KEVIN K. HO + JONATHAN B. MCNARRY
Real Estate In the Time of COVID-19.
(L’immobilier au temps de COVID-19)
COVID-19: A Call to Adapt.
→ Yes, real estate is still happening in San Francisco during COVID-19. People still need to buy and sell property regardless of the circumstances. And just like everything else, the pandemic has disrupted how we do business but this also means that a lot of opportunity has sprung up since.
Ah, the Before Times.... Gone are the open houses that you could willy nilly come upon while you were out and about one weekend thanks to COVID-19.
In their place is a more focused (and, arguably, more efficient) process whereby only pre-approved and committed buyers can actually visit a property they may want to buy in person. While it’s more difficult to visit a property in person by accident, it’s becoming easier to see or ‘experience’ a wide number of properties thanks to increased agent use of 3-D property tours, property videos and virtual open houses via Zoom, YouTube Streaming and more. What follows is a rough and early guide as to how real estate is soldiering on in the coronavirus era and beyond.
What About Property Values in a Pandemic?
We thought you’d never ask. Historic data from past pandemics like the 1918 Flu, something in the 1950s, SARS, the Swine Flu and other calamities show that while the number of real estate sales go down during the outbreak early on, property values remain steady otherwise. This makes sense: less inventory meets less demand. Data tracking COVID-19’s impact on real estate appears to be more segmented: suburbs and gateway communities are seeing surges of sales and prices, while more dense areas see softness due, in part, to being able to work and learn remotely.
How Are Home Prices Holding Up in San Francisco?
We took a deep dive into the sales data from 2019 and 2020 comparing the first 10 months of each year and found that, for the most part, we’re still seeing strong and steady sales numbers for most parts of the City despite the Pandemic and wildfire smoke. Because of that the demand for single-family houses is, and remains, strong (more people wanting to leave stacked living buildings or realizing they want their own outdoor space) while condominium values have declined in general but only just so — both the median and average condominium sale price figure fell about $20,000-$40,000 from 2019 to clock in at $1.24 million and $1.35 million respectively. This despite that the active available inventory on the MLS is nearly twice the normal at just about 2,000 active listings for houses, condos, TICS, co-ops, parcels of land and 2-4 unit buildings as of this writing. And the purported emptying of San Francisco is a bit premature as the tragic and now more frequent wildfires have shown, there are fewer and fewer places that we can go lest we run the risk of seeing our homes go up in flames or otherwise.
The rental market is taking a hit as we’ve all seen as work patterns change and remain unsettled. Also, areas like SoMa, South Beach, Yerba Buena and Mission Bay are having a tougher go at it as stacked living buildings (i.e., skyscrapers) are not in favor currently.
1. No More In-Person, Public Open Houses (For Now)
And When Open Houses Do Come Back...
Like everything else, when public open houses do come back, expect to encounter limits on how many folks can be inside at once, There may be temperature checks and booties and, most certainly, hand sanitizer, clorox wipes and disclaimers and waivers.
Unfettered Access to Properties is Now ... Fettered?
Gone are the days where you could just stroll into a Sunday open house unexpectedly. Now curious neighbors or looky-loos will have to do this online.
No in-person open houses or broker tours are allowed during shelter-in-place orders until who knows when. But if you’re really serious about a home there are ways.
Suspending public, in-person open houses was an early part of social distancing practices that have had the following impacts
→ Loss of spontaneity: there will be fewer impulse buys that were aided and abetted by being able to go to open houses easily any given weekend
→ Loss of serendipity: lots of folks may not realize they could afford (or should) buy may not have that chance now. Similarly, folks may not realize that their home (which most will think is usually better than the open house they happen to be in) has appreciated in value so significantly. This may only ever happen when they meet an agent at an open house.
2. Visiting Virtually
Masked Crusaders vs. the Voyeurs
For the truly determined, interested and serious buyers we can go and see. For everyone else, we can go and see (virtually)
→ While there is no real substitute for an in-person property visit, technology is making it easier to see something without actually being there. We’re seeing agents use polished property videos, matterport 3-D virtual tours, and Zoom open houses. And while these means a decent job of communicating what a property is about, a lot of folks want a more genuine sense of what a property is like in person. That’s where we come in. We will go out and make exhaustive, first-person walk-through videos that we’ll post on YouTube. We’ve made more than 400 of these videos over the years and have the process down. The hope is that these videos and commentary will help you decide if it’s worth visiting in person.
Before an In-Person, Visit We Preview
Even if you’re a serious buyer with full underwriting approval, steady income and sufficient cash for a down payment (and post-close reserves), agents are still asking everyone view a property’s website, virtual tour, video and, in many cases, disclosure package before we can go and visit in person.
3. Didn’t Al Gore Talk about Lockboxes?
It’s Time for a Relay for Keys.
→ Unlike their Bay Area counterparts, San Francisco agents rarely put lock boxes on their listings. A property would be too unique or expensive to let people attend without the chance to sell the place in person was the logic. Now the world has been turned upside down, we’re seeing San Francisco agents use lock boxes as the default. Because it’s somewhat new practice, we’ll see more fumbling for keys, issues with lock boxes and less in-person selling.
4. Time for P.P.E.
Venturing Out (P.P.E., PEADs and all).
→ In-person property visits should be sponsored by 3M, Purell and Clorox at the rate we’re going. Before listing agents let anyone visit a property, buyers will have to cough up a pre-approval letter or proof of funds (pardon the pun) and will make buyers sign a the newly created statewide waiver form disclaiming the right to sue if you get sick. Property visits currently limited to two buyers (from the same household) and just 1 agent. Wipes, sanitizer, masks and social distancing do make a property feel a little eerie but if that’s the price of admission for a new place to call home and shelter, it’s a small one.
5. Contracts with Roadmaps
Navigating this New (not-so) Normal Requires Planning for the Unexpected.
→ A bit of balance is back in San Francisco. The sellers’ market of the past several years often meant buyers wanting contingencies, a price break or other concessions wouldn’t get very far in the market. While evolving, we’re seeing offers with financing contingencies get accepted and a certain amount of negotiation is back too. It’s also a good idea to include more flexible contract terms that allow for the unexpected to happen while still promoting good will and understanding on both sides.
6. For Everyone Else Who Bought: Forbearances + Re-Fis, Oh My.
→ So, for existing homeowners who may be facing a rough patch who need to defer loan payments to another month (or months) or to the very end of a loan’s term (forbearance), or others who just want to re-finance their loans, COVID-19’s impact on real estate has been profound. Negotiating with mortgage lenders is on the table again, which was unthinkable at the beginning of the year when the economy was humming along. The economy’s shutdown is thought to be only temporary but important enough so as to compel most major lenders to accommodate mortgage payment changes in order to avoid anything resembling the financial crisis era.
Track Property Prices in San Francisco
Take a look at what COVID-19 has done to San Francisco real estate prices.
Hi, we’re Kevin Ho and Jonathan McNarry of Vanguard Properties in San Francisco, California. We’re partners in life and in business. Together with our big black Labrador retriever, Raffi, we are top producing Realtors in San Francisco’s competitive and valuable residential real estate market.
We truly love what we do and are passionately committed to our clients, their needs and advancing their interests. We represent both buyers and sellers with many repeat clients but we are always expanding our client base. Our belief is that by working with you you will make better informed decisions in this most important of areas of life.
We invite you to contact us to learn more and to start your success story now.
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Real estate is always changing and evolving. It's complex and can be as fickle as it is surprising. And while the information and knowledge on this site is considered to be accurate and correct, it cannot be warranted. Market conditions in San Francisco, California, and the world can change with a tweet or a sneeze and is beyond anyone's control.
In San Francisco, things like local, state and federal tax regulations can change with big implications. Other things like rent control rules, eviction control, lending practices and standards, building and zoning regulations are just a few of the other things that can change with little or no notice. All of these things and other intangible factors can and will impact market values and performance.
Kevin is a licensed California attorney but focuses on real estate about 99.9 percent of the time. It's important to note that while you can’t take the attorney out of him he will not be acting as your attorney here. This speaks to the larger point that you should also seek out qualified folks who work in their respective sectors if you have further questions.
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Kevin K. Ho, DRE 01875957/SBN 233408
Jonathan B. McNarry, DRE 01747295
2501 Mission Street, San Francisco, CA 94110
555 Castro Street, San Francisco, CA 94114