Chino Hills Covid19 Seller Confidential Market Report (updated 05/01/2020)
5/1/20 4/22/20
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Since we are in unusual times, whenever we see something worth bringing to your attention, we will. As we’ve done for years, we will bring you an honest report, whether we relay great news, or tough ones.
While we are all very aware of the coronavirus situation, we are barely entering the fifth week. It is worth noting to put the market in perspective.
The big picture BEFORE Covid19:
The previous market bottom was the end of 2012 into early 2013. The drop from the highs of 2006-2007 was anywhere from 35% to 45% for single family homes in our city. The next 5.5 to 6 years saw our market on a blistering 50% rise through all of 2017 and into early 2018. Most of 2018 was flat. (Of course, there were the occasional outliers that set ridiculous records – John and I had the privilege of marketing and selling a large proportion of them. But they were the exception, not the rule.)
2019 began a very slow and gentle decline of about 2.5% – a little more for homes priced above $800K, and a bit less for homes under. We were also seeing a further softening of the market into the first quarter of 2020, by another roughly 2%.
Then the virus situation comes about. The best way to describe the current situation is to answer this question: How have things changed?
1. Showings – gone are the lookie-loos. They were never serious anyways, but could give the illusion that there were many people looking to buy. Worth noting is that with the market softening, showing activity had been slowing down for the last year. As we have reminded all our selling clients, even BEFORE covid19, the number of showings will be slower than the previous years.
2. Days on Market – there is really no such thing as an accurate measure of how long it takes for a home to go into escrow. The motivation of any seller significantly determines that. A motivated seller will price their home just above current sold comps in general, while one who has the luxury of not being in a hurry will price much higher accordingly. The former will garner more viewings, the latter will take longer.
BEFORE the virus came, it was already taking some homes, especially anything over $800K, between 60 to 90 days to get an offer. When we factor in the current situation, it will of course take longer than usual. We cannot expect to get normal results at normal prices under very unusual circumstances.
With most people being home, even being on the market for 2 or 3 weeks has felt like 2 or 3 MONTHS to our clients. We understand the feeling you are going through – it is like watching and waiting for multiple layers of oil-based paint dry. While it feels that way, we hope you understand that we have NOT stopped doing what we can under our control – that is the marketing and selling efforts of your home as we have always done.
3. Pricing Strategy– As John & I observe all the moving parts of this changing market, we have been giving this advice: ONLY BECAUSE OF THE VERY LOW LEVELS OF INVENTORY, the buyer who typically puts in very strict price parameters will most probably be forced to cast a wider net and end up seeing that’s listed a BIT HIGHER THAN NORMAL. Of course, we do that prudently, and let the market give feedback. Let the serious buyer write the offer. We can always do a strategic price adjustment later.
As briefly mentioned, it would be unrealistic to expect prices to hold from the highs over a year ago in a declining market, even before coronavirus. But there s a positive…
4. Inventory – over the many cycles of our market, no one can control when it’s strong or weak. But one thing John & I have seen is that inventory levels can be your friend. Had we been in the middle of summer with over 170 homes on the market when the virus hit, that would have been an ugly sight. What is currently gingerly supporting the prices is the fact that inventory is low.
5. Buyers – we have had several escrows, and active buyers back out of escrows and pull our of the market because they have unfortunately lost their jobs. That is one significant factor that has lowered the eligible and qualified buyer pool.
Despite that, we still have a number of qualified buyers, as well as obviously other agents’ clients, who are actively looking to make a purchase. The market had already been tipping into the buyer’s side since last year. It has leaned into it even more with the recent events, but thanks to current low inventory count, there is a fragile support for seller prices that will likely be 6% to 8% below last year’s actual closed prices. Of course, every home is different, and ultimately will be subject to the buyer’s bank’s appraisal, even for cash buyers who are much more careful.
That said, we have been putting homes on the market, and continuing to open escrows – yes, some within a few weeks, but many that have been on the market much longer.
Having been in many conversations throughout these times, it really forces all of us to count our blessings. Above all, beyond the homes and material things, even jobs for some of us, our health and our family are what really counts.
Do continue to take care, stay safe, and we are here for you every step of the way, good market, slow market, virus market, or any other market.
Thank you for the privilege of serving you and your family!
John & Jack
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