Traditional Market vs. COVID Reality: August 2020 Spring Market
What does a Traditional Market look like for us
In our last posting, we described the roller coaster ride of Real Estate during the outbreak of the pandemic. I thought it would be instructive for you to have a perspective of our traditional East Bay Real Estate Market.
- January always begins slowly as we all recover from the holiday season. A few homes hit the market in January and receive a lot of attention as they are the first new inventory Buyers have seen for a couple of months.
- If we are going to see a rise in prices, January and February are the months that we see the quantum jump in prices for the year. 2020 began with an approximate 10% increase in the median price.
- Our usual Spring Market, which is our busiest season, usually begins at the end of the fourth quarter of the Super Bowl. No, I'm not kidding.
- Inventory usually begins rising sharply and sales volume continues to increase through April.
- We begin to see a slowdown around the second week of May.
- As we hit June 1, the amount of new inventory and new transactions usually slow dramatically. Kids are out of school, Graduations are occurring, families have their first shot at a family vacation and parents are scrambling to get their children into summer camps.
- We continue through summer with steady inventory and sales with no sharp spikes.
- August is traditionally a slow month at the beginning as families try for one last family vacation.
- Late August sees children back in school, vacation season is over and the Fall Market begins.
- The Fall Market is busier than summer but not nearly as hectic as the springtime.
- Inventory and sales rise through October.
- November usually begins a slowdown in the market. Usually, the market slows dramatically around Thanksgiving and then continues to slow and muddle along through the holiday season to New Year's Day.
Where We Are Now
To say 2020 is an unusual year is truly an understatement.
- For some reason, inventory was very slow to come to market this year. Inventory was significantly down in January and February of this year compared to 2019.
- In February, awareness of the Corona Virus began to set in.
- Inventory began to rise in March with a large number of homes set to come to market mid-March.
- Then the system was shocked by the first Shelter in Place order. Fear and confusion gripped the market. So began the COVID roller coaster.
- As discussed in our previous post, Realtors were able to pivot rapidly and provide all of the necessary services to get homes sold.
- Perception of the world is now fueling a furious Buyer demand that is unprecedented:
- Shared living arrangements for tenants are in decline. Demand for 1 and 2 bedroom rentals are high with larger units becoming vacant.
- Many renters are making the plunge to first-time homeownership wanting more privacy and outdoor space.
- Those living in dense urban areas like San Francisco are seeing the East Bay as a safer alternative than the congestion of the big city.
- Some living in the East Bay perceive more rural areas as a safer alternative. Some are moving to the wine country or to Tahoe.
- Basically, Shelter in Place did not destroy the Real Estate market. It merely delayed it.
- Mid-June became the new mid-February.
- And August truly feels like a usual March-April Spring Market.
- So guess what... Our traditional Spring Market is now here in August.
The Market
Unit Volume Performance
Unit Volume of sales is still down double digits over last year across all of our markets. But Unit Volume has improved dramatically from June, now being down about 26% versus last year.
Inventory Trends
Inventory is still the Key Factor driving this competitive market and multiple offers.
- In May we were down 35% in Active Listings over last year.
- In June we were down only about 25% in Active Listings.
- Through July 31, our major market of Oakland is down only 10% in year to date listings, while Berkeley continues to be the laggard down about 23% in inventory YTD.
Median Price Growth
And the Median Price continues to rise in the very hot market.
- Our entire market is up 3% in Median Price over last year.
- Certain areas are up as much as 13% in price.
Market Outlook
The bottom line is that COVID-19 has caused a huge shift in our Real Estate Market and our lives. We will see what transpires in the coming months, but my best guess is that we will see one big Spring Market that runs from June through November this year. One thing is clear; as digital marketing continues to expand, many of us continue to work remotely and our children turn to remote learning in a Zoom Room rather than the classroom, the first 8 weeks of Shelter in Place advanced the digital transformation of our world by about 5 years according to most experts.
What about my Neighborhood?
As our economy begins to reopen, our offices are now open Monday through Friday 10:00 AM – 4:00 PM, and all of our staff are now back to working full time. You can continue to find us at one of our many virtual open houses every single weekend or reach out anytime, with questions or a quick hello, would love to hear from you!
Stay safe and healthy.
