Areas that have reopened and faced fewer Covid-19 infections are poised for a speedier, V-shaped recovery.
Photo Credit: Chris Lawton
Confidence is percolating among home sellers in the San Francisco Bay Area, one of the nation’s first hotspots for the coronavirus and now one of the first to see its housing market rebound.
“I have one to three sellers asking me to list their home every day—that is something that has never happened,” said Suzanne Masella, who’s been selling real estate in the greater Oakland area since the 1970s. News that offers are coming in hot has spurred a sudden flurry of sellers to get their homes on the market and fast.
“Sellers are all kind of shocked that the offers are coming in this quickly,” said Ms. Masella, an agent with Redfin. “Everyone expected demand to go nowhere… This is like the most competitive market we’ve ever had, but on steroids.”
Now, she said, “word is getting out that this is the time to sell.”
Housing inventory in every segment nationwide plummeted in March and April as homeowners yanked their listings from the marketplace amid stay-at-home orders due to the coronavirus pandemic that made showings difficult or impossible, or out of concern over the economy. But as regions gradually open up, it appears the nation’s luxury housing segment, including expensive cities and vacation markets, is leading the recovery, according to inventory data from Redfin and analyzed by the Dow Jones Market Data Team. (Mansion Global is a Dow Jones publication)
U.S. housing inventory across more than 375 metro areas continued to decline from around the peak of the national outbreak on April 1 through mid-May, even as many states and regions began relaxing stay-at-home orders and reopening businesses. Total inventory was down more than 4% in the week ending May 16 compared to April 1, indicating that sellers remained reluctant to put homes back up for sale.
But confidence among luxury home sellers has been more resilient, as the inventory of homes asking $1 million or more rose 1% during that same timeframe, according to our analysis.
Northern California’s Market Awakens From the COVID-19 Shutdown
Confidence has been particularly strong in parts of Northern California, including Oakland, Silicon Valley and San Francisco—where most indoor retail, summer camps and outdoor dining will reopen by mid-June. House hunters were able to tour empty properties during most of California’s stay-at-home order in March and April, but authorities expanded that a few weeks ago to include occupied homes, kickstarting activity again, Ms. Masella said.
“A lot of occupied homes that we’d taken off the market, we were able to put them back on,” she said. The burst of activity has even paid off for homes that languished throughout the crisis.
“A lot of the homes that were sitting and not getting a lot of activity are now selling,” she said, adding that her team recently went into contract on a $1.8 million home that was listed early in the year for “just about” its asking price.
In Oakland, supply of $1 million-plus homes rose 37% by mid-May compared to the beginning of April. In San Francisco, million-dollar inventory is up 29% in that timeframe, and in San Jose, in the heart of Silicon Valley, inventory rose 20%. In San Rafael, a metro area on the bay north of San Francisco, luxury supply rose 36%. In all of those areas, supply under $1 million has been slower to bounce back.
Why Listing Numbers Matter
As housing markets begin to recover from the pandemic, home listings will be the first sign of life, said Noah Rosenblatt, founder of Manhattan-based UrbanDigs.
“You’ll see a spike in new listings first, and then three to five weeks later, you’ll see more new contracts signed and closings,” Mr. Rosenblatt said, adding that the battered housing market in New York City, the national epicenter of the outbreak, where roughly 200,000 people have tested positive for the disease, is behind other parts of the country.
But the return of inventory to certain markets, including New York’s Westchester suburb, and suburban parts of New Jersey and Connecticut, indicates sellers are ready to play, he said.
“Before, sellers didn’t want anything to do with the market,” he said. “With re-openings around the corner, people can see the light.”
Photo Credit: Corbin Bell