The initial impacts of the coronavirus on the residential market are starting to emerge. A drop in listings in recent weeks suggests sellers are hitting the pause button.
Those expecting massive bargains for their dream homes may have to wait, although some deals could be found. Pricing in the luxury market may be buoyed by an already undersupplied market, a trend that’s been building in recent years, brokers suggest.
“There is a lot of market volatility right now, but we still have a shortage of new home inventory, which will help maintain luxury pricing,” said Tim Smith of Coldwell Banker Residential Brokerage.
Still, an impact on pricing is inevitable.
“We have been teetering on historic highs over the past four years, and this will likely bring an adjustment,” Smith said. “We are telling sellers that they need to be incredibly aggressive with their pricing.”
Aggressive Pricing
Orange County’s luxury market was already experiencing a dip in business leading up to the pandemic.
According to Business Journal research, home prices and sales volume for ultra-expensive homes were down in 2019 from the prior two years.
The cumulative sales prices for the top 25 deals in OC fell some 7% from year-ago levels.
Lack of new supply in the ultra-high-end segment was an issue, as well as differing expectations on pricing—sellers want more for their properties than buyers are willing to pay.
Recent market uncertainties will prompt even more skepticism from local buyers in the coming months.
Lee Ann Canaday of Canaday Group & Re/Max Fine Homes has yet to notice any impact on pricing.
“There hasn’t been any softening in the high-end, and I expect that to continue,” Canaday said.
“Inventory of new homes for sale has been incredibly low since the end of last year. As long as supply can’t keep up with demand, pricing will remain high.”
Listings Pulled
A new report from Realtor.com suggests the number of newly listed properties fell 34% in the week ending March 28 when compared with the same period a year ago.
Home-price growth was up 2.5% that week, representing the slowest pace of listing price growth since the website started tracking this data in 2013.
“Locally, we are definitely seeing a number of homes being pulled from the MLS,” Smith said.
He also argued that the buyer pool for the luxury market is more notably insulated, specifically for California coastal markets.
Canaday echoed this, noting that low interest rates and the government stimulus package will serve as boons for the real estate market.
“Real estate is an incredibly safe investment,” she said.
Still, Sales
Smith’s team opened three new escrows for luxury homes, even after the stay-at-home order was issued for the state of California.
“For the deals that we are currently in negotiations, the buyers had not seen the property,” said Smith, adding that his firm is using FaceTime and other video technology to showcase homes.
“We intend to sell many additional homes, even without the ability to show them in person.”
Canaday, meanwhile, is grateful for an investment she made pre-COVID-19.
“I bought a Matterport camera, which enables 3D videos and photography. I now do my weekly open houses virtually,” which reaches about 80,000 digital consumers.
Video Marketing
Utilizing technology for marketing purposes has never been more important for Smith, who is known for investing in creative video productions to show a home.
He helped secure record pricing for a Newport Harbor home last year, in part due to a music video, “Teach Me How to Duffy,” a Newport Beach-themed parody of the 2011 “Teach Me How to Dougie” by Los Angeles-based hip-hop group Cali Swag District.
That video, which cost more than $50,000 to produce, was a “risk that paid off.”
The Balboa Peninsula mansion at 1813 E. Bay Ave. sold for $35 million, the No. 3 highest sale in OC last year.
Coming up with video strategies is now top of mind for Smith.
“People are continuing to think about their dream home, and we want to be in front of every prospective buyer,” he said.
Views for Smith’s website and videos are up tenfold in recent weeks, he said.
