Selling During The Pandemic

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Real Estate

As we prepare to close out another year...

I'm amazed by all that we’ve experienced in 2020.  Life has thrown a curveball into many lives, having to homeschool children, work from home, keep distance from friends and family; all while navigating this new life we’re all living.

The real estate industry has taken on its own challenges, although nothing Earth shattering or life changing that we couldn’t maneuver -- gloves, masks, booties, sanitizer, and some new forms to sign, confirming that you don’t have Covid before entering a home.  From a technology aspect, it’s actually propelled our industry into a more efficient way of doing business.

Our one challenge continues to be the lack of homes for sale.  And yet the increase in sales activity has created a seller’s market like we haven’t seen in over a decade.  Realistically, we don’t see this changing any time soon and here’s why…

There’s been an interesting shift with many people coming to Sacramento as a way to escape the busy, big city lifestyle.  The new-norm seems to be distancing yourself from your neighbor, which living in the Bay Area and other parts of California doesn’t always allow for.  Homeowners are selling their small condo and turning that into a spacious single family purchase in our region.

We had seen this before, but not nearly in the numbers we’re experiencing now.  We’re also seeing people making necessary changes to find homes that will accommodate this new way of living while working from home.  Many who once had to commute to their job now only have to walk down the hallway to get to their office.  This gives the choice of moving anywhere, so once again the Sacramento area is seen as a desirable location with our close proximity to Tahoe, Napa and the coast.

Let’s face it -- Sacramento is a great place to live! 

Here’s something else I’ve realized...

It used to be that homeowners would make a move every five to seven years.  You’d buy a home, fix it up to suit the needs of your family, then the kids move out and you downsize or move to a different neighborhood.  That was the norm.  We just aren’t seeing that happening these days.  People buy a home that they like and they stay for decades.  Could it be that these DIY shows and renovation ideas are more appealing than packing boxes?  Maybe.

Here’s another issue to consider.  Right now homeowners are taking advantage of the incredibly low interest rates to refinance their existing mortgage into one with less than 3% interest.  That’s cheap money, folks!  But what that’s also going to do is cause homeowners to stay in their homes even longer!

Once you have a 3% mortgage, will you make a move when rates finally go back to ‘normal’?  Will you trade your 3% loan for one that could be double that?  Probably not.  So, this could further magnify what’s already a challenge in our region -- a lack of new inventory coming on the market because people, unless forced to, don’t move.

The other piece of the real estate puzzle that’s been practically non-existent is new construction.  After the melt-down, builders went away.  We didn’t have new subdivisions being built because there wasn’t the demand.  Unfortunately it takes so long for builders to react, not to mention the fact that the fees and red tape for builders have become a significant deterrent in California.  Thankfully we are beginning to see new housing, but new isn’t for everyone...

I digress...   

Let’s talk about the positive aspects of our market.

For those who were in Sacramento in 2000, you may remember that we ‘enjoyed’ a 20% increase in property values five years in a row.  I say ‘enjoyed’ because it all came tumbling down when the financial crisis hit.  People ask me now, “will history repeat itself”?  My response is that I don’t think so.  What we’re seeing now versus what we experienced then was very different.  That market was fueled by a financial mask that couldn’t be sustained.  Once we looked behind the curtain and saw what was happening, it quickly tumbled.

Today, we’re seeing a lack of supply.  Those buyers with the ability to pay more in multiple offer situations are winning.  They’re winning with cash, not bad loans that will eventually fail.  Most homes that come on the market are receiving multiple offers - upwards of 6 to 10 buyers who are paying tens of thousands of dollars over asking price just to be chosen.  It’s a little crazy, to say the least.

Will it settle down?  Not until we have homes for all of these buyers, or when interest rates start to go up.  When interest rates go up, some buyers will be priced out of the market because they won’t be able to afford the payment. Hence why they’re so anxious to buy a home or make their move now.  I do think it will eventually settle down but my guess is that 2021 will be very similar to 2020 in almost all respects.

Low rates, lack of inventory, masks, gloves, booties, multiple offers - yep, more of the same!

After almost 30 years of selling homes I’ve learned that change is inevitable. The market is either going up or coming down -- seldom is it neutral.  Guessing the timing of the top of the market or the bottom is determined by many factors - even more today than in a ‘normal’ market.  Our local region has typically done well because we have jobs and are somewhat affordable; although this year we’ve had an increase of about 12% in home prices, which can squeeze some out of the market. While much of our local job market is government centered, our hope for all business owners is that they can hold on during this next round of shut downs.  


Will the real estate market see a seasonal slow down? I really don’t think so. Since it doesn’t appear that we’re going to have a ‘normal’ holiday season with people getting to spend time with friends and family, going to gatherings, etc -- my guess is that for buyers, the focus will stay on finding the right home when it comes on the market.  Trust me when I say...  they are staring at their computer screen right now just waiting for something to come on that meets their needs.  

Let’s face it - nothing about this year has been ‘normal’.  While celebrating the holidays and socializing with friends and family may not be quite the same this year, buying and selling homes (at least right now) still is!!  For us, it’s about YOU.  If you’re ready to jump in, we’ve got your gloves and booties!  Thanks as always for your continued support.  We truly appreciate it.

Wishing you JOY and a wonderful THANKSGIVING

From our family to yours!