While it is still relatively early in the battle against this pandemic, real estate history does hold some lessons for us regarding what’s next for housing.
It is generally agreed that today’s economic downturn will not be another Great Recession that decimates local home prices. Real estate had been on a roll up until March when we were instructed to hunker down. At that time Southern California’s six counties’ median sales price was $550,000, up 6.8% in a year. This data was based mainly on deals that were in progress before the “stay-in-place” order.
In early April, the market saw some discounting. Zillow reported that the median asking price in Los Angeles and Orange County as of April 19 was $856,575 (down 7% in a month, but up 7% in a year).
Historically speaking, large upswings in California unemployment usually create downward pressure on housing values. But unlike the past real estate fiasco in 2008, there was no oversupplied market propped up by unrealistic lending practices when we embarked on this event.
While this should have been a thriving homebuying season in 2020, we are instead seeing a limited supply of homes for sale. The data for L.A.-O.C. for pending sales in mid-April were down 59% from last year. But there are still plenty of Southern California house hunters lured by cheap mortgage rates and a view that this will be a brief economic downturn.
Most California economists believe that this painful episode in our history will be followed by a rapid recovery. Mark Schniepp of the California Economic Forecast stated, “ A number of us believe there will not be very much of an impact on home sales, once we restart the economy again and people can get out to look at homes, both existing and new.”
So don’t be afraid, get out there and find your dream home or sell your current home to an anxious home buyer.
Based on an article from the Orange County Register