I am a Retired LAPD cop. I did my time and it seemed that we, in my day, were always essential.
During this pandemic, cops, fire personnel, and emergency services are very essential. The Nurses and Doctors and all medical support personnel are essential.
Teachers - they are essential in virtual classrooms.
These days in the Santa Clarita Valley you cannot take a trip to Costco without seeing the FUZZ in the parking lot driving around to keep the peace.
I never minded the name-calling and took it as a right of privilege when I was the law, five-o, pig, pig in a blanket, donut eater and the fuzz.
That is a shame that some people take it upon themselves to do bad things - but I digress.
Real Estate - Essential?
My point has to do whether or not real estate is something that is essential.
I know for those who were in escrow at the time the pandemic was announced and had your home purchase canceled, you probably thought you were either saved by the bell or worse off than you were before.
Some home buyers, definitely in the minority, are viewing their transactions as being canceled as putting them in the best place possible. Even though they may have to stay in an extended stay or with family because they had already canceled where they had been living.
Most homebuyers that we had been working with, for those reasons related to not having a place to stay and other reasons, were exceptionally upset to have their transactions canceled.
The rub was really painful because they had already removed all contingencies - their inspection contingencies and their loan contingency. Because the "lender stopped" the funding, that concerns the loan and they may lose their deposit. In some cases, it had been over $20,000.00.
The true cost of the pandemic can be expensive for a home buyer that was in escrow, depending on what stage in the process they were in.
Transactions that were canceled by the lending entities also affected the home sellers. Maybe they were involved in buying another home where that transaction was "contingent" on them selling their current home to a home buyer that was getting close to closing but lost their $20,000.00 deposit because of the lender canceling the transaction.
Why do lenders cancel?
The same thing happened back in 2007 after the subprime lender collapsed. It was like a house of cards, everything came crashing down.
Some transactions that had been in the process continued, some others were canceled by the lenders.
The lenders mentioned they needed to step back and see how the events unfold before they can continue loaning money.
I don't know what industry you are in, but in most others, there is no "stopping the process" in order to save oneself money or from a potential financial impact.
When we had the fires - the lenders canceled escrows as well. This is because the insurance companies wanted to "take a step back" to see if they were going to continue writing insurance policies on real estate within the same cities and zip codes where the fires persisted.
Then we had the earthquake, Northridge, those had the lenders canceling transactions also - insurance companies, etc.
Canceling - a good thing or a bad thing?
That is going to depend on who you are asking. If you have a home seller that has a home to sell and if that home is getting down to the closing date where funding is imminent and the pandemic has been announced, only to have the transaction fall apart, this seller may have been trying to buy something else that was supposed to close at the same time. Now that transaction will be rendered thwarted.
The seller's deposit on the home they are buying maybe become the property of that home seller. The home buyer for our home seller may forfeit their deposit to our home seller. Maybe our home sellers are buying in another state where the deposit will not be allowed to be kept, but where they can keep their buyers deposit.
So many factors to consider for those who are selling real estate.
For a home buyer, it may be a gift, especially in the coming months real estate starts to hit all-time low prices due to a busting increase in inventory where the market makes a shift from a home seller's market with low inventory to a home buyers market with a ton of real estate for sale.
In addition to a home buyer, could be the worst thing that could possibly happen. Due to the current past few months being the refinance boom in real estate, where most people have been financing, most of those homeowners are not considering selling.
They are going to stay put having just refinanced. Plus in some cases those new loans, those refinance, are going to carry penalities for selling before a certain time frame after the refinance was completed.
This brings me to the current housing inventory. How low is it? Today in the Santa Clarita Valley, as of the date of my Santa Clarita home article, Friday, March 27, 2020, the Santa Clarita Valley has a total of:
Current Status of the Santa Clarita real estate market
Current Active Santa Clarita homes for sale: 319 - includes Single Family Homes, Luxury Homes, Condos and Townhomes
Homes in Santa Clarita which are under contract: 207
Homes in SCV which are in the pending status (under contract not showing): 255
Homes that sold to this point in March 2020 - as of the 27th at 1223pm: 254
Closed homes in February 2020: 268
Closed Santa Clarita homes in January 2020: 185
The homes which are on HOLD do not show: 86
What I see from the current Santa Clarita real estate numbers that I just researched.
We are very low related to homes being on the market for sale in the Santa Clarita Valley.
With the pandemic, it's holding people back from placing their homes on the market until things normalize.
With the pandemic, the home buyers are very active on our SantaClaritaHomeExperts.com website searching for homes and inquiring with questions. Buyers that are Viewing homes for sale, they are not very active "in person".
If the Santa Clarita Valley did not have any other homes listed for sale we'd, at the current sale volume, be close to ZERO listings for sale within the 45 days. That means we have very low inventory.
Remember, the slow down did not happen until this month - in March 2020. The entire real estate market has been refinancing oriented due to the lower interest rates.
Reminder - when refinancing most of those folks are not going to want to turn around and sell. Some cannot turn around and sell without having to pay a penalty. So hence the importance of finding out what you are paying to have your home refinanced and getting future penalties explained in writing. Look out for pre-payment penalties, their amounts and when they are satisfied.
The numbers from April 2020 and May 2020 will truly give us a better understanding of this particular housing market.
Real Estate has never been here before
The reason the market collapsed back in 2006/2007 was because of high prices and the lending industry who were lending money hand over fist with creative loans, Adjustable Rates, Balloon Payments, and affordability within the subprime lending sector.
Like a house of cards the subprime market collapsed starting with New Century Bank - March 2007.
The failure of the real estate market was multi-faceted. There was a severe real estate depression and most housing prices came down to 1/2 of the current values which were held at their highest point.
The low point of housing prices in the foreclosure and short sale market was reached in the Santa Clarita Valley at the end of 2011 and at the beginning of 2012.
If you had a crystal ball - this would have been the right time to go all in.
When the stock market gets stronger real estate is thought about as being in second place.
When the stock market gets hammered, the bond market gets stronger which causes interest rates to lower, stimulating home buying.
The stock market is taking a major hit daily. The interest rates are low. But, people are not working unless they are deemed to be in an "essential field" of employment.
I will keep you posted as the Santa Clarita home expert. I'm Connor MacIvor and I'm glad to be at your service.
When ready, reach out to me and I'll be your real estate consultant and advisor.