During the first two months of 2020 we enjoyed a steady real estate market, record low unemployment of 3.5%, a stock market that peaked at 29,450 in Februrary and solid consumer confidence. We had more sales in California than we’d seen in over 2 years! Locally, the first two months of the year were meaningfully better than Q1 2019. California’s median price was up 8.5%, year-over-year, due to strong activity in the high end market. And then all that changed. Specifically, it all changed on March 17th, the day the shelter in place was ordered for Monterey County. After this, showing requests and new escrows came to a halt. The vacation and luxury home market are at a near standstill. Now we have historic unemployment, California being one of the hardest hit states, and there are very few outliers, meaning we are truly all in this together.
It’s impossible, actually irresponsible, to provide a forecast on what our near future looks like. It depends on how long the shelter in place will last. And of course, the big concern is the unknown timetable for recovery. This is not akin to the 2008/2009 financial crisis. This is a health crisis, not a housing crisis. There is a before COVID-19 and an after. If you study the recovery models of other natural disasters (i.e. the Spanish Flu of 1918, Hurricane Katrina, SARS, MERS) there is no one pattern for recovery, no single take away.
It’s safe to say the second quarter will see a significant decline. But what will Q3 look like? While the next couple of months are going to be long and slow, I believe that we are going to come out of this not only as better, stronger people, but our local market will fare well. The economy was strong before the pandemic and those fundamentals underline where we should return. When the equity markets are volatile, people turn to real estate as a more stable asset. We’ve always had strong demand from the San Francisco Bay Area and I see that increasing as people may want to leave more populated areas. Add low interest rates and slim inventory levels, and our area is poised for recovery.
Please stay safe and healthy and I look forward to seeing you on the other side.
Click here for Carmel Realty's complete Q1 market report with data for Carmel-by-the-Sea, the greater Carmel area, Pebble Beach, Carmel Valley, Carmel Highlands, Big Sur and the South Coast.
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