When a significant portion of society has scarce funds, housing and rent prices are expected to drop. This is what defines a failing economy. So, why is that not the case for the California housing market? CalMatters’ Matt Levin and the Los Angeles Times’ Liam Dillon dissect the topic with Zillow’s Senior Principal Economist Skylar Olsen in their podcast, “Gimme Shelter: The California Housing Crisis Podcast.”
The novel coronavirus, or “COVID-19,” has certainly impacted the health and well-being of many individuals across the globe. This has been the worst economy since the Great Depression although, our CA housing market has shown resilience.
According to Skylar, we’ve faced both the demand and supply shock in light of the pandemic. Demand shock caused by less income, unemployment, inability to perform regular activities, etc. The huge supply shock was generally caused by a lower number of active listings. Builders and developers may be less motivated during this time for two reasons:
They are concerned for their health & safety; and/or
It’s not practical to sell their home right now.
Many may feel it’s not the best time to sell, especially if they’ll need the home itself to comply with Safer at Home orders. Sellers may just need a bit more time and encouragement.
Buyers, however, have seen great improvement over the past few months. With historically low interest rates, many aggressive buyers are out shopping for their forever home. The last time rates were this low was during the Great Recession in 2008. Both then and now the objective is the same: to help boost the economy.
This recession is expected to have a softer bounce-back than the earlier recessions. Let’s face it - many people love living in California. And if they’re not here yet, they’re working hard to get here.
California buyers are innovative. After this pandemic, things certainly aren’t going to be the same. Many of us may have to work from home 3 out of 5 days of the week. These individuals may have to change their environment in order to adapt with the new way of life. This means getting a home with an office or an extra room. Or perhaps a double master for your Gen Z children who have moved back home because of the pandemic. Regardless of the situation, there is always an option available.