What changes have you seen in the last month?

Real estate industry experts discuss California’s assets market. I checked in another time with Compass California President Mark McLaughlin and CoreLogic’s Deputy Chief Economist Selma Hepp. The conversation focuses on the Bay Area and Southern California markets.

In 2018, McLaughlin led the merger of San-Francisco-based Pacific Union International with Compass establishing Compass California, a frontrunner in market share in California. Selma Hepp is executive, research & insights, and deputy chief economist for CoreLogic.

What changes have you ever seen within the last month?

Mark McLaughlin: we've got seen a change within the velocity of the market. Not the demand, but the rate, in two other ways. Without "broker's preview tour" or "open houses," showings are linear in nature and wish to be an hour apart. If ten buyers want to determine a home, it literally takes 10 hours. additionally, homes are taking longer to organize for the market. One vendor at a time during a home vs. painters, carpet installers, etc. crawling everywhere one another. We are learning to wait.

Selma Hepp: Obviously, plenty went on within the last month. By mid-April, the market appeared to have bottomed out. then activity picked up as homes began going into contract. In both the Bay area and Southern California, the new listings are primarily within the million and below range. Some higher-priced listings have commenced the market. My numbers show that 40 percent of buyers withdrew offers within the first period of time of April. While 30 percent tried to renegotiate the acquisition price within the last period of time before closing.

What changes are you seeing in how buyers and sellers are reacting to the present market dynamics?

Mark McLaughlin: The demand remains robust. Urban families are searching for yards and suburban properties. Sellers are learning to regulate and make pricing concessions for properties that don't seem to be "dialed in" or in optimal locations with excellent schools.

Selma Hepp: within the past few weeks, buyers are more active. they're expecting price discounts. there's a stand-off within the market where sellers don't seem to be willing to scale back their asking prices.

How would you describe the present market fundamentals?

Mark McLaughlin: I might say cautiously optimistic. The buyer/seller balance is narrowing. The mortgage market is functioning through the first stay-in-place (SIP) issues and also the redemption issues. If SIP is successful, September will likely feel a bit more like what's going to be the new normal.

Selma Hepp: I'm hearing anecdotally that the pent-up demand is robust. what's going to impact the market is are the buyers who were looking before this still within the market? we all know people have lost jobs and seen household budgets reduced. before this, the debt ratio as a percentage of income was at its lowest in 20 years.

Does the Bay Area currently look to recover faster than l. a. area markets?

Mark McLaughlin: it'll all be a function of SIP success and relaxation of stages 1 - 4. The timing of those relaxations will define recoveries. Seventy percent of our professionals in California during a recently completed survey stated that the interrupted Spring season would be postponed and not lost. The months of July -October may be traditional "Spring" like. So, the Bay Area and l. a. will respond similarly in magnitude but may be different in timing due to SIP relaxation schedules.

Selma Hepp: I do believe the Bay Area will recover faster than l. a... More counties are opening sooner around metropolis than within the Los Angles metro area. l. a. also experienced a bigger jump in unemployment.

California's assets market is historically resilient. Let’s see if this downturn is merely temporary.