I Never Thought This Would Happen…

We’re On Lockdown!

On Monday, it was announced that everyone living in the Bay Area would be quarantined at home. No more gym, restaurants, movies (at the theaters) for the next three weeks, and especially no real estate meetups 😢!

Not being able to go out and get my information from Brokers and other investors meant that my only way to get informed about the market was to read other articles and videos on the news…and boy, it’s been a depressing week.

Crazy Conditions Can Quickly Change Antiquated Practices

Earlier this week, the Santa Clara County Clerk’s office was closed, meaning that properties in escrow couldn’t close! After some mild panic by home sellers, buyers, and agents, some title insurance companies started offering title insurance gap policies (something that I’ve never heard of) that allows you to “close” on the property (without actually closing on it). In the event that you aren’t able to close when the Clerk’s office opens, then you get reimbursed through the policy (title reps, let me know if I’m wrong)

Eventually, the Santa Clara County Clerk’s office started allowing e-recordings, so people didn’t have to actually go in the office to file (where was this when I needed an e-recording last year….).

How’s The Market Doing?

Because of the restrictions, properties that are on the market now are “on hold” that means the DOM (days on market) doesn’t increase for those properties, giving them a fair chance at being sold in the future, without the damage of being a property with a high DOM statistic. For those who don’t know, It looks bad if the DOM on a property is higher than 15 days in the Bay Area, people assume there must be something wrong with it.

Even large iBuyers like Zillow and Redfin are temporarily halting all acquisitions.

The market prices have been surprisingly stable during this time. I believe it’s because the supply and demand have gone down at similar rates. Homeowners don’t want to put their houses on the market at this time (they can’t even host open houses) and not as many buyers want to buy. We still hear of multiple offer situations on good properties, but we’ll see if things change as this quarantine stays in effect.

Mortgage rates were extremely low last week, but have since ticked up again. This is caused by the increased demand for purchases and refinances to take advantage of the low rates. The increased demand means that banks no longer have the staff that are able to handle the massive amounts of applications and increase the rates to get people to back off. Now that we’re in crisis mode, it can be even harder to get a refi from a traditional lender, especially if you need the liquidy now.

This Might Last Longer Than We Think

Many professionals are saying that this pandemic will last longer than our current 3 week mandated shelter-in-place and may continue all the way until Summer! The quarantine is affecting many people, especially those who work in the service industry or in retail. Even some professionals such as dentists aren’t able to service their clients during this time and will have to eat their operating expenses without any revenue or profit. They’ll have to rely on their savings to keep them afloat during this time.

Stay Liquid To Ride Out The Storm

It’s during this time that liquidity becomes extremely important. Having cash-in-hand allows you to pay for your bills as you weather the storm. If you happen to own an investment property with a lot of equity in it that you’d like to draw some cash from, give us a call to see if we can help you with a cash-out-refi with no points.