Real estate agents have canceled professional meetings, seen clients show up in masks, and resorted to fist bumps and elbow nudges instead of their traditional social currency — firm handshakes and longish hugs.
Home tours and last week’s open houses remained on track, Bay Area agents said, but crowds of 200 guests visiting homes in hot Silicon Valley neighborhoods are history as county edicts required residents to shelter in place. Real estate was not deemed a critical function.
Early signs suggest the spread of the virus is pumping the brakes on the re-accelerating Bay Area housing market.
“It’s going to start resonating,” said Greg Mathers, a Redfin agent in the East Bay. “I do expect it to change pretty soon.”
Real estate sales, rentals and leasing are a $445 billion industry in California. In the Bay Area, residential real estate has been a major driver in personal wealth for property owners during nearly a decade of record price growth.
The Bay Area residential market rebounded in January and February, with robust demand and scarce inventory pushing up prices after a slowdown in 2019. The median sale price in January for a single-family home in the seven-county region hit $865,900, with prices rising year-over-year by 6.3 percent in San Mateo County, 2.7 percent in Santa Clara, 2.6 percent in Alameda County and nearly 1 percent in Contra Costa County, according to Zillow
But in recent days, national and state real estate associations have issued health safety guidelines for the hyper-personal and glad-handing industry. The National Association of Realtors suggested agents have sellers do a deep cleaning of the property before and after showings, and provide hand sanitizers and soap throughout the bathrooms and house. Some sellers have postponed putting their homes up for sale.
The pandemic is still in the early stages — hitting core Silicon Valley communities harder than most in the country — and scant data is available to give a precise picture of its impact on the residential real estate industry.
Early surveys suggest the virus is slowing home buying activity and raising concern among real estate professionals. About half of the California agents surveyed this week expected the pandemic to have a negative impact on home sales and make it take longer for homes to sell, according to a poll released last week by the California Association of Realtors. Roughly 4 in 10 agents predicted lower prices.
About a quarter of real estate agents reported clients delaying a home search or listing, and more than one-third said clients asked questions about coronavirus and the market, the survey found.
But any negative effects of the virus on home buying could be counteracted by historically low interest rates, allowing buyers to stretch budgets much further. This month, mortgage rates fell to an all-time low 3.13 percent, down from 3.8 percent in January.
Elliot Eisenberg, partner economist with MLSListings, said the stock market retreat could hurt home sales in the Bay Area more than almost anywhere else. Tech workers with income dependent on equity grants often sell stock to accumulate the large down payments needed to get into a Silicon Valley home.
“If the stock market stays down there for a while,” Eisenberg said, “this could begin to eat away at the confidence of buyers.”
Social distancing and self-quarantines hinder human interactions, despite technology that can replace some face-to-face meetings. “Every interaction is trading,” he said. “The economics of it isn’t good.”
Early data from Redfin shows some slowing in the Bay Area and Seattle, which has also been hit hard by the virus, but demand is still better than last year.
Redfin chief economist Daryl Fairweather said demand remains strong in the two virus-stricken regions, and some technology makes it easier to perform real estate shopping and buying online. But there’s still uncertainty, she said. “I don’t think anyone really knows how long this will last,” she said.
Economists at the National Association of Realtors also say foreign investments could take a short-term hit, particularly if fewer Chinese buyers go house-hunting in California. But the market share of Chinese buyers in the state had already dropped in recent years, from 8 percent in 2014 to 3.9 percent last year, according to the association.
Several major housing and real estate gatherings — the lifeblood of an industry constantly seeking contacts, clients and future clients — have been canceled or postponed.
The crisis has even touched nonprofit housing efforts in the region. Housing Trust Silicon Valley, a major funder of affordable housing construction, canceled its annual investors briefing conference this week. The event raised $320,000 last year, and the nonprofit hoped to highlight even more ambitious efforts this year with a $50 million grant from Apple.
Instead, workers busily packaged up 700 boxes of chocolates intended for event attendees so they could hand-deliver the sweets to supporters.
Agents say despite the spread and growing warnings, business has continued as the muscular local economy drives strong demand for first-time homebuyers.
Coldwell Banker agent Ramesh Rao, based in Cupertino, has not seen a noticeable slowdown in open house traffic at Silicon Valley properties.
But, he said, some sellers have delayed plans to list properties and others shared concerns about the falling stock market. “I see more psychological changes,” Rao said.
A sign at an open house at a new luxury neighborhood, Orchard Park, in Palo Alto, alerted guests to a few simple rules: stay six feet away from the agent, don’t touch doorknobs, tabletops or counters, and avoid other shoppers. Agent Michael Dreyfus of Golden Gate Sotheby’s said the protocols will extend to all client meetings, private showings and home tours.
Redfin agent Mathers, based in Walnut Creek, saw lots of coronavirus chatter on Nextdoor and heard more from his colleagues, but until recently the virus spread had no visible impact on his business.
A new client called Thursday afternoon to cancel a strategy session and home tour, he said. The client was concerned about the virus and decided to postpone his search.
“It’s a relationship business. People work with people they know, like and trust,” Mathers said. If a client would rather do business over the phone or keep a safe distance at meetings, he’s willing to accommodate. Instead of a handshake, he said, “Right now, I’ll elbow them.”