Market Observations Post-COVID

21 May Market Observations Post-COVID

The last 2 months have been challenging in different ways for most people. As an appraiser, I’ve had to navigate through the real estate market, analyzing the data in both a pre and post COVID market. In the beginning, it was too difficult to say what, if any, impact the virus would have. After 2 months of data, here are some of my observations.

1. Watch active listings and pending sales. This tells us what the market is “currently” doing, while a sale is a historic event. A percentage of closed sales went into contract before the COVID crisis and may not have be an indicator of the future. Most data I ran for my assignments did not show any significant changes in prices overall when comparing pending sales/active listings vs. closed sales. Volume, days on market, etc. categories may have shown some changes.
2. Confirm if a low sales price is indeed the market or an anomaly. I did observe a couple anomalies on purchases early on with some contract prices far below market trends. I spoke to the agents to determine why. One was due to seller who was honestly uncertain of the COVID impact on the market and wanted to sell asap to move on.  Now if this became the norm and a majority of the comps were selling at this lower price range, that would suggest that the market adjusted and the new market range. But I didn’t observe that.
3. When looking at data from March until May 2020, don’t compare the data in this period to the data from the few months before (ex. Jan-Feb 2020). Go back and compare to the same period in 2019. Real Estate can be seasonal and seeing what impact COVID may have is best to look at the same period the year before especially during this spring period. Overall, many areas showed total volume down due to listings being placed on hold and/or withdrawn/cancelled, but was seemingly offset by a percentage of buyers seemingly sidelined due to shelter in place guidelines.  If we have a shift with more listings and buyers remaining sidelined, then a shift in prices may be more likely.
4. Recently, pending sales are picking up. Over the past month, I’ve seen many markets increase in pending sales. Some buyers may be bargain hunting and looking for a good deal. Other buyers or sellers have just been on the sidelines waiting and comfortable moving forward now. It will be interesting to see if the summer becomes a delayed spring market. This will be something to watch.
5. As we progress back to normalcy, we must remember that data can shift at any given time with a setback in the economy, COVID, and other external factors not yet known. There is a psychology factor as well. We are in new unprecedented times currently and going forward, some of our prior normal will be shifted. As real estate professionals, we have to be willing to adapt in this market.

Happy Memorial Day! I wish everybody a great weekend ahead.

Bryan Lynch
Certified Real Estate Appraiser
Office: 530-878-1688
Bryanclynch@gmail.com
Roseville Office : Auburn Office
www.AdvantageAppraisalsCa.com

Disclaimer: All information deemed reliable but not guaranteed. The information is meant entirely for educational purposes and casual reading only and is NOT intended for any other use.  This information is NOT intended to support an opinion of value for your appraisal needs or any sort of value conclusion for a loan, litigation, tax appeal or other potential real estate or non real estate purpose. This appraiser is NOT a qualified home inspector and any tips are for informative purposes only. If you’d like to obtain and order an appraisal for your specific needs, please contact Bryan at 530-878-1688 for more information.