Market Update - May 2020
Welcome to May! The weather is improving across the city of San Jose, and thankfully, so is the fight gainst COVID-19. But what about our housing market?
Welcome to May! The weather is improving across the city of San Jose, and thankfully, so is the fight gainst COVID-19. But what about our housing market? Are home prices up or down? Is anyone buying or selling real estate while also sheltering in place?
As you know, the coronavirus pandemic is affecting not only our daily lives in unprecedented ways, but also the way in which houses are being purchased and sold. And, yes, homes are still being purchased and sold but it seems that we all have been jolted into a “new normal” of visiting homes digitally and conducting appointments by FaceTime and Zoom. Nonetheless, home buyers in Silicon Valley have proven to be very resilient and have quickly adapted to these new norms...but, the ultimate impact is still yet to be known as prospective home buyers will continue to face many challenges as the shelter in place begins to slowly lift heading into summer.
After a red-hot beginning to 2020 sales prices launched out of the slower months at the end of 2019 boosted by decreasing interest rates and increased purchasing power, not too mention and uptick in local technology stocks. However, as the coronavirus pandemic infiltrated our marketplace we experienced a rapid pause of activity as would be expected under the strict shelter in place mandate issued on March 17th. Through the end of March and into the beginning of April we witnessed a sharp decline in both the number of new pending sales, as well as new listings coming to the market. Restricted activity, growing unease over the direction of the economy, and the threat of the potential spread of COVID-19 resulted in disrupted sales, as home buyers suffered loss of downpayments and loan options, and withdrawn listings as home sellers throught twice about risking exposure to the quickly spreading virus.
It would also seem reasonable to assume that given the circumstances we might begin to see home prices stumble, but so far, contrary to wishful buyer expectations, home prices have proven to hold steady from the rapid increase we had during the first quarter of the year. Tight inventory levels combined with low mortgage rates that boosted home prices have only continued to keep prices afloat as we continued to see homes sell for at or above their asking prices during the month of April.
But the total effect on the market is not clear...we’re still just starting to feel the effects of the coronavirus pandemic on home sales, and we can expect to see a greater impact on sales next month, as new escrows and new listings continue to linger at lower than typical seasonal levels for our spring market. And, although home prices continue to hold steady for now, some good news for prospective homeowners and those homeowners looking to refinance is that 30-year fixed mortgage interest rates have once again hit an all-time low, at 3.23 percent. Added the easing of the shelter in place restrictions, now allowing the touring of occupied homes as well as the return of home staging services and construction, and we may begin to see the semblance of a more normalized market come mid-summer.
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