Years ago, I worked for a Broker who was fond of reminding his Agents that “the market is only ever revealed when looking at it through a rear-view mirror.” Now with nearly two decades of selling real estate under my belt, that sentiment has never been more true than it was in 2020.
High-end real estate is a winner in an otherwise loser of a year
In a year that delivered a devastating pandemic, a hotly-contested presidential election, spelled bankruptcy for an untold number of small businesses and restaurants, created stock market volatility, set our state on fire (quite literally), sent protestors into the streets to demand social justice, and laid bare the stark discrepancies between the “haves” and “have nots,” high-end Real Estate may have been one of the few winners, which is surprising given that the “Shelter-in-Place” order Governor Newsom decreed on March 3, essentially stopped us dead in our tracks, spring traditionally being a Realtor’s most productive season.
Properties that were set to debut in March and April 2020 couldn’t be painted, couldn’t be staged, couldn’t be photographed and couldn’t be seen in person, and those already on the market, twisted silently in the wind, while nervous Sellers wrung their hands with deep concern. (You weren’t alone.) And when the growing fires that spread across Oregon, Washington, California, Wyoming, and Montana blocked out the sun, made the air tough to breath, and rained ash down upon us, we were forced back inside once again in what felt like Armageddon. To put it mildly, things looked, well . . . rather bleak.
In the words of Scooby-Do,”Ruh Roh.”
However, when government municipalities realized that the only incoming revenue would likely arrive as a result of transfer taxes, Realtors quickly became “essential workers,” followed a few weeks later by our vendors who help prepare, market and move our clients from one property to the next. Consequently, motivated Buyers could, once again, view homes in person, albeit with heavy restrictions in place.
In short, we were back in business and business BOOMED!
Those who were in an economic position to make adjustments to the mandated quarantine quickly moved into action and set about making meaningful changes that often meant larger houses that provided home offices, classrooms, and yards to accommodate “social distancing” and kids at play. City dwellers moved to Oakland, and Oakland residents migrated through the tunnel to Lafayette, Marin, Tahoe, and environs much further afield. . . .
Additionally, second/investment homes enjoyed an unexpected uptick as international travel was nearly eliminated altogether. If we weren’t allowed to vacation abroad, we were escaping to Sonoma, St. Helena, Inverness, Sun Valley, Tahoe, or in my case, Fallen Leaf Lake. (Some of you were actually making it to Hawaii or Mexico. Aloha and Ola!)
While “fear” is typically the precursor to a correction, in this case, it actually created a surge in demand. And while housing stock may have been scarce during the first and second quarters, any shortfall was soon made up in the third, and fourth periods as Realtors and clients alike became better at navigating the rules around showings, preparations, and sales, while the stock market came roaring back. (Go figure.)
In spite of recent headlines stating that November sales were down 23% (November sales are always down due to the holidays), per the MLS (Multiple Listing Service), Piedmont recorded 126 sold or pending sales between January 1 and December 31, 2020. By comparison,120 homes sold in the same period in 2019. In other words, Piedmont actually came out ahead.
More revealing, the price of homes in Piedmont went up considerably. While the average sales price in 2019 was approximately $2,430,000; in 2020, the average sales price climbed to approximately $2,787,000, which represented a 14.7% increase in home sales prices for the calendar year (“average” being a relative concept), all while an invisible and virulent virus raged on (and still does).
What’s likely to happen in 2021? Your guess is as good as mine.
Per the Feds, interest rates are guaranteed to stay historically low at least through 2021, demand is likely to remain high, and the Bay Area as a whole, should continue to attract a highly-skilled, well-paid, and educated group of Buyers – many employed in the tech industry – which tends to keep our Bay Area market more robust. Moreover, the passage of Proposition 19, set to go into effect April 1, 2021 makes it possible for those over 55 to take their lower tax base with them anywhere in the state of California, which should potentially free up some much-needed inventory. In short, if you are thinking of selling, now is a great time to do so.
Unfortunately, it’s tougher news for Buyers, who found themselves in heavy competition throughout 2020 and often came up on the losing end. In hindsight, those who bought in the first quarter bested the marketplace, while those who prevailed at all, counted themselves lucky.
Will the market remain competitive?
If “Supply & Demand” are the ONLY factors that count, 2021 should prove equally dynamic.
Still, at some point, I gotta believe that Americans will need to “pay the Piper” for the heavy debts incurred during the time of Covid (we’re not done yet racking up the TRILLIONS in costs). With record-breaking unemployment, a high number of mortgages and rents in arrears, foreclosures gearing up, Coronavirus still very much at play, and a sea of “unknowns” on the horizon, wouldn’t it be reasonable to assume that the status quo will shift in the not-too-distant future? It should. (Full disclosure, I’m not an economist, financial planner, or a fortune teller, so this is one Realtor’s opinion only.)
That being said, Covid-19 didn’t affect everyone the same. In fact, buoyed by my new partnership with Sarah Abel, our team had its best year ever – as did COMPASS – now 19,000 Agents strong. However, I’m acutely aware that not everyone fared as well. While the Coronavirus didn’t discriminate based on class, as is too often the case, those in the upper tier, while certainly inconvenienced, had choices that those in the bread lines, unemployment lines, and on the front lines did not.
So while we seek to make sense of 2020 (Is that even possible?) here’s to 2021: to widespread Coronavirus vaccinations, to job growth, to expanded healthcare, to unrestricted travel, to school openings, to government-sponsored daycare, to team sports, to movie theaters, to indoor dining, to social gatherings, to mental health, to greater equity, to family holidays, to joyful celebrations, to tearful reunions, to hugs and kisses, to a new normal, to enough food on the table, to banding together, to decency, kindness and civility, and to what lies ahead. I’m relieved to see 2020 in the rearview mirror. Perhaps the aftermath of 2020 presents a chance to finally get it right.
Here’s to new beginnings. (We’ve earned them the hard way.)Happy New Year!
How can we help you?
Julie Gardner & Sarah Abel | Compass Realty
Not just Realtors, but consultants in all things house and home, we’re here to educate, explore, examine and refer . . . In short, you may count on us to take care of your home as if it were our own and anyone who knows us, knows we take pretty darn good care of our homes.