“Overall, yes, the market’s down quite a bit as with everybody else, but there’s still business happening,” says James Dwyer, a real estate agent with Engel
Is now a good time to buy a home in the San Francisco Bay Area even with the covid-19 crisis going on?
For the well prepared home buyer, the COVID-19 situation has cracked open a nice window of opportunity in the notoriously tough and competitive Bay Area real estate market.
Unlike the rest of the country, which are still girding for the impending economic fallout from the COVID-19 lockdowns, the Bay Area is seeing a nice influx of cash pouring in to seek safe harbor in one of the most desirable asset classes in the world while waiting for a tsunami of central bank monetary stimuli to flood on in.
The Bay Area leads the world in the tech industry, which is uniquely well positioned to provide a viable alternative to a global lockdown from COVID-19. Indeed, if it weren’t for local tech companies like Netflix to entertain, Facebook to connect, Zoom to videoconference for work, Google to provide access to information and countless other supportive cloud driven businesses that allow Amazon to supply homebound people, the American economy would be in far, far worst shape from fear, boredom, and occasional panic.
Coming out of COVID-19, the tech businesses can leverage their steady cash flows and low debt servicing costs to crush all conventional competition, which are on life-support with trillions of dollars in Federal aid. Those tech companies will need tons of talent and will remunerate accordingly. Along with massive money printing from the central bank, money will chase high priced Bay Area real estate further into the stratosphere. So, the upside potential is huge.
But, in the meantime, there are many dislocations in the local real estate market that are limiting buyer competition. With the general lockdown, every step of the real estate transaction has been made more challenging. Appraisals, underwriting, and inspections are all taking more time. For the sellers who have the luxury of waiting beyond the typical 21 day close, home prices are already breaching new highs in anticipation of the upside. However, for the sellers who can’t wait, often distressed or remote, they may have to give away the house to well-prepared buyers, often with all cash, who can close quickly. Home prices on such deals are going for 10–20% below market, a massive discount for the Bay Area.
That’s where the opportunity lie. Buyers can get a good deal and sellers can get a quick and large lump sum of cash for whatever required purpose. As the COVID-19 situation drags into late May or June, more such deals will emerge out of necessity.