Real Estate Round-Up: Shelter in place
Last updated 4/17/2020 at 4:22am
It’s now week four, and for better or for worse, we are all “sheltering in place.” I’m sure many of you are wondering why I would say “for better or for worse,” and here is why. Not being a scientist, I have nothing to add to the discussion of the health implications of COVID-19. I, like you, read many articles on the subject and find a diverse perspective within the medical and social sciences community.
The leaders in the U.S., and California, have adopted the “shelter in place” position, in tandem with additional recommendations, like wearing a mask in public, social distancing and washing our hands often and for at least 20 seconds.
Sweden has adopted a “herd approach,” believing that minor exposure to the virus will help people develop their own immunity to fight off the virus. The approaches couldn’t be more different.
California’s approach has shuttered every business that is not considered essential. Real estate has been included in the “essential” business category. Despite being included as “essential,” the impact on real estate has been measurable.
At a time when real estate sales were steadily climbing, the “shutdown,” caused most things to stop and recalibrate. Fallbrook reports 51 detached homes closing escrow in January, building to 62 in February and 65 in March.
March’s number would have been higher, but it was March 19 when Gov. Gavin Newsom ordered the “shelter in place,” which had an immediate effect on many buyers who were in escrow and now found themselves furloughed.
Lenders were not going to provide a mortgage to someone whose employment was in question and began the process of reverifying employment right before funding the purchase loan. It was a very sad time for many buyers who were hopeful to own their first home and suddenly had the rug pulled out from under them, literally days before they thought they would be moving.
So where do we go from here? What is essential and how do we unwind the “shelter in place” mandate? Real estate is finding its way. Buyers who are qualified and motivated, are still buying homes.
There are currently 75 homes in escrow in Fallbrook. Which means, sellers are still selling their homes. Despite the concerns over exposure, many sellers, either due to the necessity or the desire to sell, are taking precautions and moving forward with the process.
There is another side of the story, that is not being discussed, and it is the long-term ramifications of the many businesses that found themselves not categorized as essential.
All those people either own or rent homes and have no source of income. They went from being able to pay their bills to not being able to pay their bills. The mortgage relief package offered by most banks provides them with the ability to not pay their mortgage for up to 90 days; however, with few exceptions, the past due amount must be paid back by the end of the year.
I don’t know about you, but if I missed my mortgage payment for 90 days because I didn’t have an income, I don’t know how I would earn enough when I return to work to not only pay my regular bills but also pay an additional amount to cover the past due months.
A possible result might be an increase in notice of defaults and ultimately foreclosure, which would not be good for the real estate market.
In 2008, when defaults were rampant, Fallbrook homes lost over 60% of their value, on average. That means everyone who owns a home, will be impacted if we don’t get people back to work.
Ask yourself, is it essential for someone to be able to support their family? I think the simple answer is yes. If social distancing and masks are a necessity, then allow businesses to reopen with those guidelines in place.
Fallbrook has already lost two restaurants and three retail stores. That loss may not matter to you, but trust me, it matters to those owners and the people employed in those places.
Restaurants could limit their customers, make sure their employees all wear masks and gloves, disinfect every surface after each use. Small-business owners would be thrilled to have 10 people in their store at the same time.
Having more than one client in their store at a time was a very good day for the independent store owner. They could mandate the social distancing rule, the wearing of masks and provide gloves for their clients.
These types of guidelines are specific. Restaurant owners and independent store owners would be thrilled to have the opportunity to uphold these types of guidelines, if it meant reopening and getting their employees back to work.
If a person were in a high-risk category or have personal concerns over exposure, then they could continue to “shelter in place” until they are comfortable with the exposure levels.
But for the people I mentioned above, their high-risk is losing everything, with the possibility that they may never recover from that loss. Just my thoughts. Have a great week.
Kim Murphy can be reached at [email protected] or (760) 415-9292 or at 130 N. Main Ave., in Fallbrook. Her broker license is #01229921, and she is on the board of directors for the California Association of Realtors.