Mark McLaughlin is the president of San Francisco-based real estate company Compass California, and Selma Hepp is the Deputy Chief Economist at Corelogic, both recently spoke with the press about the current state of California’s real estate market and why it’s seeing such an unexpected curve in sales.
According to McLaughlin, the recent “surge” in home buying that California is experiencing is due to three main variables. The delay of the traditional spring home-buying market, the Covid-19 pandemic inspiring investors to search for larger properties to quarantine in, and record low interest rates all across the country.
The combination of these three varying factors has created a “velocity in the market we have not seen since 2006, pre-Great recession.”
According to Hepp, in August California saw a 15% increase in year-over-year sales activity, and while she believes that activity will still be down for the year overall due to the current economic crisis, it will still be a “solid year in sales and prices.” Inventory in California has been down by 50% which has an obvious impact on sales.
The major difference that’s fueling the current demand, despite the lack of supply, is the fact that mortgage rates are so low and sellers have been spending their time in quarantine making changes to their homes that better fit the stay-at-home lifestyle we’ve all adopted throughout the past six months.
“I would say home buyers have a unique opportunity to lock in the record lowest mortgage rates which will help offset some of the affordability challenges seen in the last few years.”
Both experts also have mixed feelings on the November elections impact on the future of the real estate market. McLaughlin believes that another round of federally funded stimulus checks need to be distributed to Americans for the economy in general. These stimulus payments also helped individuals pay their rents and mortgages, so without them, the beginning of the 2021 market year could see a major decline in housing payments all across the country.
Hepp on the other hand isn’t as convinced the election will have an impact on the market, as in general she’s seen a slowdown in transactions before any election season. She claims that with the beginning of every year after a November election, the market sees a new surge in purchases, so she’s still projecting that will occur in California.
“Homebuyers have a possibility to expand their search geographically and entertain areas that they haven’t thought of in the past. These are unique breaks that buyers in the past may have not had.”
When it comes to giving advice to homebuyers, both believe that prospective buyers should focus on the feeling of “home” more than anything else. Be conservative when it comes to spending, as the economy has proven to be unpredictable, however, real estate is almost always worth the investment overtime, so if you’re in a position to make the sale, go for it.
Eric Mastrota is a Contributing Editor at The National Digest based in New York. A graduate of SUNY New Paltz, he reports on world news, culture, and lifestyle. You can reach him at email@example.com.