Real estate market ‘booming,’ say agents
The financial fallout of the coronavirus pandemic has been punishing for almost every sector of the American economy. But at least one category of business is still going gangbusters, way off-the-charts in terms of volume.
“Everybody is looking to refinance or buy,” said Jennifer Brown, a broker with Crosscountry Mortgage. “In my 22 years in the industry I’ve seen booms, but not to this degree, not even close.”
Some of that business is motivated by historically low interest rates, kept low by the Federal Reserve to keep money flowing. Homeowners with interest rates that looked good a few years ago are lining up in droves for the opportunity to do better. One local couple recently traded their 4.5 percent mortgage for one at 2.75 percent with no points, saving $170,000 on the life of the loan. “It was a no-brainer,” Brown said.
But much of the new business is an ancillary effect of the pandemic: urban refugees looking to flee metropolitan areas and trade the buzz of the city for the gentler freedoms of country living.
“They’re coming primarily from the San Francisco Bay Area and looking to move out of metropolitan areas. They want more space. They want to spread out, as more and more people find themselves working from home,” Brown said.
“There is clearly a strong pool of buyers coming from the cities looking for space both inside and out,” said Theresa Pardini, a Compass real estate agent. “Everybody wants more space now that they’ve been quarantined. Young people from San Francisco that can work remotely are pulling out of their rentals and coming up. And older folks are likewise looking to spread out.”
Pardini said that the while the coronavirus has made some of her buyers eager to leave dense population centers, many are equally motivated to find improved work-from-home venues.
Indeed, vast swaths of the economy have pivoted to remote work models, and in the technology sector, the shift may be permanent. "Office centricity is over," Toby Lutke, CEO of Shopify tweeted.
Shopify has plenty of good company, too. Facebook, Square, Google, Apple Microsoft, Amazon and Twitter are just some of the tech companies rethinking their sprawling Silicon Valley campuses, forced into a new business model by COVID-19.
Global Workplace Analytics’ CEO Kate Lister predicts that the country is at the genesis of a “new normal” for business. “Our best estimate is that 25 to 30 percent of the workforce will be working-from-home multiple days a week by the end of 2021,” she wrote on the company website. “The genie is out of the bottle and it’s not likely to go back in.”
That may spell trouble for the commercial real estate market, according to appraiser Jack Hamilton. “There is a lot of uncertainty about long-term effect. We are interviewing brokers about the impact on the market from COVID and indications are that some deals are on hold, especially retail and office, as these markets are hit hard,” he said.
But Sonoma real estate remains attractive to Bay Area expats, Pardini said. “Sonoma still looks like a deal to everybody else,” she said.
With business recently tripled for both Brown and Pardini, could the Valley soon see a dearth of supply? Not likely, at least for the moment, Pardini said. “Springtime is our usual selling season, but COVID has moved it up. I think we’ll see more inventory hit the market soon.”
But where are all the sellers going as they make room for newcomers? Pardini says the answer to that question is complex and varied, but in her 40 years in the industry she’s seen similar migrations. “Disaster always creates change,” she said.
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