MARTI KILBY,  CRS


Direct: 619-846-9249 |

Buy, Sell or Wait it Out?


A month ago, I described the San Diego real estate market as paralyzed. Today, as we all adjust to the “new norm”, we are beginning to see some signs of life and increased activity among both buyers and sellers which has led many brokers to be cautiously optimistic about the summer buying season.


Fears for personal safety and contracting or spreading the virus are of course at the top of the list for both buyers and sellers.  The real estate industry has responded in a number of ways including encouraging virtual open house tours and guidelines for social distancing.  There are no traditional open houses and agents and buyers are wearing masks and disposable gloves if physically touring a home.  The California Association of Realtors has additionally developed several Coronavirus disclosures and addendum that reduce potential liability issues for all parties.


On the buyer side, interest rates as low as 3.23% for a 30-year fixed mortgage are a huge incentive, allowing the purchase of more home for less money. Couple those low rates with low inventory and fewer people purchasing and buyers today are well positioned to get a good deal on a home purchase.  In other words, it’s a great time to buy but economic concerns have put buying on hold for many.


The seller side has changed considerably.  Before COVID19 a well-priced home in a desirable San Diego county neighborhood sold in a few days.  Now, with a much smaller pool of buyers and more constraints on showings market time is tending to be longer and sellers are understandably nervous about people coming into their home, or the efficacy of a virtual open house.  Despite the fact that closed sales were up the week ending May 1 for the first time in six weeks, many sellers have taken their home off the market and are going to “wait and see”. 


So should you buy or sell now, or wait? In my humble opinion, I’m afraid that by fall we are going to see a significant down turn in the real estate market on both the buyer and seller sides.  Here is why:


  • Many experts believe that we are likely to see a second significant wave of Coronavirus cases come fall forcing additional stay at home orders, the effect of which will likely put any forward economic motion in reverse.  As a result we might see job loss and unemployment hit staggering numbers, at which point most families will have eaten through any savings or retirement accounts and government loans and stimulus payments will have likely dried up. If money is scarce, people are not buying homes thus reducing demand and prices.


  • Lenders are already tightening the mortgage qualification standards.  FICO score requirements are being raised as are the requirements for having larger cash reserves and down payments.  Lenders are also digging deeper for more comprehensive information regarding the probability of one’s continued employment, making it increasingly difficult for the self-employed to get a loan. These factors could significantly lower the number of people who can qualify for a mortgage thus reducing the buyer pool.


  • Reduced income has already forced 3.8 million homeowners to seek forbearance agreements with their mortgage lenders. If we do indeed see another spike in Coronavirus cases by fall and continued high unemployment, many borrowers may be unable to fulfill their repayment obligations which could trigger a huge spike in short sales, and ultimately foreclosures. This is where home values could start to decrease significantly.


So should you buy or sell now, or wait?  I’m not an economist and everyone’s situation is different, but in my opinion if you are thinking of buying or selling I would do it now.  I think we have a small window here in San Diego where we still have demand and housing inventory is low which is good for sellers, and qualifying for a loan is still possible for most buyers.


Hopefully, I am wrong about the fall scenario I’ve outlined and maybe a strong selling season in the next two months will bolster the San Diego housing market.  But in any case, by fall I am pretty certain home prices will have dropped somewhat and it will be more difficult to get financing. Thus sellers will likely sell for more now and have a larger pool of buyers. For buyers, although prices might be lower 5 months from now, it may not be possible to qualify for a loan and we do not know if interest rates will be as tantalizingly low.  These factors may indicate that a “wait it out” strategy for buying or selling could mean a heck of a lot longer wait than anticipated, pushing well into 2021 or beyond.


Buy, sell or wait, whatever your decision, please stay well, stay home, and let me know if there is any way I can help.

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