Early numbers reveal some hits to the San Jose region’s real estate market in April from the coronavirus shutdown as agents were restricted from showing homes to potential buyers.
The inability to show occupied homes played a role in the 9.6% decline in Santa Clara County single-family home sales compared with March, said Mary Pope-Handy, an agent with Los Gatos-based Sereno Group and writer of real estate blog “The Valley of Heart’s Delight.” According to Palm Desert-based property data firm Information Designs, the median sales price fell 0.7% to $1.4 million.
California has started to allow agents to show some homes in-person to potential buyers as part of its easing of shelter-at-home restrictions, and agents overall are optimistic in activity picking up as restrictions continue to lift, Pope-Handy said.
The year-over-year declines were steeper, with sales falling 35.8% compared with April 2019, and the median price down 0.8%, according to Information Designs.
Month-to-month changes don’t necessarily reflect long-term trends, and May numbers might shed more light on the damage done from the pandemic and buyer mood, Pope-Handy said.
Under the revised restrictions, an agent can show a house to two potential buyers at once as long as the buyers live together. The agent and buyers must obey social-distancing rules, and the agent needs buyers to sign forms acknowledging the risk of entering a house during the COVID-19 outbreak.
Along with buyers unable to visit occupied homes during April, Pope-Handy said, industry professionals like appraisers were also unable to perform their duties, contributing to the drop-off in sales. Home sales volume totaled about 550 in the county.
While real estate firms have access to more digital tools than ever before to give potential buyers access to homes without a visit, photos and teleconferences only offer buyers so much peace of mind to make a purchase, Pope-Handy said. “You have to see it. You have to smell it,” she said. “You have to see if the floor is level.”
Despite the hit to sales from COVID-19, some indicators showed San Jose’s market — long among the most robust in the nation — holding up well.
The ratio of sales prices to list prices fell about 2 percentage points to 103.1 percent, meaning sellers sold houses for about 3.1 percent more than the list price.
The San Jose metro market saw the highest return on investment nationwide for home sellers during the first quarter of the year, according to Irvine-based property data tracker Attom Data Solutions.
That return on investment was 81.8 percent, besting San Francisco’s 67.7 percent and Seattle’s 63.6 percent. San Jose also saw foreclosure activity below pre-recession averages during the first quarter.
Attom Data labeled Santa Clara County among the least-vulnerable counties to COVID-19 housing damage. The company based its findings in part on fourth-quarter foreclosure notices and the percentage of mortgages underwater. Working against Santa Clara County is the affordability of a home — including mortgage payments, insurance and property taxes — compared with local wages, Attom Data Chief Product Officer Todd Teta said in an email.
The county saw the second-smallest level of underwater mortgages — loan balances that exceed the value of the home — in the nation at 1.02 percent of mortgaged homes, Teta said. One in 3,400 homeowners faced foreclosure actions in the fourth quarter, far less than the nationwide ratio of one in 1,200 homeowners.
Other areas deemed least vulnerable include Seattle and parts of Texas. The New York City suburbs and Central Florida counties were considered among the most at risk.
The extent of the effects from COVID-19 and the shelter-in-place policy on real estate will become clearer by early summer, Teta said. Millions unemployed and anxieties around interacting with others will almost certainly cut down on house hunting nationally.
“How that shakes out is unpredictable at this point,” he said. “There could be some pockets of the country where the virus does not hit hard and the buying season is fairly normal. However, unless the economy rebounds much faster than economists predict, fewer potential buyers will mean less demand, which will likely lead to prices flattening out or declining.”
In the meantime, Pope-Handy said she’s done virtual continuing education classes and trainings. She’s encouraged her buyer clients to use the time to work on loan approvals and sellers to make overdue fixes to their properties and prepare disclosure documents.
She said she expects a possible resurgence of COVID-19 restrictions during the fall flu season. Until then, she will conduct home showings as allowed by law, bringing with her a mask, gloves and booties for her and her clients.
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