San Francisco County real estate most hard hit due to the coronavirus



  • 645d9 920x920 San Francisco County real estate most hard hit due to the coronavirus

    Of the Bay Area counties, San Francisco County “has seen the greatest impact of the crisis,” said Patrick Carlisle, Compass Realty’s Chief Market Analyst.

    Of the Bay Area counties, San Francisco County “has seen the greatest impact of the crisis,” said Patrick Carlisle, Compass Realty’s Chief Market Analyst.


    Photo: Patrick Carlisle | Compass

Caption

Close

Of the Bay Area counties, San Francisco County “has seen the greatest impact of the crisis,” said Patrick Carlisle, Compass Realty’s Chief Market Analyst.

Of the Bay Area counties, San Francisco County “has seen the greatest impact of the crisis,” said Patrick Carlisle, Compass Realty’s Chief Market Analyst.



Photo: Patrick Carlisle | Compass


Historically, the spring selling season in San Francisco is the most active of the year, with new listings, sales and market prices all climbing steadily out of the mid-winter slowdown. But today, the coronavirus has changed all that, altering the typical San Francisco housing market in the same way it has altered so many other aspects of our lives.

Of the Bay Area counties, San Francisco County “has seen the greatest impact of the crisis,” said Patrick Carlisle, Compass Realty’s chief market analyst. While it’s too soon to chart a change in sales prices, the striking shortage of new listings (less than 20 by the second week of March) is telling, as is the sharp decline in accepted offers.


(This data is depicted in many Compass infographics in the gallery above.)



There was also a huge spike in withdrawn listings, further limiting the number of active listings, which according to Carlisle’s records was only 550 the third week of March. The luxury market (homes listing at over $2.5 million) shows particular shrinkage, with less than 145 active listings in that price range during the same period.






According to San Francisco Bay Area Realtor Robert Collett, “The virus is impacting the market logistically and financially in the short-term. Open houses are halted, down payments have slimmed, and virtual media is king. Serious buyers can evaluate properties online and offer subject to evaluating further during escrow. Buyers are interested in deals, but sellers have not changed price expectations, because inventory remains scarce. Long-term, residential real estate should hold firm, because homes and self-sufficiency remain essential.”



It’s early to be making any conjecture. Due to the lag time between offers being accepted and sales closing escrow – typically three to five weeks — it is too soon for sales volumes (or sales prices) to reflect any significant impact of the virus. “April sales statistics will begin to give us insight into how and whether median home sales prices will change,” Carlisle said.

Since the subprime crisis is the last time San Francisco experienced a real slump, we asked Carlisle to compare the two catastrophes. “The 2005-2007 bubble was fueled by tens of millions of people buying and refinancing homes with loans they couldn’t afford, loading households with exorbitant debt promoted by predatory lending practices.


“Today, due to huge improvement in underwriting standards and close to historically low interest rates, U.S. homeowners pay less for their mortgage debt as a percentage of their disposable income than at any time in the past 40 years (see chart in gallery above). So, while overall household debt levels – cars, credit cards, student debt, etc. – have been growing dangerously high in recent years, mortgage debt levels are actually in good shape.”

Carlisle stressed that the rental market would shift more quickly than the real estate market since the combination of shelter-in-place regulations and job loss would hit tenants and would-be tenants hard, and federal interventions like low interest rates do nothing to help renters.

We’ve seen that the rental market so far was taking a hit.

Before the coronavirus, the bullish economy showed an equally bullish real estate market across the country. Nationally, home prices rose 3.9% annually, up from 3.7% in December, according to the SP CoreLogic Case-Shiller Indices.

The 10-City Composite showed an increase of 2.62%, up from 2.3% in December.  Those 10 metro areas include San Francisco, Washington D.C., New York City, Miami, Boston, Denver, Los Angeles, Denver, Las Vegas and San Diego.

Cities that have been hard hit by the virus were enjoying huge year-over-year gains. In January, prices in Phoenix, Ariz., were up 6.9% year-over-year, while Seattle and Tampa, Fla., each saw prices up 5.1%. Locally, virtually every county in the Bay Area saw year-over-year first-quarter increases in median sales prices.

All of this growth came to a skidding halt in March, including in San Francisco, where usually at this time, the market would be heading steadily up. “If unemployment gets as deep as some people are predicting, if it gets to the mid-teens, then it could be far deeper than the subprime crisis,” said Sanjiv Das, CEO of Caliber Home Loans.

Anna Marie Erwert writes from both the renter and new buyer perspective, having (finally) achieved both statuses. She focuses on national real estate trends, specializing in the San Francisco Bay Area and Pacific Northwest. Follow Anna on Twitter: @AnnaMarieErwert. 

Article source: https://www.sfgate.com/realestate/article/coronavirus-hurts-San-Francisco-real-estate-market-15178318.php

This entry was posted in SF Bay Area News and tagged . Bookmark the permalink.

Comments are closed.