Southern California's real estate market has seen its share of ups and downs in recent years.Dealing with the initial effects of the coronavirus pandemic on the housing market. We had questions answered on what the pandemic means for buyers and sellers no matter what their income bracket is.
Has the pandemic tanked the real estate market?
Not really, realtors are actually quite busy, and there's a surprising amount of activity going on. Perspective buyers today have the opportunity to borrow cheap money, which is a huge advantage as far as affordability goes. People are able to lock in really great mortgage rates and are perhaps able to get more property than they initially thought.
Also, the stock market is very volatile. So, if your money is in stocks, bonds, or just in the bank, you’re really not getting much of a return. Even bonds are risky, so residential real estate is a very safe investment right now. With cheap money readily available, there are a lot of buyers out there.
Is this positive trend applied to both the high and low ends of the market?
Absolutely, when you consider homes priced below $2 million, the vast majority of those buyers are getting mortgages. They’re able to get very good mortgages rates, lower than we’ve seen in years.
Are sellers skittish about listing these days?
Not at all, realtors are seeing a lot of listings right now as sellers are eager to put their properties on the market. Because the truth is there are a lot of potential buyers at home looking at properties online virtually. So now is an excellent time for people to get their properties out there in front of these potential buyers.
Are we in a buyer's market or a seller's market?
There have been some opportunistic deals that have closed for a lot less than the asking prices.
However, in the sub-$5 million market it’s still equally a buyer's and seller's market more so because of the low borrowing rates. So, seeing multiple offers on good-quality product is becoming a more common occurrence.
In the over-$5 million price range we see slightly more discounts on asking prices, but nothing too dramatic. If the property is beautiful and well-located and checks all the boxes, [the market is] still very much equal—neither a buyer nor seller's market.
What can home sellers do in this economic environment?
The advice is the same in any market. If you’re looking to sell your own house, always declutter and neutralize—less is more in that respect. You want to create a relatively blank canvas without too much of your own personality. Enabling buyers to trigger the emotional response that will make them imagine themselves living there, landscaping is also really important.
Original features are also really important. If you’re doing a remodel try and keep as many original features as you can, because they elicit emotions from buyers. Keep the original charm, those original features often can’t be replicated.
Codes for wood-burning stoves have changed so you can’t put in new wood-burning fireplaces, so keep the ones that are already there: original crown moldings, original beautiful millwork, even some original flooring, sconces, air-conditioning grates rather than vents. Those are the types of features that elicit emotion.
How do agents show a house these days?
As long as a house is vacant (of residents), it can be shown. A house can be empty or staged, and clients can walk through. Virtual tours as very popular and are turning out to be extremely helpful. Also, 3D tours and social media tours like Instagram Live have gained popularity, so there is a lot of collateral for sellers.
If a home is occupied by the residents a buyer can still drive past and check out the property. Many times, buyers are very familiar with the neighborhood and know it quite well. In many instances they are committed to the area and are going to buy so they don't consider a walk-through absolutely necessary.
Does social media really sell houses?
If done right it absolutely can, great photography by a professional and added pictures from drones to a beautiful video can paint a really good picture. Even if it doesn’t close the deal, it most certainly will be what opens one.
Are some buyers still paying cash?
Sub-$10 million buyers tend to take out mortgages, but [when paying] over $10 million, buyers often pay cash. And the cash typically represents just a small portion of their net worth.
Are there still foreign buyers who buy U.S. homes sight unseen?
At the end of the day buyers believe that the U.S. is a safe haven for investments and will continue to be a safe haven. Residential real estate in the U.S. is very stable and strong, so a lot of foreign buyers are purchasing sight unseen.
Is the rental market strong for people with cash who might be sitting on the sidelines?
Demand for leases is definitely strong in fact some people are not quite ready to “pull the trigger” right now so they are leasing in the interim.
What changed in the market now?
Before COVID-19 struck, there were shifts in the market. A lot of sellers became unrealistic across all price points. Sellers thought their properties are worth more than they are. Gaining a client’s trust so that the property can sell appropriately is still a great challenge but becoming much easier when a seller understands the great importance of pricing the property correctly. If a home is overpriced it sits on the market and goes stale and it ends up going for less than what it’s worth.
Realtor.com
