dropped from 121 days to 118 days, a Balanced Market (between 90 and 120 days). A Balanced Market does not favor buyers or sellers and home values do not change much at all. It is the first drop in the Expected Market Time since the start of the “stay at home” order back in March. From here, expect demand to continue to outpace any increase in the supply. As a result, the Expected Market Time will continue to drop in the coming weeks.

For buyers in Southern California, the current environment may prove to be the best time to jump on purchasing a home given that there is no rush to act immediately and rates are at all-time lows. That may change as California’s economy is slowly opened back up. Even so, it will not be business as usual. The new adaptation to selling homes in this COVID-19 environment will continue.

The market may not be firing on all cylinders like it was in February and the start of March when homes were flying off the market and obtaining multiple offers, but it is starting to turn a corner with both demand on the rise and the Expected Market Time falling for the first time in a couple of months.

Active Inventory: The current active inventory increased by 6% in the past two-weeks. The active listing inventory increased by 281 homes in the past two-weeks, up 6%, and now sits at 4,625. It is the largest increase so far this year. Yet, the current level is at the lowest level for this time of the year since 2013. There are still not that many homes on the market as COVID-19 is suppressing the number of homeowners entering the fray. In the past 4-weeks, there were 54% fewer new FOR SALE signs compared to the prior 5-year average. Expect this to continue until the economy is reopened down the road.

Last year at this time, there were 7,185 homes on the market, 2,560 more than today, a 55% difference. There were a lot more choices for buyers last year.

Luxury End: The luxury market is starting to improve. In the past two-weeks, demand for homes above $1.25 million increased by 17 pending sales, up 12%, and now totals 157. The luxury home inventory increased by 70 homes, up 5%, and now totals 1,571. Many luxury homeowners will continue to opt to wait to list their homes until after the economy opens back up, and demand will remain at lower levels as well. With the growth in demand outpacing the rise in the inventory, the overall Expected Market Time for homes priced above $1.25 million decreased from 322 to 300 days in the past couple of weeks.

Year over year, luxury demand is down by 235 pending sales, or 60%, and the active luxury listing inventory is down by 798 homes, or 34%. The Expected Market Time last year was at 181 days, much better than today.

For homes priced between $1.25 million and $1.5 million, in the past two-weeks, the Expected Market Time decreased from 205 to 192 days. For homes priced between $1.5 million and $2 million, the Expected Market Time decreased from 252 to 229 days. For homes priced between $2 million and $4 million, the Expected Market Time increased from 363 to 418 days. For homes priced above $4 million, the Expected Market Time decreased from 1,118 to 586 days. At 586 days, a seller would be looking at placing their home into escrow around December 2021.

Orange County Housing Market Summary:

1. The active listing inventory increased by 281 homes in the past two-weeks, up 6%, and now totals 4,625, its largest increase of the year. In the past four-weeks, 54% fewer homes were placed on the market compared to the prior 5-year average; thus, COVID-19 is suppressing the inventory. Last year, there were 7,185 homes on the market, 2,560 more than today, a 55% difference.

2. Demand, the number of pending sales over the prior month, increased by 92 pending sales in the past two-weeks, up 9%, and now totals 1,172, its first increase since the “stay at home” order was placed back in March. In the past 5-years, demand has increased an average of 0%. COVID-19 is continuing to suppress demand; yet, the bottom was reached a couple of weeks ago. Last year, there were 2,653 pending sales, 126% more than today.

3. The Expected Market Time for all of Orange County decreased from 121 days to 118, a Balanced Market (between 90 and 120 days). The drop was due to the rise in demand outpacing the rise in the supply. It was at 81 days last year, much better than today.

4. For homes priced below $750,000, the market is a slight Seller’s Market (between 60 and 90 days) with an expected market time of 82 days. This range represents 37% of the active inventory and 53% of demand.

5. For homes priced between $750,000 and $1 million, the expected market time is 86 days, a slight Seller’s Market. This range represents 19% of the active inventory and 26% of demand.

6. For homes priced between $1 million to $1.25 million, the expected market time is 165 days, a Buyer’s Market (greater than 150 days).

7. For luxury homes priced between $1.25 million and $1.5 million, in the past two weeks, the Expected Market Time decreased from 205 to 192 days. For homes priced between $1.5 million and $2 million, the Expected Market Time decreased from 252 to 229 days. For luxury homes priced between $2 million and $4 million, the Expected Market Time increased from 363 to 418 days. For luxury homes priced above $4 million, the Expected Market Time decreased from 1,118 to 586 days.

8. The luxury end, all homes above $1.25 million, accounts for 33% of the inventory and only 14% of demand.

9. Distressed homes, both short sales and foreclosures combined, made up only 1% of all listings and 1.6% of demand. There are only 18 foreclosure s and 26 short sales available to purchase today in all of Orange County, 44 total distressed homes on the active market, up3 from two-weeks ago. Last year there were 68 total distressed homes on the market, slightly more than today.

10. There were 2,383 closed residential resales in March, 5% more than March 2019’s 2,277 closed sales. March marked a 17% increase compared to February 2020. The sales to list price ratio was 98.4% for all of Orange County. Foreclosures accounted for just 0.4% of all closed sales, and short sales accounted for 0.5%. That means that 99.1% of all sales were good ol’ fashioned sellers with equity.

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Contact me when the time is right,

Like the rest of “daily life,” the housing market has not been spared from the sweeping effects of sheltering in place.

Supply and Demand: A low supply is confronted with low demand.
Life has changed. Public schools, private schools, day care, universities, date night, dine-in restaurants, sporting events, organized sports, concerts, movie theaters, trips to the mall, amusement parks, public pools, beaches, neighborhood parks, travel, and frozen yogurt have all been put on hold. The “stay at home” order has affected every aspect of daily life. The Orange County housing market is no different.

A man in Orange County tested positive for COVID-19 on January 25th, becoming the first confirmed case in California. On March 4th, Gov. Newsom declared a state of emergency for the Golden State. Disneyland closed its gates and most major sports leagues suspended their seasons on March 12th. Schools closed on March 13th. The “stay at home” order was announced by the governor on March 19th. That means that California citizens had been sheltering in place for four weeks as of April 16th.

Demand is defined as the past 30-days of pending sales activity. Up to this point, demand readings have included weeks prior to the order when the housing market was still hitting on all cylinders. The market was scorching hot at the very beginning of march despite the state of emergency that was declared. The market began to decelerate in the second week of March. By March 19th, with the kids already at home and preparing for online learning, housing demand slowed to a COVID-19 crawl. It was at inherent demand levels.

Now that it has been more than four weeks of virus suppressed demand, the Orange County demand readings are a true depiction of the number of pending sales that will take place under the “stay at home” circumstances. The current reading is an accurate indicator of the current market until the economy begins to reopen down the road. There is a broad housing market interruption due to the Coronavirus that has had a major impact on the velocity of the market, demand, and the supply of homes, the active inventory. Both have been impacted significantly. Yes, demand is at ultra-low, anemic levels, but so is the active listing inventory. Buyers are not writing that many offers, and fewer homeowners are pounding FOR SALE signs in their front yards.

As a result of everyday life grinding to a halt, demand dropped by 55% in the past month, from 2,398 pending sales to 1,080. These demand levels were last seen in 2007. Since the “stay at home” order on March 19th, the number of homes placed on the market dropped by 52% compared to the prior 5-year average. That is 1,972 fewer homeowners entering the fray. Consequently, the active inventory has only grown by 185 homes in the past four weeks, a 4% rise, and the inventory now sits at 4,344 homes. While demand may be at Great Recession levels, the inventory is not growing like it did in 2006 through 2008 when it reached nearly 18,000 homes.

In looking at the county’s different price ranges and detached versus attached, the entire market has been impacted. Yet, there are a few ranges that are still functioning. They have evolved from an extremely hot price range to one that still favors sellers but a bit slower. For detached homes, everything below $1 million lines up at least slightly in the seller’s favor. Between $500,000 to $750,000, the “bread and butter” of the local housing market, detached homes are obtaining more offers than any other range and sellers get to call most of the shots. The Expected Market Time (the time between hammering in the FOR-SALE sign to opening escrow) for that range is at 49 days, a Seller’s Market. Four weeks ago, it was at 25 days. For detached above $1,000,000, the market slows considerably, leaning in favor of buyers. Above $2 million has nearly ground to a halt. For attached, only condominiums between $250,000 to $500,000 slightly favors sellers with an Expected Market Time of 85 days. It was at 34 days four weeks ago. The $500,000 to $750,000 price range for condominiums is balanced. All other condominium ranges, including those below $250,000, favor buyers. For attached above $1 million, the market is extremely slow.

WARNING TO BUYERS: There is very little price movement within the overall Orange County housing market; do not expect a deal. From the real estate trenches, some prospective buyers are expecting values to drop 10%, 20%, or even 30% like they did during the Great Recession. The current Expected Market Time for Orange County is 121 days, a slight Buyer’s Market, a market where buyers get to call more of the shots, but values are not changing much at all. During the Great Recession the Expected Market Time climbed to nearly 500-days for all of Orange County. Only at those levels will values drop substantially,

WARNING TO SELLERS: Until the shelter in place order is lifted expect meager buyer activity, showings, and offers. Even with real estate being reclassified as an essential service, it really has not moved the needle in terms of demand. Expect demand to remain at its current, inherent levels and the active inventory to continue to slightly grow, ultimately slowing the market further until the economy is unlocked.

Across the board, the broad housing market has been interrupted and the disruption will continue. Even when the governor opens economic activity, it will not be a light switch flipped to “on;” instead, it will be more like a dimmer. Demand will slowly thaw as more homeowners opt to place their homes on the market. It will be a slow, gradual evolution and there will not be a sudden spike in either supply or demand.

Active Inventory: The current active inventory increased by 4% homes in the past two-weeks.
The active listing inventory increased by 161 homes in the past two-weeks, up 4%, and now sits at 4,344. This is the lowest level for mid-April since 2013, when the inventory reached the most anemic level of the housing expansion. Quite simply, there are very few homes on the market right now. This is due primarily to homeowners opting to NOT come on the market right now, with 52% fewer new FOR SALE signs in the past four-weeks compared to the prior 5-year average. This will continue until the economy is opened for business.

Last year at this time, there were 6,933 homes on the market, 2,589 more than today, a 60% difference. There were a lot more choices for buyers last year.

Demand: In the past two-weeks demand continued to plunge.
Demand, the number of new pending sales over the prior month, decreased from 1,584 to 1,080, shedding 504 pending sales, down 32%. Demand reflects all new escrows within the past four weeks. The current level is the first accurate picture of COVID-19 suppressed demand. Prior snapshots have included weeks prior to sheltering in place, with higher demand readings. Current demand is a much more accurate depiction of the business that can take place in the current environment. It will no longer continue to “plunge” as it has for the prior month. It will flatten from here until the economic activity at large can resume. At that point, demand will begin to thaw and rise once again.

Last year, there were 1,644 more pending sales compared to today, 152% extra, more than double.

In the past two-weeks the Expected Market Time increased from 79 to 121 days, a SLIGHT Buyer’s Market (between 120 and 150 days), where buyers get to call more of the shots, but home values are not appreciating much at all. Expect the market to only slightly cool from here as the inventory slightly rises and demand remains flat. Last year the Expected Market Time was at 76 days, much better than today.

Luxury End: The luxury market is nearly grinding to a halt.
In the past two-weeks, demand for homes above $1.25 million decreased by 66 pending sales, down 32%, and now totals 140. The luxury home inventory increased by 29 homes, up 2%, and now totals 1,501. Many luxury homeowners will continue to opt to wait to list their homes until after the outbreak and demand will remain at these low levels. With a substantial drop in demand, the overall Expected Market Time for homes priced above $1.25 million increased from 214 to 322 days in the past couple of weeks.

Year over year, luxury demand is down by 284 pending sales, or 67%, and the active luxury listing inventory is down by 778 homes, or 34%. The Expected Market Time last year was at 161 days, much better than today.

For homes priced between $1.25 million and $1.5 million, in the past two-weeks, the Expected Market Time increased from 120 to 205 days. For homes priced between $1.5 million and $2 million, the Expected Market Time increased from 140 to 252 days. For homes priced between $2 million and $4 million, the Expected Market Time increased from 323 to 363 days. For homes priced above $4 million, the Expected Market Time increased from 903 to 1,118 days. At 1,118 days, a seller would be looking at placing their home into escrow around May 2023.

Orange County Housing Market Summary:

• The active listing inventory increased by 161 homes in the past two-weeks, up 4%, and now totals 4,344. In the past four-weeks, 52% fewer homes were placed on the market compared to the prior 5-year average. Last year, there were 6,933 homes on the market, 2,589 more than today, a 60% difference.

• Demand, the number of pending sales over the prior month, decreased by 504 pending sales in the past two-weeks, down 32%, and now totals 1,080. In the past 5-years, demand has increased an average of 4%. The drop is due to the Coronavirus. Last year, there were 2,724 pending sales, 152% more than today.

• The Expected Market Time for all of Orange County increased from 79 days to 121, a slight Seller’s Market (between 120 and 150 days). The increase is due to the Coronavirus. It was at 76 days last year, much better than today.

• For homes priced below $750,000, the market is a slight Seller’s Market (between 60 and 90 days) with an expected market time of 77 days. This range represents 36% of the active inventory and 56% of demand.

• For homes priced between $750,000 and $1 million, the expected market time is 96 days, a Balanced Market (between 90 and 120 days). This range represents 19% of the active inventory and 24% of demand.

• For homes priced between $1 million to $1.25 million, the expected market time is 185 days, a Buyer’s Market (greater than 150 days).

• For luxury homes priced between $1.25 million and $1.5 million, in the past two weeks, the Expected Market Time increased from 120 to 205 days. For homes priced between $1.5 million and $2 million, the Expected Market Time increased from 140 to 252 days. For luxury homes priced between $2 million and $4 million, the Expected Market Time increased from 323 to 363 days. For luxury homes priced above $4 million, the Expected Market Time increased from 903 to 1,118 days.

• The luxury end, all homes above $1.25 million, accounts for 35% of the inventory and only 13% of demand.

• Distressed homes, both short sales and foreclosures combined, made up only 0.9% of all listings and 1.7% of demand. There are only 18 foreclosure s and 23 short sales available to purchase today in all of Orange County, 41 total distressed homes on the active market, down 4 from two-weeks ago. Last year there were 59 total distressed homes on the market, slightly more than today.

• There were 2,383 closed residential resales in March, 5% more than March 2019’s 2,277 closed sales. March marked a 17% increase compared to February 2020. The sales to list price ratio was 98.4% for all of Orange County. Foreclosures accounted for just 0.4% of all closed sales, and short sales accounted for 0.5%. That means that 99.1% of all sales were good ol’ fashioned sellers with equity.

Like with most businesses today, the coronavirus has adversely affected the real estate industry. However, I will continue to share information related COVID-19 and its impact on real estate. Contact me for questions about renting, buying, and selling in today’s RE market.

How will the coronavirus impact home prices?

C.A.R. is still forecasting a modest increase in the median home price for 2020, but the current outlook for home prices is difficult to assess in this rapidly changing environment. On one hand, lower mortgage rates will make homebuying more attractive — particularly for first-time homebuyers and for lower-priced homes generally, as those home typically rely on debt financing in much larger proportions that investment properties, second homes and luxury properties.

At the same time, there have been significant negative wealth effects in the wake of market fluctuations. This will reduce demand from homebuyers who were relying on financial market wealth as a source of funds for luxury homes, second homes and investment properties. There might also be counter-vailing effects as some investors seek refuge from turbulent financial markets in real estate.

The net effect of these various forces remains to be seen. Currently, C.A.R. expects negative economic growth during the second quarter of 2020 (and possibly the first), and C.A.R. has modeled scenarios where the negative effects on consumer confidence outweigh the positive effects of lower interest rates such that home prices shrink back from their current highs. Such a scenario is contingent upon the coronavirus deteriorating beyond what is currently envisioned with the infection progressing into the summer with peak cases not being reached until the third quarter.