How COVID-19 Impacted Real Estate in One of the Most Expensive Counties in the U.S.
As COVID-19 and state-mandated restrictions spread across the country last year, housing costs and the real estate market in San Diego, California, have changed drastically.
San Diego real estate agent Brady Sirota said he’s seen a change in property-showing guidelines, housing costs, and an increase in the seller’s market.
Sirota told Scriberr News when the pandemic first hit, “a lot of people were worried that it could create some sort of recession in the housing market and it slowed for about a week or so with not being able to do open houses and showings.”
According to Sirota, people are in the market to buy a home due to low interest rates, but fewer homeowners are willing to sell.
Last March, the San Diego Association of Realtors (SDAR) announced that real estate was deemed an essential business and there would be new guidelines enforced for open house tours
Sirota, who is also a member of SDAR, said one of the short-term effects of the COVID-19 restrictions was that people who were putting their house up for sale did not want to let too many people inside to tour the house.
“After that, it was basically just wear a mask, wear gloves and if you’re in someone else’s house, make sure to use hand sanitizer and don’t touch anything. Then it was business as usual.”
Before seeing a property, potential buyers have to give the listing agent a prequalification and sometimes proof of funds, meaning that the buyer must be approved for a loan before viewinga home.
“I mean, it used to be where, you know, sometimes agents would just hope that the person they’re working with is gonna be able to get a loan, but now it’s like they definitely will have to,” Sirota said.
“So, that’s kind of a positive thing that came out of it,” he said.
Sirota said everyone who sees the home agents are selling is pre-approved and would most likely qualify to buy a house.
Although these new guidelines may limit some homebuyers from seeing a property, the demand for homes is still higher than the supply because of lower interest rates.
Sirota said the increasing demand for homes compared to what is available is the leading cause for increasing home prices.
“Housing prices have gone up, and that’s not really necessarily a direct function of COVID,” Sirota said. “It’s just the fact that the supply has gone way down and the demand to buy a house is still there.”
“Interest rates being low is a huge driver of that,” Sirota added.
The Federal Reserve Policy that was created to stimulate the economy following the 2009 housing market crash allows interest rates to drop much lower.
According to the San Diego Real Estate Hunter, 30-year fixed-rate mortgage rates are at 3.56 percent, the lowest they’ve been since 2016.
Despite the increase in housing costs, the pandemic has not stopped people from buying homes.
Victoria Usgaard bought her first home last May in the San Diego area and followed the new COVID-19 guidelines before viewing any homes.
“Some [house showings] were virtual right, and like wanting to make sure you’re really interested in the property before just letting anyone come in and see it since they weren’t performing open houses,” Usgaard told Scriberr News.
“You would also have to prequalify for a certain amount, and then that pretty much gives you like your range of what you’re allowed to go view.”
At the beginning of the pandemic, many people were unsure about making life decisions like buying a home. However, Usgaard said the pandemic has helped her and her partner find the right house.
“I’ve been looking and something interesting that me and my partner has talked about is that we think we only got this house because of the pandemic,” Usgaard said.
“People were so unsure about what was going to happen with COVID, that I feel like people were kind of scared to buy, so we were kind of able to get our foot in the door.”
The increasing home prices and sales in San Diego, California, won’t be slowing down anytime soon.
Many first-time homebuyers are taking advantage of the lower interest rates but may run into the issue of not enough homes available on the market.