As we come to the close of one of the biggest transitional years since 2008, 2020 will leave its mark in the history books for monumental change and shifts. Since the pandemic was announced in March and the actions that were taken to slow the spread of Covid 19, lives began to be altered in ways no one could see coming.
From the shelter in place and work at home orders as well as businesses that came to a screeching halt, everyone’s life began to change.
The home became a primary focus as people were required to stay there as we made our way through the first few months of the pandemic. Families were put together for long periods of time along with those working no longer required to go into an office. The way we had been living had changed overnight. As this began to become our new reality, many people started taking a closer look at their lives, their homes and really giving conscious thought to what they had and what they wanted to change.
In many ways, 2020 has caused an enormous paradigm shift
As we headed into the summer months and some of the restrictions were being eased up on, we saw a huge influx of people leaving the large metropolitan areas, i.e., San Francisco, Los Angeles and moving to areas more conducive to the lifestyle that they now were seeking. No longer being required to be in these large cities gave people pause to really think about the lifestyle they wanted for themselves. On the whole, we have seen people move all over California or out of the state, each seeking what they really wanted.
Where We Are Now
With the housing market taking off once again early summer, coupled with the historically low interest rates, home buying kept its pace right up to the beginning of the holidays. Though the rush of buying from buyers out of San Francisco has subsided, the listings hitting the market here in Sonoma County keep coming. With the average days on market running around 40 as of November, this market is healthy.
The quickest sales are those homes priced at $650,000 or lower, many times going into contract within the first 2 weeks of hitting the market.
For homes that are $800,000 and higher, the pricing needs to be aggressive, especially as more listings are going to come on the market the first two weeks of January. New construction builds are still commanding attention from home buyers and will be the competition for any higher priced homes.
The average sales price is running at $679,000 which is up 9.6% from 2019.
This is the county average overall, but the leaders of higher median prices are still areas like Healdsburg, Glen Ellen, Penngrove, Sebastopol and Sea Ranch all running close to $1,000,000 and over.
The San Francisco Market – After The Movement
According two the news, it would appear that San Francisco and other major metropolitan cities nationally were taking a financial real estate bath, due to Covid 19. Though many people did migrate from major cities, San Francisco included, the real estate market actually improved. According to JK Dineen with the San Francisco Chronicle, sales for single family homes actually rose in price from $1.57 million to $1.66 million. Part of the drive of this increase was the flood of condos that hit the market, pushing the condo listing total to over 10 months of inventory. To keep this in perspective, during the 2008 crisis, the housing inventory averaged 8 months, meaning it takes 8 months to sell.
The San Francisco rental market is what took the biggest hit…with rental declines of 50% or more
Though the flood of condos on the market helped drive the sales of single family residences in San Francisco, it is noteworthy to mention that the luxury sales market (those homes over $2.5 million) rose over 28% from 2019. San Francisco has long had its own real estate market rhythm, but also is an indicator for the rest of the state as far as movement.
How 2021 is Opening Up
2021 will be opening with some heat. Listings are being held until the first week in January and the inventory should see a generous increase. This will add to the competition of homes on the market. With new construction leading, competing homes need to be aggressively priced to make the sale. The inventory of $1,000,000 plus listings is growing and continues to solicit buyers from San Francisco and the South Bay.
When it comes to the price of dirt, its a different story
There are over 138 active listings on the market currently for lots in Sonoma County. Most of these lots are burn lots from the Tubbs fire of 2017. With the average days on market running from 90 days to over 365, it is no surprise these aren’t moving.
The cost of construction has risen to over 25 – 45%
With the cost increase, spec builders have less margin for profit coupled with the pivotal year we have seen and speculation about what 2021 will bring. In order for these dirt lots to move, they will need to have price improvements to make them more attractive to prospective buyers. It all comes down to money and making a solid investment.
It is very hard to speculate how the end of the moratorium on evictions and foreclosures will affect the market
This area of real estate in many ways will be driven by specific areas of California. This moratorium does come to an end on December 30, 2020 unless they initiate another stay. If this does open up after January 1st, more inventory could possibly hit the market, adjusting the real estate market once again. All of this is speculation at this point as nobody has the exact figures area by area.
As we head into 2021 in the first few months, we should still see low interest rates, which will continue to help fuel movement. This, coupled with this past year of bringing life choices into a more clear focus for many, should create another pivotal year for real estate. One of continued movement and change.
The most important thing anyone could do is to figure out what they want and how to “Live their best life” moving forward into the new year.