COVID-19 puts real estate on downward trend

Gilroy faring better than Bay Area, early stats show

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NEW HOMES Work moves forward on the Glen Loma Ranch project on the west side of Gilroy. Photo: Erik Chalhoub

Early indications suggest that the county’s shelter-in-place order has had minimal impact on Gilroy’s real estate industry despite forcing agents to conduct business differently.

Throughout the Bay Area and nationwide, however, the typical beginning of the spring home-shopping season is off to a rough start.

Santa Clara County’s updated shelter-in-place order on March 31 clarified real estate as an essential service. However, it prohibits open houses and instead pushes real estate agents to conduct showings virtually. If a virtual showing is not possible, agents can show a home in person following social distancing protocols, but only two people are allowed, and the property must be vacant.

According to data by the Santa Clara County Association of Realtors, Gilroy saw 35 single-family homes sell in March, which was six homes less than March 2019’s numbers. Gilroy’s 75 active listings in March represented a three percent decrease from the same month last year, according to MLS Listings data.

“While some sellers are reluctant to go into the market, there are definitely still people buying and selling homes,” said Sandy Jamison, president of the SCCAOR. “Life doesn’t simply pause for people even in these unique times.”

While city-specific data for the first two weeks of April is not yet available, Jamison said the number of homes sold in the Bay Area has dropped by 19 percent since March 1 compared to last year, and new listings have dropped 31 percent in the same period.

“We will need to give it some time to understand the full impact that this crisis will have on the real estate market,” she said.

According to Zillow, an online real estate database, the number of new listings nationwide usually grows by 50 percent from March 1 to early April. This year, however, the listings fell by 19 percent over that time.

Newly listed homes were down 27 percent from a year ago during the first week of April.

Virtual home tours increased nationwide by 408 percent from February, according to Zillow’s research.

“With real estate being recently deemed an essential business, Realtors are still able to serve their clients while taking several precautions to stay safe,” Jamison said. “Many agents have adapted to the situation by creating virtual tours of their properties and meeting with clients over video conferencing. It’s reassuring to know that Realtors are still able to serve their clients.”

John Taft of Maxima Realty Group, who conducts most of his real estate transactions in downtown Gilroy, said COVID-19 has “shocked the market and has had an uneven effect” on commercial real estate.

“Inquiries dropped dramatically initially, but we are seeing activity pick up,” he said. “We have had more interest downtown expressed from millennials for leasing and baby boomers for transactions.” 

Many, however, are remaining cautious and are waiting to see how much longer the shelter-in-place order will continue, he added.

The county’s March 24 eviction moratorium for both commercial and residential tenants has led landlords to fear that their tenants won’t pay their rent, according to Taft.

“Landlords would much rather work with a good tenant than throw them out,” he said. “It should not be the landlord’s responsibility to shoulder all the losses. People should not forget they still have mortgage payments, taxes and insurance to pay as well as continuing to pay for routine maintenance and repairs even if they aren’t receiving the rent from the tenant.”

It’s too early to say how much of an impact the eviction moratorium could have.

“So far, most of our tenants have paid their rent, but we have only had one-month experience,” Taft said. “Next month will be much more telling if it is going to become a bigger problem.”

Taft remains hopeful the city’s downtown will bounce back from the pandemic.

“Downtowns are typically very resilient and have always survived shocks to the system, and we believe that we will this time as well,” he said. “We are already planning for the restart of the economy so that we are prepared to move.”

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