February was filled with a lot of love for homeowners looking to sell, as home sales and prices increased compared to a year ago.
But the far-reaching effect of the coronavirus pandemic in the past few weeks, from companies closing to 1.6 million employees laid off in the state, will cause the housing market to “deteriorate accordingly in the near term.”
So, February’s solid housing figures are like looking at wedding photos a month later as you file for divorce. It’s just not the same.
‘Housing market is expected to decline precipitously in the coming months’
With that said, February home sales reached an annualized rate of 421,670 units in February, a 6.6% increase compared to a year ago, according to the California Association of Realtors. It was the first time in three months that home sales topped the 400,000 level.
But that figure, how many homes would sell at the current pace over a year, will likely be the high mark for some time, according to real estate officials.
“As the coronavirus pandemic worsens, the housing market is expected to decline precipitously in the coming months,” says CAR president Jeanne Radsick. “Additionally, sales in escrow may be delayed by the closure or limited availability of all the essential services related to a home sale, such as financing, title, escrow, recording or by buyers who may have backed out of a purchase due to coronavirus concerns.”
Home prices soar, but will definitely slump with pandemic
The already few homes available on the market will certainly get worse in the next few months, as homeowners hold off until the risk of coronavirus eases and the governor’s shelter-in-place is lifted. Only homeowners who need to sell will list their homes on the market.
And the listing and sales price will almost certainly drop, an about-face from the 8.5% increase to $580,000 in February from a year ago. Even near-record-low mortgage rates will do little, if anything, to help as consumers worry about their health and jobs in the short term.
“The economic impacts of the coronavirus pandemic are becoming more pronounced as uncertainty continues in the financial markets, consumer spending declines and unemployment insurance claims rise — all factors that impact the housing market,” says Leslie Appleton-Young, senior vice president and chief economist for CAR. “The housing market condition is expected to deteriorate accordingly in the near term, with both sales and prices being downgraded from our original 2020 housing forecast in the coming months.”
February Home Prices Compared to a Year ago
Source: California Association of Realtors