How Has The Coronavirus Impacted San Diego's Housing Market?

Speaker 1: 00:00 Spring is usually a busy time in the real estate market. And this year was initially shaping up to be a Bonanza for home sales in San Diego. But as we're all now hunkering down at home, how is spring turning out for the housing market? What impact will depend on AMIC have on the price of housing in San Diego in the immediate term and in the longterm here to give us a glimpse of what's happening in the real estate market is Phil Molnar real estate reporter for the San Diego union Tribune. Thanks for joining us, Phil. Speaker 2: 00:27 Yeah, thanks for having me. Elson Speaker 1: 00:29 so go ahead and describe how the housing market in San Diego was shaping up in January before all this started and how the pandemic and the quarantine have affected it. Speaker 2: 00:39 So it seemed like in the beginning of this year that the home price would just keep rising and nothing could stop it. Um, as of February, our median had reached by 187,000. So, I mean, looking at the beginning of the year, I was starting to bet that we were going to hit 600,000 median home price by the end of the year. Um, at the end of last year I was talking to a lot of economists every month and say, ah, you know, I think we've hit some affordability wall. I don't think the home price is going to keep going up. But month after month, the home price kept rising and it was really spurred on by strong job growth, low unemployment rate, and of course crazy low mortgage rates. So the market was doing really, really good at the beginning of the year. Speaker 1: 01:25 Then what happened? Speaker 2: 01:27 So then the Corona virus hit and we have seen things change quite a bit. Um, so for instance, uh, as of about the last, last month, 28 days, uh, 12% of all homes that had been on the market in San Diego have been taken off. And that compares to about 9% nationally. So a lot of what's going on there. I've been talking to real estate agents and the big thing is a lot of the home sellers just want to take the home off the market right now. It's not gonna look good if it's been sitting there for a long time. And in some cases real estate agents are actually [inaudible] telling their clients, Hey, you might want to take the home off. Um, we've also seen the number of pending sales. This is about in the last two weeks, but the number of pending sales is down about 27% year over year. Speaker 2: 02:21 So we've seen a real slow down going on. We don't have home price numbers yet for March, but we know from a lot of the studies, just some sort of simple things. Like you can see that Google searches are down for San Diego homes and I've been calling, I write about a story a day. So I call real estate agents almost every day. Say, Hey, what's going on? I've got a whole list of ones that I like to harass and you know, the real estate agents just keep telling me story after story about people backing out because of the Corona virus and one of the reasons is they might've had a lot of money in the stock market and even though they're not pulling their money out just right now or something like that, they're just worried about their future investments so they don't want to be part of it. Um, there are people that have lost jobs, but in the San Diego market, a lot of the people that had non essential jobs weren't really in the homework in any ways. But there a small percentage there. I haven't heard from anyone yet. This is interesting enough, I thought there might be some people backing out of trying to buy a home because they're afraid they might die. But I have not run into that yet. Speaker 1: 03:32 It's more likely they're wondering about whether it'll prove to be a good investment in the long term. And I know Phil, that you spoke to a number of one informed leaders in San Diego about whether they think that this will lower or raise prices in the long run. What did they tell you? Speaker 2: 03:47 Yeah, so the majority of people said that they thought it would be home prices would be lower by the end of the year and they point to just this huge economic shock on San Diego County. And it's just, it's hard to, there's like a lot of Domino's. Like first you might just see the restaurant workers aren't buying homes and you might see yourself, Oh well you know, those restaurant workers were really in the market to buy a super overpriced, the Enneagram house. But you know, there's people that supply them and there's people that, you know, all tied to different industries that kind of go together. There are still a vocal majority of analysts out there that think there are so few homes in San Diego for so many people that want them, that even this pandemic will not lower prices. But we'll have to wait and see because it's, it's been a tough thing to ask people as, as the weeks and months have gone by. I've asked the questions and I've seen the answers change and then they start to change more towards that. Home prices will be lower by the end of the year. However, I would not expect a major drop in prices. The end like we saw in 2000 2008 around then 2007 just because, um, the last recession was sort of built upon the home market. The home market basically took down the economy, whereas this time it's just sort of everything. So I guess we'll was after to wait. See, Speaker 1: 05:11 on the other hand, the federal stimulus payment of $1,200 won't go far in San Diego's real estate market for people who have got rent or mortgage to pay. Speaker 2: 05:20 I did a story recently that, you know, when gang busters, that was about a San Diego landlord just telling all of his tenants, do you have no excuse not to pay rent? He put it in the body of an email. So we have it. And you know, he was citing the federal stimulus money and the federal stimulus on employment, but even at the apartment building that he had sent it to, I think the average rent there was around 1800 a month, but the stimulus package is $1,200. So yeah, it's not, it's, it's tough to live in San Diego. And sure the federal several was money is going to help a lot. A lot of people, it's just not going to go as far easier. Speaker 1: 06:00 And Phil, I wanted to ask you, do you know what, uh, overall the banks are doing to help people who currently own homes, uh, keep up with their mortgages? Is, is there an interest in the banks to prevent another rave or foreclosures? Speaker 2: 06:14 Right. Yeah. Well, I mean, even if they aren't as interested, I think they would rather have the person stay in their home than do a foreclosure just because of the added work. But under the cares act, which was passed, um, I guess about two weeks ago now by the federal government, it actually blocks a lender or a loan servicer from foreclosing on you for 60 days. That starving marching team, but almost all of the lenders, I haven't really found too many that are not doing it, but most of them are offering loan forbearance deferment for a period of time. Um, if you, you don't even have to provide documentation, you just need to say, uh, Oh yeah, cause a Corona virus, um, I am not paying my mortgage for the next three months or whatever. Speaker 1: 07:00 But you do have to contact your lender to get that, uh, arrangements in place. Speaker 2: 07:05 God, if you're just sitting back and waiting for it, it's not gonna happen. You got to call your lender. The only bad thing about that, and I think it's going to have to depend on everybody reads it or whatever, but there isn't any sort of uniform payback. Um, some banks are doing something where it's like, okay, so you won't pay for three months. So we'll just tack a little bit on your payment for the next, you know, year or some say you have to pay us back at the end of three months. Give us all that money that we were owed. Um, so it is kind of rough. You've got to pay it back and how you pay it back. Depending on your lender, you might want to ask him about that. Speaker 1: 07:43 Good. Well, thank you for your overview, Phil. Appreciate you giving us some of your insights. Speaker 2: 07:49 Thank you so much for having me. Speaker 1: 07:50 That was Phil Mollner real estate reporter for the San Diego union Tribune.