Industry experts discuss today’s California real estate market. Compass California President Mark McLaughlin and CoreLogic’s Deputy Chief Economist Selma Hepp answer key questions on the market.
In 2018, McLaughlin led the merger of San-Francisco-based Pacific Union International with Compass establishing Compass California, a leader in market share in California. McLaughlin acquired Pacific Union International in 2009, growing it to a luxury boutique residential real brokerage firm with 2.2 billion in sales volume in 2009 to $14 billion in sales volume in 2019.
Selma Hepp is executive, research & insights and deputy chief economist for CoreLogic. Before joining CoreLogic Hepp was chief economist and vice president of Business Intelligence for Pacific Union International, Inc.
The Bay Area and Los Angeles markets seem to be moving targets, how, would you currently characterize them?
McLaughlin: The whole USA economy and real estate markets are moving targets. A recent survey, we did across the Bay Area and Southern California is the voice of 700 professionals in California. In Northern and Southern California 78% of the agents believe there will be the same or more sellers post stay-in-place. Those numbers go to 73% and 69% of agents who believe there will be the same or fewer buyers.
Selma Hepp: It is a moving target that has come to a standstill. There is very little going on by looking at new listings on the MLS. The closings that were previously scheduled have probably closed. That’s why when you look at year-over-year for March there isn’t a significant decline in sales for that period.
With years of deep industry experience, what are your thoughts on where we will be in two months from now as an industry?
Mark McLaughlin: The question should be two months from the relaxing of stay in place. The conventional Spring market [highest season of the year May – July for new contracts] will come back aggressively post relaxing stay-in-place.
Selma Hepp: The Bay Area has many people already working from home who were not laid off. This allows the market to bounce back quicker than Southern California where you have the entire film and television industry which is at a standstill. I think the California market will be a gradual but steady upward recovery.
What advice do you have for sellers who must sell now?
Mark McLaughlin: Be prepared to a dramatic shift from a sellers’ market to a motivated buyers’ market. The survey results show for properties between $500,000 to $2.9 million that 63% of Northern California Compass agents and 55% of Southern California agents think post stay-in-place pricing will be down 5% to 10%. For properties over $3 million, that number may be down by more than 10 %.
Selma Hepp: Everyone is asking of course what’s going to happen to prices? Once we see updated numbers sellers who need to sell will most likely have to reduce the asking price.
Advice for buyers who must be in the market now?
Mark McLaughlin: Get pre-approved from a very stable lender, might be the best buying opportunity in five years.
Selma Hepp: This is a good opportunity for buyers to come in with not as strong offers as they might have earlier in the year.
As the country’s real estate market continues to deal with the impact of COVID-19, I will be speaking with industry professionals for the latest insights and updates.