Sellers—Particularly in the Higher End—Return to Market

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

Texas, Rocky Mountain Markets Seeing Sellers Return

Besides Northern California, luxury inventory has bounced back from the depths of the crisis in parts of Texas and in Colorado’s cities and high-end ski communities—two states that were early to reopen their economies.

Around Boise City, Idaho, a budding luxury second-home destination, inventory of million-dollar homes in the week ending May 16 was up 24% compared to the beginning of April, a sign that affluent sellers are feeling confident again. Idaho’s stay-at-home order expired at the end of April.

Even in the midst of the lockdown, it was the higher-end of the Boise City market where deals persisted, driving the median sale price in April up by more than 16% compared to a year earlier and up 2% from March, according to data from the Boise Regional Realtors.


Meanwhile, the number of million-dollar-plus homes on the market rose 10% or more from the depths of the crisis through mid-May in Dallas and Fort Worth, Texas; Boulder, Colorado; and Salt Lake City, Utah.

Rising demand is helping to encourage sellers in those areas. Home showings in Colorado and Texas recovered swiftly in early May and are back to 2019 levels, according to data from Showingtime.com, which tracks house tours in most U.S. states. In Texas, showings were up 11% In the week ending Thursday compared to last year, according to the website.

Million-dollar-plus homes are leading the supply recovery in Seattle as well. The city was one of the earliest hotspots in the crisis, but inventory of million-dollar listings has increased more than 9% between the weeks ending April 1 and May 16. That’s stronger than the city’s overall market, where inventory had grown about 6% during that time, according to our analysis.

There are, of course, many markets where inventory—and general market activity—remains at very low levels. This is particularly true in areas where the coronavirus has caused the most death and disease and where people are abiding by strict stay-at-home orders. For instance, in Nassau County, New York, where more than 40,000 people have tested positive, million-dollar listings continued to fall throughout April and May.

Million-dollar inventory has also been slow to recover or fallen further in cities around New Jersey and Chicago, regions also hard-hit by the virus.

In addition, the economic toll has been uneven and is affecting the way some housing markets recover.

That divergence is apparent on the West Coast, where the buoyant tech industry helped the housing market rebound in the Bay Area and Seattle, while in Los Angeles, important industries, such as entertainment, have ground to a halt, said Leslie Appleton-Young, vice president and chief economist at the California Association of Realtors.

“The hit to the economy has been felt to a greater extent in Southern California,” she said.

In Some Cities, Low Inventory Persists

Persistently low inventory, whether in Chicago, Florida or downstate New York, could pose a major challenge for home shoppers, which mortgage data shows are coming back in droves.

In Illinois, for example, for-purchase mortgage applications rose 22% in the week ending May 22 compared to the same time last year, according to a weekly survey from the Mortgage Bankers Association (MBA). For-purchase mortgage applications have nearly reached 2019 levels in California, and in Texas, they have surpassed 2019 levels by 20%, according to the latest MBA survey.

“The housing market is one part of the economy that’s showing a V-shaped recovery,” said Joel Kan, an associate vice president at the Mortgage Bankers Association, using an economic metaphor that refers to a rapid rebound. Limited supply, however, could get in the way of that recovery if available homes mismatch with buyers’ budgets, he added.

It makes sense that affluent white-collar workers or affluent home buyers and sellers would be leading the market rebound, Mr. Kan said, since they have, by and large, weathered the crisis better economically.

“A lot of this activity is from buyers who are still pretty-well equipped to get out there and to shop,” he said. “They already had the savings and the plans in place to buy. For them, this was just, ‘let’s hold off and wait to see when the smoke clears.’”

Buyers are also facing a dearth of inventory in Florida, where sellers have been much slower to return. In West Palm Beach, which was under full stay-at-home orders until mid-May, million-dollar inventory continued to fall, even as many agents reported a notable uptick in house hunting.


Drew Backoff, a project manager at Compass Florida who’s marketing Magic Village in Orlando and another residential-resort in Palm Beach County, said the new development Amrit Ocean Resort & Residences on Singer Island saw the most deals since he's been on the project in April, and May is on a similar trajectory.

“The people with the financial means to make a move today are pulling the trigger,” Mr. Backoff said, adding that when new listings do come on the market, “they are getting multiple offers.”

Indeed, for-purchase mortgage applications have jumped in the Sunshine State; last week they were up 13.6% compared to the same time period in 2019, according to MBA data. The question will be if wary sellers can come back in similar numbers.

“A lot of people are still on the sidelines,” Mr. Backoff said. “They’re still looking for some clear path forward.”

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