Post-Covid19 Bay Area Market

[Frederick Kuo]

I am curious as to where all of you think the Bay Area market is going after Shelter in Place is lifted and the COVID-19 crisis starts to wind down? Currently, it is difficult to assess the true impact on the local residential market because many sellers are withholding their properties, showings are limited and many buyers are taking a cautious approach. In addition, with the extension of the shelter in place ordinance, local businesses will be impacted and this will mean increased unemployment for the foreseeable future thus leading to a weakening of buyer demand.

It is hard to see a crash in residential real estate prices mirroring that of the housing crash of 2008 simply because the cause of this crisis is not rooted in the health of our industry but due to a public health crisis. However, if unemployment skyrockets and significant amount of businesses are unable to recover, this will eventually lead to higher defaults on mortgages and increased numbers of foreclosures, all of this will lead to eventual and significant declines in home values in the market.

In my opinion, the one segment of the real estate industry that will be most impacted by this crisis is commercial retail. Since many of the public health concerns surrounding this crisis are associated with the impact of social gathering, that in effect will destroy many brick and mortar retail businesses. It seems as if the forces that were already impacting commercial retail such as automation and online retail, has only been expedited by Covid-19, and many mom and pop restaurants, retail businesses without deep pockets will not survive simply because the crisis for their businesses will not simply end with the lifting of shelter in place, but will only end when the fear of this virus dissipates which may be many months to a year from now when we finally have approved and effective treatments along with a proven vaccine.

In contrast, I would be curious as to what thoughts are on which industry segments will thrive post-Covid19.

[Jenifer Levini]

@Frederick Kuo I’m a real estate lawyer & investor based in Santa Cruz. Here’s what’s happening in this residential market. Google, Facebook, Tesla & other local high tech companies have announced that their employees no longer have to come into their offices. So thousands if not tens of thousands of people are moving from places like Mountain View & San Jose to more beautiful, peaceful & lower density locations within driving distance like Santa Cruz. Last week a house went on the market & received 13 offers the first day. Based on this exodus out of the valley into surrounding areas, I expect that areas like beach towns & wine country will be seeing a boom in residential housing. On the other end, the market for commercial is very soft. Tenants are contacting me trying to get out of leases. Anyone who can come up with creative ways to repurpose office space & retail will have a lot to choose from. I’m really sad to see the death of many great restaurants. I hope something great grows from their ashes.