"So I know you don't have a crystal ball," Monty said, "but if you had to guess, what do you think is going to happen with the market? (He meant housing, not stock; I don't pretend to understand what's going on with the stock market, or why!?!)
Monty Stott, a gifted structural engineer, is my first line of defense whenever I need an expert opinion on a home's foundation. We met on Monday at a historic Victorian in Piedmont and like many Bay Area homeowners, he wondered what the future of Real Estate is going to look like in the coming months? (The foundation got mixed reviews.)
While it's true I can't read the future, here's what I've culled from several reputable sources (and no, this is not "fake news" . . .)
As my COMPASS manager, Jeff Samuels, said at last Tuesday morning's virtual meeting when the topic of "What lies ahead?" came up: "If I walk into the kitchen and you've got a kaiser roll, slice ham, Swiss cheese, and mustard out on the cutting board, I'm going to assume you're making a sandwich." And then he added, " and while it might be true that you could be planning on doing something else, it's probably a pretty good guess." (I prefer my sandwiches on bagels, but I get your point.)
Whether your particular sandwich is ham & cheese, a BLT, or my personal fave, the humble PB&J, the upshot is that the market could look incredibly different a year from now. With the clear understanding that I am NOT an economist (nor do I play one on TV), it seems inevitable that the growing deficit will need to be curtailed, lenders will begin to foreclose, job losses may morph into relocations, underwater homeowners will be forced to sell, and others may choose to "get out of Dodge" just because they have the wherewithal to wait it out somewhere safer (like New Zealand). Consequently, the supply & demand equation could flip entirely on its head, meaning home values would very likely correct should such an event occur.
Or you could just be slinging cheese at the walls . . . .
But it's not all bad news. Here's what's keeping our bread buttered thus far: banks are lending, interest rates are historically low, demand still outpaces supply by a fair margin, California's housing stock is woefully inadequate, single-family home sales soared last month, and the stock market has not only rallied, but has continued to climb; all valid reasons why our real estate market has remained strong, especially here in the East Bay, AND we're not alone. Marin, Sonoma, the Peninsula, Sacramento, and many other areas are enjoying increased values and robust sales across the board. (Please keep in mind that volume is still down overall). So while condo prices in San Francisco may be softening, homes - especially those with larger yards - are experiencing competitive bidding wars.
Still, despite gathering storm clouds, for those 160 million Americans still gainfully employed, the concept of "home" has never been more important, both physically and emotionally. Meanwhile, vacation properties are being swooped up in record numbers. (Cliff and I released the final contingency on the Fallen Leaf cabin yesterday.) Put another way, when it comes to homes, low interest rates have trumped Covid concerns.
Is that likely to change?
Your guess is as good as mine, but doesn't it stand to reason that at some point, the nation will need to pay for that GINORMOUS sub sandwich we've all been consuming!?!
So this is where it's important to understand that no matter WHAT happens, Real Estate purchases are meant to be long-term holds. If you need a house in today's world and you plan on staying in it for 7-10 years, the ups and downs in the next 2-3 years may very well be irrelevant. However, if you are looking to sell in the not-too-distant future, waiting could be a very costly decision.
Do I know that for sure?
No, I do not, but with a tremendous amount of uncertainty up ahead, worldwide disruption, political unrest, lack of a clear way forward, and no definitive ending in sight, it seems like a sandwich is definitely on the menu. Let's just hope it's not a Po' Boy.
How can I help you?
(BTW, if you'd like a sense of what your home is worth in today's world, we're happy to provide a complimentary market analysis.)
Julie Gardner, has been writing The Perspective for 18 years and has published more than 750 humorous but always informative, essays on life and real estate.