We recently had friends who are in the real estate business over for a socially distant dinner at our place. They have been in business for thirty years buying and selling properties for their hundreds of clients in San Francisco and Sonoma County. They said, in all that time, they have never seen a real estate market quite like this one!
According to these experts, properties are changing hands now more than ever. We wanted to know why. What makes this particular time so busy? Is it because it’s the summertime when most transactions happen anyway? Is it the historically low interest rates? Is it the 3-month moratorium on showing houses that is now at least partially lifted? What they said surprised us.
Up Close and Personal
They think the reason for all the buying and selling is fueled by the long months of shelter in place where home-owners got up real close and personal with their places of residence, some for the first time. It was one thing to use your home for a crash pad and spend most of your time at work and quite another if you are cooped up there for months on end.
But now that they were spending all of their time at home, they began to see the shortcomings of their shelter as a possible long-term “internment.” Suddenly everything that was “wrong” with their home was annoying. Now they wanted to sell and try to do better. They wanted more than a crash pad. They wanted a home they could foresee spending most of their time in.
Online and Outta Here!
The buyers were seeking the same thing, but for many, they were suddenly untethered from the city and the physical location of their employment. Now they were working from home and could live anywhere. Why not move further out to the country? Even if it was not their dream home, they were able to live there at a reduced cost, avoid the congestion and competition, and be close to recreational opportunities.
Stock and Bombs?
The other factor that seems to be at play in real estate today is the realization that our money is at greater risk in the roller coaster stock market. Where will we put it? Why not in a place that improves our life? And why not put it in real estate where we are more likely to get it out or borrow against it if the need occurs?
And who’s going to pay for all the money that got handed out suddenly in an attempt to temporarily prop up the economy? We all going to pay in the form of taxes and inflation. You didn’t really think the government had all those trillions when they were already in the hole? So there goes your savings.
Now you’ve got to find an investment that will inflate along with your money, like residential single family real estate. Then there’s the fact that with rampant inflation just around the corner, there’s never been a better time to go into debt because you will be paying it back with dollars that are worth much less than the dollars you borrowed.
For these reasons and others, buyers and sellers are suddenly motivated to make a change in their domicile. We feel fortunate that we live in a place where we can have a victory garden and see nature all around us. Of course there are the annual power outages, the increasing cost of taxes and maintenance, and don’t forget the climate change driven fires we all contend with. Remember the sayings, “One person’s trash is another person’s treasure,” and “The grass is always greener …” Welcome to the crazy COVID world of real estate!