It is tempting to think of the recession in Real Estate as a traditional economic recession; this is a health crisis, not a recession. It will affect the economy more like a natural disaster, such as a Tornado or the Debris Flow.
What happened in Montecito after the Debris Flow was economic distress, but not for everyone. Houses that were damaged had their locations devalued. Nearby undamaged homes suffered a loss of value but only briefly. The real estate market picked up quickly and was even better than before.
Maybe a quick recovery without a strong decline in values sounds hollow to you, with huge numbers of people out of work. Some businesses will fold and these people will be hurt – just like the damaged homes in the Debris Flow – but businesses that do not fail will come back strongly. There are strong economic programs in place to help people maneuver through the next few months.
This is not the climate of the 2006 economy that needed 5 years to recover from the popped bubble. In 2006 – 7, people were borrowing as much as they possibly could and were only saving 3 percent of their income. Currently, household debt is historically low and households are saving 8 percent of their income. Consumers are in much better shape to pull through a brief slump.
People are waiting to put their homes on the market. Across the US, new listings are down 44 percent and they are down by that amount locally. The Santa Barbara Multiple Listing Service shows 21 new pending sales in the first two weeks of April, which will probably be viewed as the worst moment of the cycle. That is half the normal sales – but clearly the market is functioning during a very stressful time.
Protecting both buyers and sellers is the top priority in our current environment. There are stringent safety procedures mandated by the California Association of Realtors when showing a home. Everyone must agree to the protocols in writing or no showing.
Montecito Market Report
One has always had to show the source of funds and loan pre – qualification before writing an offer, in order to show seriousness. The biggest change is that now you must do these before entering a seller’s home. A buyer must also acknowledge that they have seen the virtual tour, inspection reports, and all the photos before a showing can take place.
In 93108, from the ringing of my phone, I can tell that there are a lot of people who currently need a new home. If you wish to sell, there is low inventory and therefore less competition. Qualified buyers are sheltering at home looking at their computer screens, and thinking about the pros and cons of their homes. Some of them would prefer to own a different home – maybe yours would be right for them.
For buyers, low interest rates are enticing. Inventory is low but fewer people are shopping and you might find a motivated seller ready to unload at a price that would make you happy. Most people want to purchase the right home for their family and expect to stay for many years. If you see the right home, then now is the time to move.
The ripple effects of the current health crisis can seem staggering but they also allow us to slow down into awareness, and hopefully, well being. Maybe there are opportunities for you. I am here to help. Call when you need to talk about ‘Home.’
Client Talk…
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