March 2020 Market Update

March Madness is upon us (and I’m not just talking basketball)! 
 

As many of you know and felt, the stock market crashed last week, leaving a painful sting in most of our pocketbooks. For the real estate market, however, it triggered an upswing as buyers aim to take advantage of their increased buying power with historically low rates. After the stock market crashed, the Fed announced a huge emergency interest rate reduction to stimulate the economy and counteract the Coronavirus scare. It's the fourth rate cut since the start of 2019 and we now have the lowest rates in 3.5 years. From what I see, the Fed's plan to stimulate is working. There has been a surge of refinances, but also, in terms of purchasing, I have noticed buyers stepping up their motivation to buy in order to lock in these incredibly low rates. Some buyers are again overbidding past the most recent sale price just to win and try to get ahead of the summer market. I know this after getting feedback on homes we lost bids on. Agents are surprised at what their listings end up selling for. It seems as though as long as the payments are the same as what they would be for previously higher rates, buyers are willing to pay more for the property. Appraisals, on the other hand, are telling a different story and pumping the breaks on financed loans.

Right now, I am in the process of renegotiating two contracts for properties that came below appraisal value. In these cases, my clients didn’t even overbid for these properties. In fact, we are in contract for below the asking price. Appraisals are being pretty tight right now. Despite being in contract for below the list price, Appraisal value for these properties came in between $5k to $10k below our offer price. Thank goodness we have our appraisal contingencies in place so we have a chance to renegotiate, but if this happened to a buyer without appraisal contingencies, they would have to fork up the difference in cash.

For us at Hatch Realty Group, it's been particularly busy for us these past two months working with motivated buyers. Our listings are slim pickings right now which, I think, is pretty representative of the market as a whole. Throughout the Bay Area, no matter where our clients are looking, buyers can see all the inventory in their search criteria within 2 showings. New listings pop up on the market each week, but they get taken down and in contract almost just as quickly…especially in areas with good school districts….If you have a property to sell, this is a great time. Buyers are out there in droves willing to pay top dollar to lock in a property right now. If you have a home to sell, please call us. We would love to help! 

Money is so cheap right now. It would be a smart move to buy an investment property. However, the temptation to gamble in the stock market is so strong. What are you going to do? I say, let’s do both.  :)