Data reveals that the housing market in Southern California carried on despite COVID-19
By Melissa Hazlett
New home sales in the first quarter of 2020 proved strong in California, as buyers lined up to view beautiful home models and builders geared up for a successful Spring selling season. Bidding wars among prospective buyers were cropping up, fueled by lack of supply amidst consistent demand for homes in the highly desirable Golden State.
The Coronavirus undoubtedly took many of us by surprise. Even those of us distantly aware of the virus’ presence abroad couldn’t foresee how much it would impair life in the U.S. once it hit our shores. When it did, subsequent stay-at-home orders across the country led to homebuilding and buying activity slowing toward the end of March, albeit to varying degrees regionally depending on infection levels and government mandates.
In California, many of our state and local representatives understand housing is essential. To be sure, the state’s housing supply is an ongoing concern likely considered by the governor when he decided to allow construction to move forward. Many sites have remained active with precautions in place to reduce exposure risk and keep crew members safe.
Perhaps California is a unique case study, but sales within new home communities in the Southern part of the state – specifically those at Otay Ranch in San Diego County and The Oaks at Portola Hills in Orange County – are still underway. Common drivers of the sale activity are becoming increasingly clear.
Better than ever rates
Mortgage rates have drifted downward and are currently hovering at historic lows. Rates represent an incredible financial incentive to purchase now. While some fringe buyers have indeed exited the market, serious buyers remain and are responding favorably. Mortgage applications have reportedly increased in response to the highly attractive rates.
Southern California’s home inventory is likely to decline further
California’s housing shortage has been an issue for an extended period of time. For many years, demand for homes has far exceeded the number of homes available for purchase and new construction has been unable to keep up. The virus outbreak has slowed progress on some new home construction sites. As we are beginning to emerge from strict COVID-19 stay-at-home rules, a likely result is home options will be increasingly sparse.
Many serious buyers are still in the market
The country has sadly experienced an influx in unemployed and furloughed workers, and in recent weeks, we’ve seen many beginning to get back to work. However, there were many people with secure jobs and income who remained in the market and who were willing and able to take advantage of the incredible finance rates. Some builders were even inclined to consider incentives for these buyers, as a way to entice them further.
Life doesn’t stop
Even in times of uncertainty, life goes on. Some buyers may have been expecting a new baby. Some may have recently welcomed an elder relative into their home to care for or may be new empty nesters. Others may have been seeking an extra room to turn into a professional home office. There are a number of milestones, as well as shifting family configurations, that occur in life. Home and space needs fluctuate in response and many of these variables won’t wait for a virus outbreak to resolve itself. Homes will still be in demand.
Though increased care must be given to limiting buyer and staff exposure and risk, these sales process shifts have proven both doable and effective at keeping new home sales moving forward at these attractive, in-demand communities.
Melissa Hazlett is Vice President of Sales & Marketing for Baldwin & Sons, the Newport Beach & San Diego CA-based family owned builder and developer. The company has built more than 20,000 homes for generations of families across southern California. Visit Baldwin & Sons at www.BaldwinSons.com and the new home communities at www.otayranch.com and www.portolahills-homes.com.