I thank all of those who have complimented me and encouraged me on the posting for McKae Properties Silicon Valley Market Commentary. It is encouraging to know that it is appreciated and encouraged.
WOW, what a week! Listings falling, prices being reduced and terms being adjusted. All this in the face of a Shelter in Place that has been most challenging. From Face masks to booties, to gloves and hand sanitizers just for a starter. Then there are the new forms that the California Association of Realtors have included in the listing, visitation, marketing and sale and closing. To add to the frustration of both sellers, buyers and agents, the new conditions eliminate brochures, open houses and brokers tours. These are to be replaced with virtual tours to be added to the Multiple Listing Service and a requirement that final or first viewing of the property must be done with a firm desire to purchase the property listed. In other words, no more Lookie Lews. Visitations will require buyers to have viewed the property via a virtual tour, reviewed all the disclosures and provided proof of funds and a commitment letter the lender. When viewing a property only two people are allowed in, the property must be vacant, buyers and agent must wear a face mask, gloves, booties. Of course, Social Distancing is a must! Virtual Staging is now a common practice. Owners are being asked to open all doors, and drawers so that the buyers do not have to handle them to view closets, cabinets and rooms.
Still, properties are selling. Many have seen price cuts to get interest in the property. On a national level listings have declined some 29% of the total supply and homes for sale down some 19%. Homeowners are dropping prices as the coronavirus chokes the economy. Depending on the severity of the Lock Down prices have cut from 5-10% on average to areas where the lock down is most severe a 20%- 34% cut has not been uncommon. On the bright side areas that have had loose lock downs; such as, Sacramento where a 3% cut has been most common.
The next shoe to drop will be in July as the U.S. Economy will react to the relaxation and or elimination of the lock down. Of course, this is all dependent on how we all react to coming back to moving forward. So much damage has been done it is hard to envision a snap back to the way things were in January and February 2020.
The lack of income for Doctors, Dentists, Restaurants, Barbers, Hair & Beauty Salons and most of the "brick and mortar" retail businesses has put tremendous pressure on survival. With their survival in question the empty store-fronts, empty small offices will be a signal of our resilience and ability to snap back.
The action of many Silicon Valley Employers to help in lock downs has put many residents in a work at home mode. To those who can come back to work, the work place will be completely different. Plastic shields between workplaces, body temperatures at the entrance door, hand washing, social distancing will all wreak havoc on an environment that has prospered on the ability of workers to create ideas and the ingenuity that has made Silicon Valley so profitable and successful. Will Facetime, Zoom, Meet, Facebook be able to keep the ingenuity and progressive ideas for a better economy and society possible. Coming to a consensus on that is like listening to forecasters in the stock market's future direction.
The work at home will have many casualties. Many are re-evaluating whether to stay in a high priced small rentals to working from home in a lower priced locale. 2019 had already seen and movement out of our area. Will 2020 see that movement increase. Will the movement become a wave or a tidal wave? $2650 one bedroom rental in South San Francisco can easily be transformed into a 3000 square foot home in El Dorado Hills. The addition of a move to Nevada or Texas will add to the savings and reduction in cost of living when State taxes are eliminated. It cannot be ignored that an increase in both income tax rates and sales taxes will not occur when one considers the $54 billion deficit in California and deficit the counties and cities and towns face. Counties who rely on revenue sharing and sales taxes have already viewed the probability of increasing income. Some Counties, Towns and Cities are considering selling excess land on their balance sheets. Sell to Whom, I ask? There are already developers and builders questioning who will rent their project under construction.
Renters and homeowners are already facing the ability to pay rent and make mortgage payments. Forbearance programs are being established to help home owners, but the forbearance does not help mortgage servicing companies. Mortgage servicing companies are not the banks who granted the loans. They are non-banks who have a very profitable business of collecting mortgage payments and making payments to the end owners of the mortgages. They must still make payments when the homeowner is unable to make his payment and request forbearance. How long will they be able to handle the negative cash flow? To matters worse is that 49% of mortgages that have been created are by Non-Bank Banks. The servicing company can only go back to the creator of the mortgage to claim the lender was not properly screened. The Non-Banks then just close their doors. The only recourse is foreclosure. Does this sound familiar. 2009 is Deja Vu All Over Again, right Yogi?
A client of mine, who just canceled her listing to update and make the property more saleable while the lock down is in force, said to me, " I am worried about the economy Mr. McKae. But I am not worried about the US . We have talented sons and daughters who will create the future as we and our parents created their future".
From Lemons You Make Lemonade. For every person who sells their property they will buy elsewhere where prices are lower and cost of living is lower. In the Stock Market we called that "Same Day Substitution". Does it really matter if the seller gets a little less to buy a great deal less elsewhere? The buyers will be able to get discounted property that will increase in value. It is a Win Win situation.
Property will increase in value because we have inflation in front of us. The best way to fight inflation is real estate! The only risk in real estate is LIQUIDITY! Buy a home you and your family will live in for the future.
We will see a transition that will create opportunities. The landlord who does not want to have non-paying tenants will sell and look elsewhere for income property. That property will come on the market. Work at home will have property facing the "same day substitution" rule. Then there is the ugly head of foreclosure. Look at where we were in 2009 and what we became in 2019!
Interest rates are low and payments at lower interest rates is far more attractive than saving on purchase price. The inflation previously written about will come from commodities. Hogs are being slaughtered due to slaughter house closings. Cattle are put out to pasture and the cost of carry will increase. When the slaughter houses open pigs will be needed. Competition will find higher prices to meat processors and find their way to the dinner table. When pork prices go up so will all meat prices.
Internationally things are a bunch of lemons. It is not only Trump banging the China Drum. The Pandemic all comes back to Wuhan and a suspicious lab in Wuhan. New Zealand and Australia have blamed China for the pandemic. African nations have joined in and so has Europe. Japan has set up a $ multi billion fund for Japanese manufactures to bring plants from China back to Japan. Taiwan Semi Conductor is moving a plant to the U.S. Sooner or later that will happened for U.S businesses in China. What is China's recourse....They won't buy our food products? What will their people eat? China uses others technology and ingenuity to build their economy, they cannot improve only copy. China has more to worry about than food, it is employing the masses. Unemployed and out of work is not something that the populace will endure. Isn't there an old Chineses curse of may you lie in a changing world?
The United States was built on immigrants who came here for a better way of life to operate in freedom and being allowed to be successful. DONT SELL SHORT AMERICA!
Collect those lemons get ready to make lemonade to sell when the time is right. Do your research, plan your purchases, do not forget to think about "What if" Also, dont; forget about your friendly realtor Gary McKae to help you sell or buy your home and refer him to your friends and family.
Until next week
Gary
I’m a Commercial Real Estate Advisor and Broker Associate with decades of experience guiding investors, property owners, and institutions through complex real estate decisions. My background spans investment banking, portfolio strategy, and high-value real estate transactions—including REO, TICs, foreclosures, and structured deals across California and beyond. I specialize in helping clients navigate market shifts with clarity and strategy.
DEJA VU PART 2
The ability to look back to give an indication of what the future could or will bring is essential when one looks to plan one's future. That could not be more the case in real estate than it is now.
2009 is the most recent period we can look at. Remember the term "Black Swan", an unlikely event that occured? At that time it was the mis pricing of real estate values due to the packaging of bonds created from mortgages. The mis pricing that occured in that the risk was improperly recognized. What followed was foreclosures, unemployment, lack of mortgage money and to a certain extend illiquidity in real estate. It also created the best opportunity to buy real estate.
It took the stock market as we measure it in the S&P 500 to gain back a 58% drop in value about 4 years to hit the peak from the collapse. During that period, great opportunities in real estate occured.
What we have now is something that is close but far from the crisis level that was created in 2009. We are beginning to see some of the crisis markers of 2009. Mortgages are becoming tight. 20% down is a must, jumbo mortgages are rare, credit score 700+, employers are being asked to sign a document attesting to the lender will not be laid off.
In 2 months we have gone from 4% unemployment to 15%+ unemployment of 30 million people. The government is sending money to citizens to help them get by while a battle goes on to end the pandemic caused by COVID 19. We dare not to leave our homes, if so we wear a mask and gloves, wash our hands regularly and whenever possible use hand sanitisers.
To add to the financial issues affecting real estate the new normal has changed the old normal. Open houses and brokers tours ceased. They are replaced by Virtual Tours. Flyers are no longer allowed, only mail and electronic distribution allowed. In person showings can only occur when the occupants are gone to a maximum of two persons wearing masks, booties and gloves. Interior doors must be opened. A form called a PEAD, which I previously sent you in a prior Blog, must be signed by all parties before viewing and new forms warning of COVID 19 signed at the close of escrow. Additional form to note that lender could cancel financing commitments if they determine it necessary. Review the past Blog and you will find the new forms.
That will and has had an effect on real estate inventory and sales. Many sellers want to wait until the Shelter in Place ends. Buyers will do so also. So who is left.
Those willing to use opportunity to buy will be left to look for value and discounts. Sellers who must do so for personal or financial reasons are left in creating inventory. This is the one month Snapshot as of April 27, 2020 for our area
Consumer Confidence is falling.
We are going through an large adjustment in both how we live our lives and how we will live our lives in the future. To those of you who are buyers, I urge you to begin and finish your search before the Shelter in Place ends. For sellers please realise that things change and how it was 2 months ago it is not the same today nor will it be tomorrow and the tomorrow's in the future.
2009 is the most recent period we can look at. Remember the term "Black Swan", an unlikely event that occured? At that time it was the mis pricing of real estate values due to the packaging of bonds created from mortgages. The mis pricing that occured in that the risk was improperly recognized. What followed was foreclosures, unemployment, lack of mortgage money and to a certain extend illiquidity in real estate. It also created the best opportunity to buy real estate.
It took the stock market as we measure it in the S&P 500 to gain back a 58% drop in value about 4 years to hit the peak from the collapse. During that period, great opportunities in real estate occured.
What we have now is something that is close but far from the crisis level that was created in 2009. We are beginning to see some of the crisis markers of 2009. Mortgages are becoming tight. 20% down is a must, jumbo mortgages are rare, credit score 700+, employers are being asked to sign a document attesting to the lender will not be laid off.
In 2 months we have gone from 4% unemployment to 15%+ unemployment of 30 million people. The government is sending money to citizens to help them get by while a battle goes on to end the pandemic caused by COVID 19. We dare not to leave our homes, if so we wear a mask and gloves, wash our hands regularly and whenever possible use hand sanitisers.
To add to the financial issues affecting real estate the new normal has changed the old normal. Open houses and brokers tours ceased. They are replaced by Virtual Tours. Flyers are no longer allowed, only mail and electronic distribution allowed. In person showings can only occur when the occupants are gone to a maximum of two persons wearing masks, booties and gloves. Interior doors must be opened. A form called a PEAD, which I previously sent you in a prior Blog, must be signed by all parties before viewing and new forms warning of COVID 19 signed at the close of escrow. Additional form to note that lender could cancel financing commitments if they determine it necessary. Review the past Blog and you will find the new forms.
That will and has had an effect on real estate inventory and sales. Many sellers want to wait until the Shelter in Place ends. Buyers will do so also. So who is left.
Those willing to use opportunity to buy will be left to look for value and discounts. Sellers who must do so for personal or financial reasons are left in creating inventory. This is the one month Snapshot as of April 27, 2020 for our area
| Housing Inventory Snapshot | April 27, 2020 | |||||||
| Average List Price | 30 Day Trend | Average Sold Price | 30 Day Trend | Average DOM: active/sold | 30 Day Trend | Number of Active Listings | 30 Day Trend | |
| Santa Clara County, CA | ||||||||
| Single Family | $1,398,393 | -4.55% | $1,420,438 | -2.54% | 20 / 14 | -16 / -4 | 695 | 152 |
| Luxury Single Family | $5,049,660 | -16.28% | $3,504,232 | -4.42% | 55 / 30 | -29 / 7 | 219 | 53 |
| Condo/Townhome | $750,519 | +1.19% | $750,605 | +4.13% | 12 / 16 | -12 / -6 | 301 | 74 |
| Luxury Condo/Townhome | $1,479,064 | -0.80% | $1,443,951 | +2.56% | 12 / 12 | -9 / -8 | 92 | 18 |
| San Mateo County, CA | ||||||||
| Single Family | $1,826,489 | -4.88% | $1,721,686 | -8.12% | 14 / 16 | -14 / -1 | 324 | 64 |
| Luxury Single Family | $8,125,348 | -10.84% | $8,483,750 | +39.86% | 101 / 113 | -22 / 33 | 105 | 22 |
| Condo/Townhome | $872,562 | +3.99% | $936,502 | -1.06% | 24 / 15 | -11 / -3 | 83 | 17 |
| Luxury Condo/Townhome | $1,656,610 | +2.74% | $1,652,778 | -0.35% | 24 / 23 | -17 / 13 | 23 | 5 |
| Santa Cruz County, CA | ||||||||
| Single Family | $976,093 | +2.70% | $948,852 | +0.43% | 29 / 27 | -15 / -22 | 206 | 30 |
| Luxury Single Family | $3,133,233 | -4.12% | $3,017,500 | N/A | 67 / 50 | -27 / -77 | 64 | 7 |
| Condo/Townhome | $657,739 | +2.75% | $600,122 | +0.52% | 36 / 14 | -26 / -36 | 60 | -1 |
| Luxury Condo/Townhome | $1,141,765 | +0.72% | $1,097,667 | +15.67% | 65 / 37 | -26 / 13 | 17 | -2 |
| Monterey County, CA | ||||||||
| Single Family | $1,133,841 | -4.63% | $814,848 | -5.18% | 63 / 30 | -16 / -25 | 353 | 7 |
| Luxury Single Family | $6,042,414 | -3.34% | $4,485,786 | +8.90% | 125 / 120 | -16 / -66 | 124 | 3 |
| Condo/Townhome | $539,992 | -1.71% | $441,000 | +2.77% | 40 / 55 | -18 / 28 | 59 | 0 |
| San Benito County, CA | ||||||||
| Single Family | $628,048 | -1.81% | $595,927 | -3.42% | 22 / 67 | -23 / 21 | 96 | 16 |
| Luxury Single Family | $1,504,853 | -8.95% | $1,120,000 | +4.55% | 69 / 9 | -5 / -91 | 30 | 6 |
| Alameda County, CA | ||||||||
| Single Family | $897,769 | +1.07% | $968,415 | +5.09% | 18 / 16 | -12 / -2 | 514 | 115 |
| Luxury Single Family | $2,140,945 | -5.66% | $1,907,994 | -11.35% | 41 / 18 | -20 / -6 | 166 | 34 |
| Condo/Townhome | $609,321 | +1.38% | $605,644 | +2.64% | 18 / 27 | -11 / 3 | 242 | 45 |
| Luxury Condo/Townhome | $1,008,356 | -0.43% | $981,895 | +0.51% | 19 / 12 | -16 / -10 | 78 | 13 |
| Contra Costa County, CA | ||||||||
| Single Family | $709,488 | -0.61% | $695,347 | -2.66% | 20 / 21 | -13 / -6 | 725 | 118 |
| Luxury Single Family | $2,339,796 | -8.74% | $1,673,640 | -10.96% | 40 / 13 | -16 / -11 | 231 | 31 |
| Condo/Townhome | $455,852 | +4.69% | $428,030 | -3.96% | 20 / 21 | -11 / -7 | 198 | 13 |
| Luxury Condo/Townhome | $989,991 | -0.12% | $875,458 | -2.54% | 21 / 25 | -16 / 9 | 61 | 6 |
Consumer Confidence is falling.
We are going through an large adjustment in both how we live our lives and how we will live our lives in the future. To those of you who are buyers, I urge you to begin and finish your search before the Shelter in Place ends. For sellers please realise that things change and how it was 2 months ago it is not the same today nor will it be tomorrow and the tomorrow's in the future.
Is it Deja Vu all over again?
Wasn't Yogi Berra a kick? He took from Lord Toynbee his Nobel Prize on history repeating itself into Brooklyn speak.
I was reminded of that when I read about the closing of the slaughterhouses and the issue of hogs. What does one do with all the hogs accumulating without their way into food chain? They are not like cattle. Cattle can be released to the pasture and graze until the food chain opens up again. "Where did I experience this before?"
As a rookie stock broker in 1970, just out of college, I came to a stock market not much different than the past few years. New Highs after new highs and nothing could stop the stock market ascent. The "new normal" was in vogue. THEN, like something out of nowhere prices began to fall. Fall they did, over 60%! The Nifty Fifty were the FANG stocks then. The difference it took over 3 or so years to fall 60%. This past month it fell 60%.
Interest rates were rising back then and kept rising along with inflation. Commodity prices began rising our supply of grains were sold to the Russians and before anyone realised it would happen the Saudis raised oil prices. Lines at gas stations, prices escalated and the new normal took a new phase.
Being a stockbroker became like a mortician. No one wanted to buy stocks to see them close lower in a week than they were when purchased. Dividends were cut. Banks and brokers folded. I switched to being a Commodity Manager. Right, a commodity manager in a department of one in Honolulu Hawaii. Business was GREAT! clients made money bought Grains and they went up, bought Hogs, Cattle and Pork Bellies and they went up. Sugar, Broilers and you name a commodity traded on our commodity exchanges and they went up. Gold and silver were sky rocketing.
The Federal Reserve needed to stop this inflation and stop it they did. Interest rates went up to double digits and commodity prices fell. On I went to real estate. As interest rates went up foreclosures followed. The commercials foreclosures were from shopping centers, office buildings and garden apartments. Some of them never lived in. The commercial properties had great anchor tenants. Investment banking my next stop as we put the properties in partnerships for individual investors and tenants in common for the institutional investors.
There is more to the story, but I will stop there. We are now in the new normal....better to say change will happen.
The most difficult thing for us humans is, we dislike change. We like the same way day in and day out. We like our stocks to keep going up, employment to keep going down, inflation low, change will happen.
To follow the pattern of the past it will be improbable to have us return to the past as it never has happened before. Politicians and government spokespersons will try to convince us that it will be back to normal. Sure but what is normal?
Like in the past the old normal will start with Air B&B's. How much leverage has been taken by investors in purchasing homes that they could rent at prices greater than what the property could rent for as a residence? Air B&B Becomes a Victim of the Cronavirus. Know a neighbor who has turned his home into a Air B&B or has several. Foreclosures will put pressure on housing prices. It is hard to tell where. The cities we live in do not have a registry for Air B&B. I questioned Menlo Park on business licences and a list...don't have it. Just like the last crisis in housing crisis. The investment community created it! Remember Air B&B was planning a mega billion IPO?
Hawaii was booming back when, in 1970 tourism was booming and by 74 no tourists! All my colleagues who bought into the condo conversion boom had negative cash flow and it became horrible as the number of condo's fell from occupied or rented to empty. The ability to rent long term did not cover the mortgage and maintenance. Sooner or later prices came down and auctions at the courthouse steps became common....EVEN IN HAWAII!.
How many senior citizens here in our area have a number of rental homes? Wasn't it that long ago that hedge funds and private capital were buying rental homes foreclosed on by banks? Why do we have a low supply of houses for sale? Too many in investor hands as they milk rents? The next shoe to drop is "Landlords are worried increasingly fewer renters will pay rents as coronavirus job losses mount" As I read the local county and state orders on rents:
I was reminded of that when I read about the closing of the slaughterhouses and the issue of hogs. What does one do with all the hogs accumulating without their way into food chain? They are not like cattle. Cattle can be released to the pasture and graze until the food chain opens up again. "Where did I experience this before?"
As a rookie stock broker in 1970, just out of college, I came to a stock market not much different than the past few years. New Highs after new highs and nothing could stop the stock market ascent. The "new normal" was in vogue. THEN, like something out of nowhere prices began to fall. Fall they did, over 60%! The Nifty Fifty were the FANG stocks then. The difference it took over 3 or so years to fall 60%. This past month it fell 60%.
Interest rates were rising back then and kept rising along with inflation. Commodity prices began rising our supply of grains were sold to the Russians and before anyone realised it would happen the Saudis raised oil prices. Lines at gas stations, prices escalated and the new normal took a new phase.
Being a stockbroker became like a mortician. No one wanted to buy stocks to see them close lower in a week than they were when purchased. Dividends were cut. Banks and brokers folded. I switched to being a Commodity Manager. Right, a commodity manager in a department of one in Honolulu Hawaii. Business was GREAT! clients made money bought Grains and they went up, bought Hogs, Cattle and Pork Bellies and they went up. Sugar, Broilers and you name a commodity traded on our commodity exchanges and they went up. Gold and silver were sky rocketing.
The Federal Reserve needed to stop this inflation and stop it they did. Interest rates went up to double digits and commodity prices fell. On I went to real estate. As interest rates went up foreclosures followed. The commercials foreclosures were from shopping centers, office buildings and garden apartments. Some of them never lived in. The commercial properties had great anchor tenants. Investment banking my next stop as we put the properties in partnerships for individual investors and tenants in common for the institutional investors.
There is more to the story, but I will stop there. We are now in the new normal....better to say change will happen.
The most difficult thing for us humans is, we dislike change. We like the same way day in and day out. We like our stocks to keep going up, employment to keep going down, inflation low, change will happen.
To follow the pattern of the past it will be improbable to have us return to the past as it never has happened before. Politicians and government spokespersons will try to convince us that it will be back to normal. Sure but what is normal?
Like in the past the old normal will start with Air B&B's. How much leverage has been taken by investors in purchasing homes that they could rent at prices greater than what the property could rent for as a residence? Air B&B Becomes a Victim of the Cronavirus. Know a neighbor who has turned his home into a Air B&B or has several. Foreclosures will put pressure on housing prices. It is hard to tell where. The cities we live in do not have a registry for Air B&B. I questioned Menlo Park on business licences and a list...don't have it. Just like the last crisis in housing crisis. The investment community created it! Remember Air B&B was planning a mega billion IPO?
Hawaii was booming back when, in 1970 tourism was booming and by 74 no tourists! All my colleagues who bought into the condo conversion boom had negative cash flow and it became horrible as the number of condo's fell from occupied or rented to empty. The ability to rent long term did not cover the mortgage and maintenance. Sooner or later prices came down and auctions at the courthouse steps became common....EVEN IN HAWAII!.
How many senior citizens here in our area have a number of rental homes? Wasn't it that long ago that hedge funds and private capital were buying rental homes foreclosed on by banks? Why do we have a low supply of houses for sale? Too many in investor hands as they milk rents? The next shoe to drop is "Landlords are worried increasingly fewer renters will pay rents as coronavirus job losses mount" As I read the local county and state orders on rents:
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Is another Housing Crash in the Cards?
It is so easy to let fear in without carefully examining the situation. Yes, housing prices are coming down, yes housing prices came down in 2006-07, yes they came down in 1987. Had you purchased at those times look what happened. Home prices rebounded and went even higher.
I had written in my inaugural letter that the stock market leads the real estate market. Since records have been kept the price of homes have followed the stock market average. Whether the average be the Dow Jones or the Standard and Poor 500 or any other index created. Why? The averages are economic measurements of our economy. With every reaction down there was a rebound up and those rebounds kept going onward and went beyond the lows that created the concept of "crash".
10 years from now all those who went back to their rental or their under sized house will look back and regret not moving forward.
How can one make a mistake? Interest rates are at historic lows. There will be a new normal in real estate.
This past week we have seen prices cut in various sections of Silicon Valley and large drops in sales prices versus list prices. Should you be fearful? Or, should you begin looking for opportunity.
For sellers it is a opportunity to move up, or an opportunity to create a large cash cushion and move into an updated home that fits your family needs.
For the buyers it is the opportunity of a lifetime. Get your dealing hats out and find a realtor who will work hard to get a price less than list or at a discounted price that will increase in time. I have my name out there if you don't realise it.
What will be the new normal. First there will be an end to "Open Houses". Virtual Tours will replace the Open House and visitations will come once the buyer is ready to make an offer, or has made an offer and can substantiate funds to cover purchase and or a commitment from a lender.
The new normal may find buyers and sellers speaking to one another on Skype, Team, Zoom or any service that can create a one on one atmosphere. This I believe will allow buyers to carefully examine the merchandise before making an offer, reviewing the disclosure packets and asking their agents pertinent questions from the disclosures. Remember, nothing is unimportant.
Your real estate agent is here to serve you, not flip you and move onto the next buyer/seller. If you get that feeling get another agent.
Where are buyers active? They are active throughout Silicon Valley. Sales are not as numerous as they were pre-pandemic and pre February 2020 stock market. They are still there.
Getting used to the new normal will take new forms from the California Association of Realtors. New guidelines in viewing homes with face masks and social distancing. Sellers realise that the lender may ask for documentation from employers that the employee will not be laid off due to COVID 19 issues. Buyers, be prepared for larger down payments, be prepared for jumbo loans being harder to find.
Putting your parents in a Senior's Facility will become harder. I already have a realtor associate who has taken in her aunt from a Senior's Facility. Expect parents to begin looking at +55 communities in the eastern hills where COVID 19 was a rarity.
There will be changes, and for every change there will be opportunities. Look for those opportunities whether you are selling or buying. Get onto my Facebook, LinkedIn and Twitter pages to get values in today's real estate market.
The the reader that asked what I think about the economy and market let's say that the economy and the stock market will not move as quickly up as it did down. It will be a gradual affair. I think that the low of March will be challenged or broken. When that occurs homes value opportunities will occur....get ready.
I had written in my inaugural letter that the stock market leads the real estate market. Since records have been kept the price of homes have followed the stock market average. Whether the average be the Dow Jones or the Standard and Poor 500 or any other index created. Why? The averages are economic measurements of our economy. With every reaction down there was a rebound up and those rebounds kept going onward and went beyond the lows that created the concept of "crash".
10 years from now all those who went back to their rental or their under sized house will look back and regret not moving forward.
How can one make a mistake? Interest rates are at historic lows. There will be a new normal in real estate.
This past week we have seen prices cut in various sections of Silicon Valley and large drops in sales prices versus list prices. Should you be fearful? Or, should you begin looking for opportunity.
For sellers it is a opportunity to move up, or an opportunity to create a large cash cushion and move into an updated home that fits your family needs.
For the buyers it is the opportunity of a lifetime. Get your dealing hats out and find a realtor who will work hard to get a price less than list or at a discounted price that will increase in time. I have my name out there if you don't realise it.
What will be the new normal. First there will be an end to "Open Houses". Virtual Tours will replace the Open House and visitations will come once the buyer is ready to make an offer, or has made an offer and can substantiate funds to cover purchase and or a commitment from a lender.
The new normal may find buyers and sellers speaking to one another on Skype, Team, Zoom or any service that can create a one on one atmosphere. This I believe will allow buyers to carefully examine the merchandise before making an offer, reviewing the disclosure packets and asking their agents pertinent questions from the disclosures. Remember, nothing is unimportant.
Your real estate agent is here to serve you, not flip you and move onto the next buyer/seller. If you get that feeling get another agent.
Where are buyers active? They are active throughout Silicon Valley. Sales are not as numerous as they were pre-pandemic and pre February 2020 stock market. They are still there.
Getting used to the new normal will take new forms from the California Association of Realtors. New guidelines in viewing homes with face masks and social distancing. Sellers realise that the lender may ask for documentation from employers that the employee will not be laid off due to COVID 19 issues. Buyers, be prepared for larger down payments, be prepared for jumbo loans being harder to find.
Putting your parents in a Senior's Facility will become harder. I already have a realtor associate who has taken in her aunt from a Senior's Facility. Expect parents to begin looking at +55 communities in the eastern hills where COVID 19 was a rarity.
There will be changes, and for every change there will be opportunities. Look for those opportunities whether you are selling or buying. Get onto my Facebook, LinkedIn and Twitter pages to get values in today's real estate market.
The the reader that asked what I think about the economy and market let's say that the economy and the stock market will not move as quickly up as it did down. It will be a gradual affair. I think that the low of March will be challenged or broken. When that occurs homes value opportunities will occur....get ready.
Month One and Counting Shelter in Place
Harley my Old English Sheep Dog looked up at me as I waited for cocktail hour to begin and said, "Now you know why a chew on furniture".
We now are looking forward for the Governor to decide on the resumption of our economy. Good Political play from POTUS. If it is successful he wins and if it is a failure the Democratic Governors who opposed him making the decision are left holding "The Bag". A stinky bag it will be. Redwood City has declared that all walking outdoors must now wear a facemask. Isn't this locking the barn door after the horse is stolen?
Homes for sale declined 15.7% in March and so far this month the results are:
Atherton: 6 new listings, 3 cancels, 2 cuts
Menlo Park: 13 new listings, 6 pending, 7 sold, 1 withdrawn,1 expired, 3 cuts
Palo Alto: 17 new listings, 9 pending, 9 sold, 3 expired, 4 cancelled, 3 cuts
Woodside: 5 new listings, 1 pending, 5 sold, 1 withdrawn, 1 expired, 0 cuts
Portola Valley: 2 active, 3 sold, 1 withdrawn, 0 cuts
La Honda: 1 active, 1 sold, 1 expired, 0 cuts
Redwood City: 24 new listings, 10 pending, 20 sold, 1 withdrawn, 1 expired, 2 cancelled, 7 cuts
Days on the market are increasing. So far, the effects of Shelter in Place and the requirements in listing and viewing documents have not shown an impact.
I am taking a pessimistic attitude toward the ability of realtors to show property and get virtual tours from some of the listing agents. Sellers are reluctant to show homes and buyers are cautious on viewing homes. There must be a process to keep everyone pleased. I will be creating a sanitized home condition for all homes that I list and close. For viewings there will be the California Association of Realtors inspection form, I will require facemasks, gloves and booties. I suggest all you buyers become prepared to view your chosen house with your own equipment. Make offers at below list and make offers contingent upon a sanitizing of the house and living areas. That includes garages and storage areas.
The desire to live in communities that have active city centers will diminish. The joy of a vibrant downtown area like Palo Alto, Los Altos, Mountain View and Menlo Park will come under pressure as the joy of sitting close to one another in conversation will be gone. Face masks make word recognition difficult and down right impossible when one has a hearing disability. Why pay up to live in a city when it is dangerous and unhealthy to walk to downtown area?
I have always believed that the value of Woodside, Atherton and Portola Valley has been the privacy and security a large land parcel offers owners. Children can enjoy the outdoors without incurring the potential health threats of a playground in Menlo Park, Palo Alto or Los Altos. The value of the former with a $5 million home on an acre or more seems far more beneficial than a 12,000 square foot lot in Menlo Park.
I think there will be a greater risk of ownership when a Facebook employee must work from home for the next 8 months. Now I know what Solitary Confinement means as a punishment!
There are communities in Silicon Valley that offer solitude and space and are within minutes of local cities and work environments. There will be the areas of growth while the hot downtown cities will see declining home values. IF, the return to normal does not occur as all expect it will happen.
On a weekly basis I send out selections of homes that are presently on the market or have recently come on the market as values, as I perceive them as. Get on my
Linked In: https://www.linkedin.com/in/gmckae
Facebook: https://https://www.facebook.com/GaryMckaeProperties/
Twitter: https://twitter.com/gmckae
You Tube: https://www.youtube.com/user/gmckae
Tumbler: site https://www.tumblr.com/dashboard.
We now are looking forward for the Governor to decide on the resumption of our economy. Good Political play from POTUS. If it is successful he wins and if it is a failure the Democratic Governors who opposed him making the decision are left holding "The Bag". A stinky bag it will be. Redwood City has declared that all walking outdoors must now wear a facemask. Isn't this locking the barn door after the horse is stolen?
Homes for sale declined 15.7% in March and so far this month the results are:
Atherton: 6 new listings, 3 cancels, 2 cuts
Menlo Park: 13 new listings, 6 pending, 7 sold, 1 withdrawn,1 expired, 3 cuts
Palo Alto: 17 new listings, 9 pending, 9 sold, 3 expired, 4 cancelled, 3 cuts
Woodside: 5 new listings, 1 pending, 5 sold, 1 withdrawn, 1 expired, 0 cuts
Portola Valley: 2 active, 3 sold, 1 withdrawn, 0 cuts
La Honda: 1 active, 1 sold, 1 expired, 0 cuts
Redwood City: 24 new listings, 10 pending, 20 sold, 1 withdrawn, 1 expired, 2 cancelled, 7 cuts
Days on the market are increasing. So far, the effects of Shelter in Place and the requirements in listing and viewing documents have not shown an impact.
I am taking a pessimistic attitude toward the ability of realtors to show property and get virtual tours from some of the listing agents. Sellers are reluctant to show homes and buyers are cautious on viewing homes. There must be a process to keep everyone pleased. I will be creating a sanitized home condition for all homes that I list and close. For viewings there will be the California Association of Realtors inspection form, I will require facemasks, gloves and booties. I suggest all you buyers become prepared to view your chosen house with your own equipment. Make offers at below list and make offers contingent upon a sanitizing of the house and living areas. That includes garages and storage areas.
The desire to live in communities that have active city centers will diminish. The joy of a vibrant downtown area like Palo Alto, Los Altos, Mountain View and Menlo Park will come under pressure as the joy of sitting close to one another in conversation will be gone. Face masks make word recognition difficult and down right impossible when one has a hearing disability. Why pay up to live in a city when it is dangerous and unhealthy to walk to downtown area?
I have always believed that the value of Woodside, Atherton and Portola Valley has been the privacy and security a large land parcel offers owners. Children can enjoy the outdoors without incurring the potential health threats of a playground in Menlo Park, Palo Alto or Los Altos. The value of the former with a $5 million home on an acre or more seems far more beneficial than a 12,000 square foot lot in Menlo Park.
I think there will be a greater risk of ownership when a Facebook employee must work from home for the next 8 months. Now I know what Solitary Confinement means as a punishment!
There are communities in Silicon Valley that offer solitude and space and are within minutes of local cities and work environments. There will be the areas of growth while the hot downtown cities will see declining home values. IF, the return to normal does not occur as all expect it will happen.
On a weekly basis I send out selections of homes that are presently on the market or have recently come on the market as values, as I perceive them as. Get on my
Linked In: https://www.linkedin.com/in/gmckae
Facebook: https://https://www.facebook.com/GaryMckaeProperties/
Twitter: https://twitter.com/gmckae
You Tube: https://www.youtube.com/user/gmckae
Tumbler: site https://www.tumblr.com/dashboard.
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