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After a brutal 2019, luxury real estate agents were really hoping that 2020 was going to be their year. In the UK, the high-end market in central London was just starting to rebound after a five-year price slump; in New York, brokers were hoping for green shoots after a bruising final quarter, in which sales volumes of Manhattan homes priced above $7 million fell by nearly half.

But then came the lockdown. With much of America under strict orders to stay at home, a business that relies on in-person viewings and inspections is now enduring another major setback.

“We’re in a state of paralysis right now that is unprecedented,” said Jason Haber, a broker with Warburg Realty in Manhattan. Before the lockdown, he said, activity had been starting to pick up after a year in which the New York market had been blighted by increased taxation and an oversupply of new condo developments.

People who viewed apartments before the city shutdown was imposed on March 16 have continued to transact, according to Haber. “I had clients who just missed out on a $5 million apartment,” he said. “They had seen it before the lockdown and bid on it, but by the time we were ready to put in an offer the apartment was gone.”

For those that didn’t get in under the wire, it’s now a waiting game. “It will cause a backlog, and when it clears I am cautiously optimistic as I have a bunch of buyers out there ready to make offers,” said Haber. “The stock market shot up 9 percent, we have a $2 trillion stimulus bill, there’s a sense that we’re going to get through this, and there will be a rebound on the other side. There is pent-up demand.”

Outside New York, brokers were more circumspect. “When financial markets or international events turn volatile, wealthy buyers tend to become very cautious,” Patrick Carlisle, chief market analyst for Compass in the San Francisco Bay Area, told Robb Report back in December. Now, he says, “Activity has been hit hard across the board.” His figures show that more than 900 luxury home listings were removed from the market in the Bay Area in the week beginning March 16, compared to fewer than 200 every week since the beginning of this year.

In central London, activity had just returned to prime areas such as Kensington, with prices rising in the three months to mid-March—only the second time in nearly six years that the area has seen quarterly growth, according to Savills. The rise was only 0.9 percent, but it represented a resurgence in confidence post-Brexit and national elections in January.

“Had someone asked me on March 1 if coronavirus would have an impact on business I would have said, don’t be silly,” says Camilla Dell, founder of Black Brick, a high-end London buying agency. “Twenty-five days later, the answer is a complete U-turn. Business has dropped off amazingly quickly.”

Transactions will remain low throughout the summer, predicts Lucian Cook, head of residential research at Savills. The result on prices, he said, will depend on “how long it suppresses the domestic and global economy, how people perceive its potential impact on their wealth over the longer term and the extent to which they turn to bricks and mortar as a store for that wealth.”

According to Dell, all her clients’ deals have been put on hold. “For people who negotiated a price before March 1 but have not yet transacted, the big concern is what will the value be in six months’ time.” The effect on prices is unknown, she says, as there are no transactions to record.

“Once we’re out of lockdown, then we will see what’s happened to the London market—profits will be down, businesses will be suffering, there will be unemployment—then we will see the effects filter through to the data.”

Within every real estate downturn, there lies opportunity. “There are always buyers circling when people start panic-selling,” Dell says. “We have had phone calls from clients saying they have cash and are interested in distressed sales, but it’s not a flood. In general people are battening down the hatches and keeping their powder dry.”

New Yorkers, in contrast, will exploit the opportunity, in Haber’s view. “Clients are saying to me that that it’s a great time to move into real estate,” he says. “Over the past three years, the stock market has been going up and real estate has been going down, so now is a good time to get in and get good prices and low interest rates.”

Article source: https://robbreport.com/shelter/homes-for-sale/real-estate-markets-coronavirus-2908308/

Article source: https://www.sfchronicle.com/business/networth/article/Bay-Area-home-prices-jumped-in-March-mostly-15206485.php

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Photo: Takasuu / Getty Images/iStockphoto

A: The volatility of the market and unknown length of this crisis has led to apprehension to invest in local real estate. However these factors have created an unexpected opportunity.

For buyers in the market, there now exists a unique and possibly short-lived window to put forth an offer with terms that a seller may not have considered just a few short weeks ago, and likely will not again once we have emerged from this crisis.

Real estate professionals across the Bay Area like our team at 181 Fremont are open and welcoming of the opportunity that this creates for buyers.

Unlike the 2008 financial crash, as the virus is contained, we suspect the recovery will be swift and San Francisco real estate will again be perceived as a safe and stable place to invest.

The Bay Area has benefitted from a solid job market fueled by blue-chip companies with significant growth potential.

Compounded by increased construction costs and a shortage in the new construction pipeline, San Francisco real estate will continue to be a very attractive investment option.

Tom Gasbarre, 181 Fremont Residences, 415-254-8389, tom@181residences.com.

A: Pro: The interest rates are very low many sellers are pricing at a price they want, and many are accepting contingencies. Run the numbers.

Con: Is this your dream home? Can you picture spending 10 years or more there? The answer s/b yes. Is your income source essential or stable? The answer should be yes. Is your lender tightening their lending requirements? Double check with your lender.

Pro: Do you need to right-size? Do you need a smaller home, a larger home, or are you wanting to move outside of the Bay Area? If the answer is yes to any of these, then this is the right time for you.

Con: Don’t be left with a moving van and no place to go. Consider a replacement property contingency if you are a seller. If you are a buyer who needs to sell their current home, consider a purchase offer contingent on the sale of your current home.

Anne Feste, the Grubb Co., 510-757-4787, afeste@grubbco.com.

A: Flippers buy dilapidated homes, fix them, resell them within a year or so for what they hope is a profit. Flippers comprise maybe 6% of real estate transactions. But the balance of the market, the other 94%, understands that real estate is a long term hold. In 2012 the median price of San Francisco homes was $750,000. By 2015 that median had risen to $1.1 million, by 2018 it was $1.715 million.

Despite the gyrations in the stock market, the high unemployment rate in certain sectors, people still want to change residences for the usual reasons: change in family size, marital status, job. Add to that a new found revelation: Working from home, at least partially, is actually possible. It is therefore not unreasonable to expect a shift from a smallish condo to a larger home, for home prices to rise once the current pent up demand is unleashed.

Astrid Lacitis, Vanguard Properties, 415-860-0765, astrid@vanguardsf.com.

Article source: https://www.sfgate.com/realestate-advertisement/article/Sound-Off-What-are-the-pros-and-cons-of-waiting-15165325.php

Consider Nelson Chu, the founder and CEO of Cadence, a seed-stage, 17-person securitization platform startup in New York. After recently landing $4 million in funding, Cadence signed a lease last month with a landlord who has agreed to start charging the outfit only when it is able to move into its new uptown digs.

It’s a good deal for Cadence, which doesn’t have to worry about paying for square footage it can’t use. Nevertheless, Chu notes that being forced to work remotely has awakened him to the possibility of incorporating more remote work into the startup’s processes.

“You always question whether remote work will impact business continuity,” says Chu. “But now that we’re forced to do it, we haven’t skipped a beat. There could be something to be said for having less office space and allowing the people who commute from out of state to not have to be in the office every day.”

It’s easy to imagine that, using tools like Slack, Google Sheets, and Zoom, other founders and management teams that hadn’t already joined the telecommuting trend are coming to the same conclusion.

Taking care of business

The possibility isn’t lost on real estate companies.

“Remote work is something we’re thinking a lot about right now,” says Colin Yasukochi, director of research and analysis at the commercial real estate services giant CBRE. “People are right now being forced to do it,” but “I think some will inevitably stick” to working remotely, he says. “The question of how many, and for how long, is unknown.”

Certainly, it’s not the trend CBRE or others in the real estate world were expecting this year. An “outlook” report published by CBRE last November sounded understandably rosy. “Barring any unforeseen risks,” it said at the time, “resilient economic activity, strong property fundamentals, low interest rates and the relative attractiveness of real estate as an asset class” suggested that 2020 would be a “very good year” for commercial real estate.

In the ensuing months, of course, that unforeseen risk has prompted shutdowns that have led to layoffs across nearly every sector of the economy. It has also — by the very nature of it being a viral contagion — made it highly likely that even when people are allowed to re-occupy commercial spaces, they’ll be less enthusiastic about dense workspaces.

This is doubly true if they know they can get their work done outside the office.

It could well lead to reduced demand for office space later on. It could also mean the same amount of space — or perhaps even more —  with reconfigured office layouts. No one yet knows, including commercial estate brokers.

Mark George, a San Jose, Calif.-based broker with the commercial real estate company Cresa, is currently working from home, where he shares an office with his wife, who is also working remotely for the first time. It’s nice to be home with their children, says George, but being housebound makes it harder to get a pulse on industry changes, particular in his industry.

Brokers are “somewhat isolated,” he says. “Touring activity has dried up because we can’t show space. City Hall is closed in every municipality, so you can’t pull permits. The industry is really shut down.”

George said that “deals that were at the finish line probably got signed” before the coronavirus really took hold in the U.S. But the “deals that were close and not quite there? Every deal I’ve seen has been put on ice. Everyone is in a holding pattern.”

A Cresa colleague of George in San Francisco, Brandon Leitner, echoes the sentiment, saying that “things are not moving fast.” Still, Leitner expects the firm — which handles clients as big as Twitter to Series A and even seed-stage companies — will see a deluge of activity once the city’s current stay-in-place mandate is lifted and brokers can start showing properties again.

Specifically, Leitner expects the market to come down by “at least 10% and probably 20% to 30%” from where commercial space in San Francisco has priced in several years, which is $88 per square foot, according to CBRE. Driving the expected drop is the 2 million square feet that will come onto the market in the city as soon as it’s possible — space that companies want to get off their books.

That’s a lot, particularly given that there is roughly 3.2 million square feet of commercial space available already, according to CBRE’s Yasukochi, who adds that a “good amount” came onto the market in the last six months alone.

Say it ain’t so

That’s not great for landlords, who are “hesitant right now to put a new number on the market,” says Leitner.

He offers that they are “realistic” and likely to “make as many concessions as they can” to hang on to and attract new tenants. Of course, there’s only so much they can do. They typically have debt to contend with, meaning that if there’s a sustained downturn or fewer people return to the office, they will themselves be relying on their relationships with lenders to see them through.

George, the San Jose-based broker, believes lenders will be inclined to help in order to preserve their own investments. The Federal Reserve may also give the banks the ability to defer mortgage payments, which would make it easier for property owners to put off charging rent.

Even still, whether the commercial real estate market comes all the way back after COVID-19 remains to be seen.

“This [pandemic] is something we’ve never experienced before,” notes Yasukochi. He says CBRE’s economists estimate the next two quarters will be “very tough.” At the same time, he says, the market “might see a substantial” uptick in the four quarter.

“It really depends on whether demand bounces back, and whether expansion plans will be put on hold, or permanently [shelved].”

For now, he seems optimistic about a return to business as usual, particularly within his home market of San Francisco.

It “feels like things go wrong really fast in the Bay Area,” says Yasukochi. “But typically, they come back really fast, too.”

No doubt industry players are counting on it.

Article source: https://techcrunch.com/2020/04/08/commercial-real-estate-could-be-in-big-trouble-even-after-this-is-all-over/

Cities, counties and even California’s governor have rushed in to manage the fraught and frayed landlord-tenant relationship during the coronavirus pandemic.

The push for quick solutions to complex problems has left a patchwork of remedies for renters across the Bay Area. Nearly a month into shelter-in-place restrictions that shut businesses and left hundreds of thousands without jobs, the answers to many legal questions depend on where a renter is living.

We asked public interest and landlord attorneys to shed light on renters’ rights and responsibilities.

One thing is certain — the months ahead will be filled with more changes.

Do I have to pay rent?

None of the new legal protections for those affected by the coronavirus pandemic exempt tenants from paying rent, although they do modify how landlords may deal with those who don’t pay.

“No one is actually saying you have no obligation to pay rent,” said Nadia Aziz, directing attorney for the Law Foundation of Silicon Valley. “To an extent that a tenant can pay rent, they should pay rent.”

Both landlords and renter advocates suggest tenants speak to their landlords if they’ve lost income, fallen ill, or are taking care of family members because of the pandemic. In some cases, tenants are required to show proof — a letter from an employer, a recent pay stub or a medical note to get relief.

The San Jose City Council considered a measure to suspend rents — an effort that would have left unpaid rent in legal limbo — but the proposal was rejected. A few tenants’ rights organizations have advocated rent strikes, but the movement has not yet gained widespread momentum.

Can I be evicted  for failing to pay rent (or for any other reason)?

Broadly, residents suffering loss of income, illness, or increased caretaking responsibilities cannot be put on the street during the coronavirus emergency. Federal, state and local governments have all acknowledged that keeping people in shelter is good for the overall community health.

Tenants can still face eviction for reasons unrelated to the coronavirus pandemic.

Will tenants unable to pay rent because of the pandemic face eviction after the emergency lifts?

Gov. Gavin Newsom last month granted cities and counties the power to pass emergency ordinances to curb evictions. Newsom later enacted a limited measure that stops physical evictions during the emergency — but still allows landlords to file paperwork to start the eviction process on delinquent tenants.

But last week, the Judicial Council of California, the body charged with setting policy for state courts, passed an emergency measure halting court action on evictions and foreclosures. The order stops evictions from going forward for 90 days after the state of emergency ends. The new city and county laws generally assume an end date in April or May but are subject to change. The only exceptions are for health and safety. Eviction cases already underway in the courts can be delayed at least 60 days.

“For the most part, everything has been put on hold,” said Whitney Prout, policy and compliance attorney for the California Apartment Association or CAA.

More than 100 cities and counties across the state have implemented bans on evictions, according to the CAA. The renter protections vary in scope — some require more strict proof of loss of income, others extend rights over a longer period. A more protective local ordinance for renters generally trumps state and county laws.

The local laws could affect court decisions after the emergency has lifted and the judicial moratorium has ended.

The majority of the nine Bay Area counties have passed tenant protections: Alameda, Marin, Sonoma, San Mateo, and Santa Clara. Contra Costa, San Benito and Napa counties have not enhanced rental laws.

San Jose, Oakland, San Francisco and Concord, along with several smaller Bay Area cities, have placed moratoriums on evictions at least through the emergency. Late fees for unpaid rent are mostly prohibited.

Residents living in housing backed by certain federal loans or receiving rental vouchers are also protected.

What happens when the emergency orders lift and I owe months of back rent?

Several cities and counties have enacted grace periods for tenants to repay back rent after the emergency ends. Oakland does not specify a deadline, while Santa Clara County residents get 120 days. In Concord and Pittsburg, tenants have been given six months after the emergency has lifted.

Hilda Chan, senior attorney at Bay Area Legal Aid, said the concern is how the courts will handle renter-landlord disputes in different cities when the emergency order ends. “It’s a complete smorgasbord of varying ordinances,” she said.

My landlord asked me to sign a repayment schedule. What should I do?

Tenant lawyers recommend checking with an attorney before signing. Most tenants don’t know when they will get back to work or how long the emergency will last.

Property owners favor a payment schedule to bring certainty in uncertain times. “So there’s not any confusion down the road,” Prout said.

What other resources are available?

Legal aid clinics, and city and county websites provide specific details about renter protections.

Bay Area Legal Aid, with offices across the region, has a collection of lawyers and translators to communicate the sometimes complicated issues in several languages. Their legal aid line, (800) 551-5554, can provide advice for many common landlord-tenant issues.

The Law Foundation of Silicon Valley provides pro bono advice for Santa Clara County residents. It also offers multilingual services and a housing hotline, (408) 280-2424, for worried residents.

Several landlord associations offer guidance for property owners on reaching tenants and arranging repayment schedules. CAA regularly updates a list of local tenant protections.

It’s also important to keep up with the news. State lawmakers have proposed several measures to help renters, who make up 45 percent of Californians. One bill would enact a broad ban on evictions and foreclosures throughout the emergency, allow courts to set up repayment schedules, and in certain circumstances give tenants through March 2021 to pay back rent.

Property owners have lobbied for rent grants to help tenants, as well as property tax deferments and credits for landlords.

Other cities and counties have been adopting and updating policies as the pandemic has caused more unemployment and economic stress.  “These are crazy times,” said Prout. “I don’t really look more than an hour or two into the future.”

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Article source: https://www.mercurynews.com/coronavirus-qa-for-bay-area-renters-landlords