Pandemic, low interest rates spur housing market

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Agents say social media, 3D virtual tours are among the ‘new normal’

By Gary Kohatsu

While COVID-19 has greatly impacted daily life in obvious ways, such as the job market, all levels of education, consumerism, religion and entertainment, the real estate market flies a bit under the radar — unless citizens are looking to buy or sell property.

Gardena and South Bay real estate agents shared their views on the state of the housing market during the pandemic and expectations as they approach the last quarter of 2020.

The pandemic lockdown (since mid-March 2020) market in virus lockdown has shown how technology benefits the industry in the era of social distancing.

“Before the pandemic, the real estate market was really strong, it had been a steady and a solid seller’s market for a number of years,” Pablo Arakaki of the Real Estate Group in Torrance, said. “The pandemic lockdown presented some challenges to the market, however, it is still going strong and prices have remained steady for the last months despite the economic impact of COVID-19.”

Mina Semenza of the Ken Nakaoka Company in Gardena adds that home sales have been impacted due to the high demand and low supply.

“Before the pandemic, inventory was low but now inventory is extremely low as listings were canceled and uncertainty leads more homeowners to put their plans on hold,” Semenza said. “Seniors are aging in place more than ever, also adding to low inventory.”

The pandemic has forced the housing industry and its agents to observe new guidelines, both agents say.

“We must comply with industry guidance showing rules and also not allowed to hold open house,” Semenza said. “There are an ever-changing list of required disclosures and protocols to follow for showings. More technology (is utilized).”

Safe-distance regulations present new challenges, Arakaki said.

“The new ‘social distance protocols’ present new regulations when it comes to showing properties, meeting with clients and in general it has made it more difficult to have any face-to-face interactions,” he said. “(Changes would include) some advisory forms that have to be completed before any in-person showings are performed.”

Semenza added that the coronavirus has made home sellers more cautious about how to show their home to potential buyers.

“Sellers are more hesitant to put their homes on the market while living there,” she said. “If a seller needs to sell, we work together using required protocols to help keep everyone safe.”

Arakaki said, “sellers are slowly becoming more understanding of the new situation we live in and allowing us to take the necessary precautions when it comes to listing their property to the public.”

Contemporary work models include much more remote tasking for client interaction. Both Semenza and Arakaki have embraced online platforms in their work process.

“The way people search for homes had been changing even before Covid-19, since the internet offers a much wider range of information regarding properties available for sale,” Arakaki said.

Semenza agrees, saying, ‘Virtual 3-D tours have become standard, making it easier and safer for buyers to preview a property. Things have become more social-media centered.”

Both agents agree that meeting with a client (sellers) in person is becoming less imperative due to current technology.

“When it comes to Real Estate transactions, it is very difficult to perform them 100% remotely, however we rely on remote documents electronic signatures, email and webcast whenever it is possible,” Arakaki said.

Semenza said working almost entirely remotely is familiar to her.

“I work with a higher percentage of sellers, most of the work is done remotely after the initial meeting,” she said. “Documents are digitally signed – texting, emails and phone conversations as well. I have worked with numerous clients who were out of state or international. so working remotely is not new to me.”

The pandemic has interest rates at a record low. This means there more people looking to purchase homes, and others refinancing their homes while in lockdown. Both agents agree that while it is a seller’s market, home inventory must grow for the industry to fully prosper.

“Definitely more people are competing for homes, driving prices up,” Semenza said. “It continues to be a seller’s market with prices increasing over last year. That being said, competition for business is higher due to the supply restriction and that many more South Bay cities have had an overall decline in the number of units hitting the market.”

Semenza added that within the date range (of June to August 2020 vs. June to August 2019) across South Bay cities, median sold prices have increased by a range of .61% to 35.94%, with the exception of the high cost areas of Palos Verdes Estates and El Segundo, which saw its median prices fall 1.8% and 3.64%, she said.

Arakaki is confident both sellers and buyers can prosper in the months to come.

“Many people are taking advantage of (low interest rates) by refinancing their existing mortgages and home buyers to search for homes,” he said. “However, the inventory is still tight, and prices holding strong, keeping the market a seller’s market, which means more competition, higher prices, and I believe the market is still going to be very active on both sides.”

While the virus has forced changes in the real estate field, there are always some positive takeaways.

“(I will continue utilizing) the use of remote e-signing, and the technology to perform remote virtual viewings are going to be the ‘new standard’ even after the lockdown,” Arakaki said.

Semenza says the virtual platforms are likely to be a more standard part of her work process.

“I will continue to utilize professional virtual 3-D tours and photos of my listings, e-signature for documents and less in-person interactions are possible since people will have become accustomed to practically buying a house on line,” she said. “We have the capability today to close on a home as a secure and virtual process. Technology is here to stay. I will continue to provide the best service possible at all times to my clients.”

Araki says the economy will determine if the real estate market will remain strong.

It will all depend on the country’s economic and political outlook,” he said. “This is a (presidential) election year, and I believe the results will define the direction of the global markets and therefore, affecting the real estate markets as well.

“Twenty-twenty one will be a defining year for many businesses in general, including real estate,” Arakaki added.

Semenza says the low interest rates and revived energy could be a key factor in a healthy market heading toward 2021.

“We are seeing high demand, increasing home prices due to considerably less inventory and feel that this will continue through the end of 2020,” she said. “Higher sales are reflecting the pent-up demand that didn’t happen during the traditional spring buying season and historically low interest rates enabling more buyers to qualify for a home.”

She added that the presidential election could play a part in the market.

“We have lost 59% of small businesses and if the pandemic continues we will see an uptick in foreclosures,” she said. “There are also three major propositions on the November ballot that could have lasting implications for the California housing market.

“Our industry is closely monitoring the federal stimulus bills rolling out as it directly impacts real estate agents and their clients who have filed for aid. The Judicial Council of California has also voted to end its statewide moratorium on foreclosures and evictions on Sept.1, which will put more pressure on lawmakers to figure out how to prevent a massive wave of evictions from sweeping across the state. What happens next with legislative and local actions will greatly affect the housing market as well as the overall economy,” she added.

Arakaki has this sound advice to homebuyers and sellers.

“For buyers, one of the main factors before considering a home search is to get the loan process started, since the supply is still very tight, it is very helpful to be ready when the right property goes on the market and the buyers are already prepared to present a complete competitive offer right away,” he said.

“For sellers to meet with the right agent(s), do their homework before listing the property and understand the process timelines, what would be required from them and understand what could be expected during the transaction period.”

Semenza wants her clients to know that she will help find them their “dream home.” And that safety guidelines during the pandemic will be observed.

“Ultimately, helping them decide if the home is a fit. This will help limit the amount of traffic going through the home to only serious buyers who are interested in the house,” she said. “Once an offer is accepted, signing documents can be done with e-signature so you don’t have to meet in person.

Both agents say this is the time for people to sell their homes.

“Now is a great time to sell with historically low interest rates and increasing home prices,” Semenza said.

Arakaki said, “The ‘American Dream’ of owning a home would still be within reach of most hard-working Americans; 2021 will be a defining year for many businesses in general, including real estate.”

 

Mina Semenza, a Realtor-Associate with the Ken Nakaoka Company in Gardena, has been licensed and practicing for 16 years and was

the 2014 Realtor of the Year, South Bay Association of Realtors®. She is actively involved in the community and is the current City Clerk for the city of Gardena.

Pablo Arakaki is a real estate agent with The Real Estate Group in Torrance, where he has worked for more than 5 years and has been in the industry for nearly 10 years. He also owns the Ladybug Asian Grill in Gardena.