Signs of recovery: Stanislaus County housing market appears to be heating up again
When Laura Turner’s husband retired at the end of May, selling their house was the last thing the couple was considering doing, especially during the COVID-19 pandemic.
The virus has affected nearly every facet of public life, and the economy has taken hits across the board, with national unemployment numbers reaching a high in April when they clocked in at 14.7%. As millions of Americans have faced job losses, working from home for the first time and an overloaded health care system, buying or selling a house was not a priority for many.
But Turner and her husband, looking to move to Nevada to be close to family, gave it a shot anyway. Turner said she’d seen a neighbor’s house sell for a good price. Impressed, she and her husband put their home in West Modesto up for sale at the end of the month.
Within eight days, they had received three offers, one of which they ended up accepting.
Turner is not alone. While the housing market in Modesto and Stanislaus County took a hit in late March and April due to COVID-19, real estate agents are already seeing it bounce back, with an increase in for-sale properties in May.
Taide Zamora, a real estate agent with PMZ, said that buyers have been less affected by the pandemic than sellers. While sales went down in March and April, the market is already showing signs of recovery and new growth in May.
“Some of the sellers took their houses off the market (and) the buyers pressed pause, but it really didn’t affect the market,” said Chad Costa, a senior managing broker with REMAX Executive.
In Stanislaus County, pending home sales dipped from 420 in March to 303 in April, according to data from Trendgraphix. In May, the number of pending sales increased to 548, a higher number than most months in 2019. Still, the number of houses on the market is lower than last year, with 525 houses for sale in May and 297 sales.
As the economic effects of COVID-19 continue to affect the county, many are making comparisons to the housing crisis during the 2008 recession. But real estate agents like Costa and Zamora said there are major differences.
The 2008 housing market crash was heavily influenced by subprime and stated income loans, coupled with a lending market that drove up prices and caused many to default on their loans. But this time around, Zamora said, loan qualifications are much more stringent, so the people who do borrow in order to finance a house will be able to make their payments.
When the pandemic hit, he added, many loan borrowers actually faced even stricter guidelines, which he said explains the March to April drop in pending sales. But he said he’s confident the market will recover and continue to grow.
Jordan Levine, deputy chief economist for the California Association of Realtors, also pointed out the differences to the 2008 market.
The current economic crisis is a shock to an otherwise healthy economy, Levine said, so the pandemic’s impact on the market won’t “metastasize some deeper kind of cancers that were lingering under the surface.”
Both Costa and Zamora said the housing market in and around Modesto has also been affected by a lack of new housing. New developments have only begun to increase in the past two years, following a slow local recovery from the 2008 recession.
A sellers’ market in Modesto area
Jeffrey Michael, director of the Center for Business and Policy Research at the University of the Pacific, said in recent years, the housing market in Modesto and Stanislaus County has largely been a sellers’ market because of that lack of inventory.
“As the market gets tighter, the prices get higher,” Michael said. “Prices have to increase to the point where it’s profitable for the builders and then the builders can compete with the existing houses that are for sale.”
Levine said he expects builders to continue to press pause as the lasting economic effects of the pandemic are still up in the air, but he anticipates an increase in development as California moves toward a more long-term recovery.
When California does recover from the pandemic, buyers and sellers may be looking at a different market altogether. With the increase of people working from home, it might no longer be necessary for workers to live in expensive urban hubs like San Francisco. While that may mean fewer commuters, Michael said, it will also mean lower rent prices in the Bay Area itself.
The coronavirus pandemic also has introduced increased safety protocols and guidelines for sanitation and social distancing during viewings and open houses.
Sellers are now encouraged to open doors and turn on light switches in their houses so that potential buyers and real estate agents don’t have to touch handles and fixtures. Meanwhile, some open houses have been canceled and virtual tours are becoming more commonplace.
“There’s still going to be a big learning curve as we figure out how to operate,” Levine said. “The new normal isn’t going to look like the old normal.”
Still, Costa encourages buyers to see a house in person before committing — with the proper protocols in place. Potential buyers are required to sign forms before entering a house stating they’re aware of the risks and not currently ill.
Brian Cortes, who recently purchased a house with his girlfriend, had to follow the precautions when looking at homes to buy. He said that while he had been looking at houses for a few months, he was “afraid that things might be different” due to COVID-19. What he didn’t expect was to start finding more houses in his price range than he’d originally seen when he started looking back in 2019.
Median sale prices for Stanislaus County have stayed fairly steady in the past few months, ranging from $340,000 in March to $350,000 in both April and May. Those numbers represent slight increases from sale prices in 2019.
Across the state, median prices for single-family homes decreased from $606,000 to $588,000 from April to May, compared to nearly $611,000 in May 2019.
In the long term, Levine expects a full market recovery mid- to late 2021, or later in 2022. He said the spike in pending sales from April to May could represent an accelerated catch-up from what was a market-wide “over-correction” to the initial weeks of the pandemic. Still, he said the current low rates and minimal discounting on homes makes for a good market to buy or sell in for those who are able.
Turner agrees.
“I would encourage people not to be hesitant because it really did go smoothly,” she said. “I wouldn’t not sell my home, just because of COVID.”
