Coronavirus and Real Estate in LA

Are the days of handshakes and smiles gone forever? My Father taught me that a handshake reflects a person’s character. A firm handshake, eye contact and a genuine smile are some of the tools that have enabled me to succeed in the business world. Coronavirus has impacted everyone in the entire world. Almost every industry has come to a standstill. People are limiting personal contact and touch and ordering online or having groceries delivered to their home. Most are staying “safer at home.” It’s been a surreal experience for us all.

One thing that has come out of this novel Coronavirus pandemic is the realization of how much we appreciate human interaction and going back to old school ways. People are helping each other again, calling, FaceTiming, Zooming, and doing social distance visiting or birthday parades! A wonderful byproduct of this is that our earth is recovering as we all stay in and self-quarantine. With fewer cars on the road and less pollution in general, the land is thriving!

Real estate has historically been a very human interactive industry and COVID-19 has truly impacted things. As a real estate broker, my agents and I don a mask, gloves, booties, and carry hand sanitizer to show properties and leases. We enter the property, turn on lights, open doors, and step outside while our clients look around. Pre-Coronavirus, we would tour the property with our clients while talking up the amenities, design ideas, and its potential. We email the competitive market analysis and property info, arrange virtual and 3D tours trying to keep the interaction to a minimum. No more handshakes and smiles to seal our deals, elbow bumps have temporarily replaced the handshake but despite all of this, we continue to move forward and will get through this together.

Within our offices, the CDC recommends cleaning frequently touched surfaces often and holding virtual versus in person meetings. We are required to fill out a new Coronavirus Addendum and Property Entry Advisory Disclosure before entering properties to ensure all safety precautions are taken. Depending on the requests of clients, we may need to cover the walkways with plastic sheeting, leave lights on, window coverings open, and open cabinets and closets so less surfaces are touched. Open houses are on hold for the time being. Transactions have taken longer in many cases because of the restrictions. Foreign party transactions have also slowed and are taking longer to close.

As the California Association of Realtors explains, “Real estate is considered an essential business because the industry and workers play a critical role in the community by ensuring continuity of functions critical to public health and safety, as well as economic and national security.” Coronavirus has brought about a lot of changes including folks being furloughed, losing jobs, taking temporary positions, changing professions to stay afloat while others are moving in with family, in or out of state even with the Coronavirus relief programs. California had record low unemployment in January, and now we are at the opposite end of that spectrum - worldwide they are anticipating a loss of over 25 million jobs! These certainly are unprecedented times.

Real estate agents and brokers are adapting and meeting the needs of our clients. One aspect of the home design that has become imperative due to Coronavirus is a home office space. We don’t know how long it will take before a vaccine is developed but either way, working remotely looks like it is here to stay. Real estate has had to pivot as have most industries. Prices have been trending down in many parts of the country but in The City of Angels, we continue to have an inventory shortage, so home values have remained fairly steady and bidding wars have ensued occasionally. Combine that with record low-interest rates, and people want to buy! However, mortgage lenders learned from 2008 and are requiring better credit scores and higher down payments making it difficult for people to take advantage of the low-interest rates.

Many families are refinancing and remodeling their homes, planting gardens, and enjoying quality time. Some are utilizing the forbearance periods extended to renters and homeowners, but they need to keep in mind that the lump sum will be due in full unless they are able to wrap it into the end of their loan. Landlords cannot carry out eviction notices until the state of emergency is lifted and even then, tenants can get an additional 60 days before eviction action is taken if they respond to court action. California courts have also banned foreclosures during the emergency and property owners will have 90 days after the orders are lifted before court action can be taken. In 2008 and for the Woolsey Fires, the LA County Assessor’s Office used mass appraisal techniques when so many homes lost their value and they are prepared to do so again if needed starting July 2, 2020. Be aware that you can appeal those mass appraisals if you feel that your house value is lower than their estimate because it will not be an actual estimate.

Real estate saw a 6.2% growth in 2019 according to LA County Assessor Jeffrey Prang. Before March, home prices were strong in LA County, and in the City of Los Angeles, they averaged $817,000. Unfortunately, there has not been enough activity to show a good measure since then. New home construction has taken a hit as well and growth hasn’t been this low since 1984. Building permits have dwindled but not as much as new construction which is a good sign because they are anticipating work to continue albeit at a slower pace. Mortgage applications have reduced over the last two months, but single-family homes are on the move again.  

Amid the crisis, real estate professionals have had to think outside the box to survive these unusual times. It has been anything but business as usual. We are following the CDC and WHO guidelines. Things are slowly reopening with the Governor’s 4 stage plan to ease the stay-at-home orders. I look forward to getting back to the new normal sooner than later which I believe will encompass the resurgence of some old-school ways we reverted to during the pandemic and I am confident that handshakes, eye contact, and genuine smiles will return. In the meantime, stay safe everyone!