Silicon Valley’s notoriously expensive residential real estate sales may have seen a slump in March and April during the region’s restrictive shelter-in-place orders, but industry insiders say it’s still a seller’s market.
The major change in the market during the pandemic has been perception by those hoping the novel coronavirus has helped to plunge sky-high housing costs along with the rest of the economy, said Don Orason of Intero Real Estate in San Jose.
“Buyers’ and sellers’ perception is still lagging,” he said. “It’s a better market than they realize because there’s just so much news about all this, that they can’t believe that the market is still this strong.”
Those looking to buy a house in the South Bay can now walk through the homes in person after county officials lifted some shelter-in-place restrictions.
Throughout April, tours were limited to vacant properties. Now, potential buyers can sign forms acknowledging the risks due to the virus and get inside homes as long as the current owner is not present.
The loosening restrictions have helped bring more certainty to the market and Orason said he sees home sales increasing and trending back to normal from a dip in recent months.
Compared to March, when the region began sheltering-in-place, the number of single-family homes on the market in Santa Clara County increased in April by about 20 percent, according to data by MLS Listings, a database used by realtors.
The numbers of sales closed decreased by about 11 percent in that month, the data show, but a median single family home still cost $1.39 million in the county and sold in 8 days for about 103 percent of the listing price in April. May numbers are not yet available, but Orason said he’s seen activity increase.
“I would imagine from the peak (impact) was probably March and April,” he said. “In May, it’s going to start trending the other way again because we are getting more and more people coming back to the market.”
And though real estate experts don’t expect a major dip in prices, buyers do have at least one advantage compared to pre-coronavirus, Mario Ramirez, a realtor with KW Bay Area Estates, said earlier this month during a panel hosted by the SVO.
“It is still a seller’s market,” he said. “However with the increase in inventory over the next couple months, buyers will have more options than they’ve had in some time.”
Now, the potentially million-dollar-home question is where the market is going as health officials say the contagious coronavirus is likely here to stay for months or even years.
Companies across Silicon Valley have instituted work-from-home policies, allowing employees to work wherever they are in the coming months. Some companies, including Facebook and Twitter, say that they may never bring their entire workforce back to the office.
Those trends may change demand over time, both Orason and Ramirez said.
Changes to come?
In some cases, Orason estimates that people who can now work from home and commute into the office once a week or less, may opt to live in a less expensive part of Silicon Valley, where their dollar can go a bit further.
“Let’s say a year from now people are working more and more from home, they’re going to say, ‘Wait a minute, why am I spending 30 or 40 percent more to live next to Apple or Facebook or Google?’” He said. “Areas of San Jose or Morgan Hill or Gilroy or Hollister, all those parts, they might … look more desirable.”
Likewise, Ramirez estimates that some people living in more urban areas may opt to move somewhere further away from the hustle and bustle — and potential coronavirus infection.
“It just depends on when rural living eclipses high-density living,” Ramirez said. “Do you want to be in an environment that has 100 to 200 people in it, and you’re going up the elevator with a dozen people?”
Buyers may also start looking for specific amenities in their homes that were less important than before, like a spare room that can function as an office or a backyard home, known as an accessory dwelling unit or ADU, he added.
But for those looking at more rural or suburban areas, internet speed disclosures are likely to become a hot topic as webinars and Zoom meetings replace in-person events.
“The bottom line is you are still going to have to be able to communicate,” Ramirez said.
And though the pandemic hasn’t had the ripple effect on price that some buyers have hoped, now still isn’t a bad time to buy, for those who can afford it, Ramirez said.
“Interest rates are phenomenally low, rents are still relatively high and … as far as buyers having more opportunities within the next 6 months to a year, I think they are going to have more opportunities than they’ve had in the last four to five years,” he said.
Contact Janice Bitters at [email protected] or follow @JaniceBitters on Twitter.