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By Helen Horvath


August 22, 2020 (San Diego) - You might think that amid the pandemic’s economic uncertainties, when many people are unemployed or living on reduced revenues, people would be hesitant to invest in buying a home. Yet real estate experts interviewed by ECM report the opposite – a frenzy of competitive bidding pushing up prices of local homes for sale. While a shortage of inventory is benefitting home sellers, the pandemic pandemonium in San Diego County’s real estate market poses daunting challenges for first-time homebuyers and those with low or moderate incomes.  

In exclusive interviews, ECM discussed the impacts of COVID-19 on San Diego’s housing market with prospective home buyers Juan and Shar and real estate experts Brian McIntosh at Versus Real Estate, Alan Nevin of Xpera Group, and Ron Schoonover at Compass Real Estate. 


Juan and Shar, prospective homebuyers: frustration over rejected bids


Juan and Shar, who asked that their last names not be published, have been searching for a home in San Diego County for over  a year and a half. Daily they search Zillow and the Multiple Listing Service (MLS) for the perfect home. They have an approved loan, a substantial down payment, and most of all, the desire to be homeowners. But they are missing one key ingredient to attaining their dream – a home.  


They make a combined pre-tax income of approximately $115,000 and currently pay $2,400 in monthly rent. They have an exceptional credit score and have been employed by their respective firms for well over 10 years each. Yet, their dream of home ownership is elusive in the current real estate buying market. Shar and Juan are not asking for much; a two-bedroom condo or townhouse with two bathrooms in the College area, La Mesa, or slightly east towards Santee.  They would even accept a fixer that is habitable as a last resort.  


In the past 18 months, Shar and Juan have put in several separate offers for homes.  Each time, their offers have been rejected. They started out bidding slightly under the listed home price, at the advice of their realtor. Then they began bidding at the offering price. Later, they began bidding slightly over the asking price and were still rejected.  Then they went $8,000 over asking price; yet the offer accepted from another bidder was $15,000 over the seller’s asking price – above their price point. They have written letters to the owners to introduce themselves, with no difference in the outcome. Shar and Juan still have not purchased a home and are emotionally drained due to the mental cycles of hope and then disappointment.  


Recently, Shar and Juan received word that there was a townhouse for sale in their price range and they should go immediately to the home to view it. The listing agent was only accepting offers for two hours after the showing. Two families bid; Shar and Juan and another couple who were friends with the listing agent. Shar and Juan went slightly over full asking price and were hopeful.  The next day they were told that the listing agent’s friends had their offer accepted.


What is actually going on in the housing market that prices are so high and the availability of homes so low, even in the middle of a pandemic?


Brian McIntosh, Versus Realty Group: The long-game strategy


Brian McIntosh joined the real estate industry after retiring from the Navy as an F-18 pilot.  He is one of the founders of Versus Realty Group.  He focuses on helping veterans and active duty military members achieve their dreams of home ownership.  


In discussing factors impacting the home buying marketplace,  McIntosh spoke about client experiences and playing the long game in the real estate marketplace.


For example, a client who works for the federal government wanted a single family home with a yard and two bathrooms  in a specific neighborhood. Instead of simply focusing upon one type of home, the young family began examining other types of homes in the marketplace that would meet their needs as a starter home.  They decided that “to purchase a condominium now was no different than renting an apartment, while they saved more money for a home. They stated they would not have equity in the apartment rental unit; it made more sense to buy.” They were able to purchase a beautiful condominium near their preferred school while building equity in their home” according to McIntosh. 


The couple developed a five-year home buying plan that recognized his ability to earn salary increases and promotions which should permit him to eventually purchase his family’s “dream” home over time.  According to McIntosh, the family has already developed equity in their home that aligns with their five-year plan to purchase a single family home.


When asked about changes in the real estate industry and Versus Realty Group as a result of COVID-19, McIntosh responded, “The changes were mostly procedural…We have done more business in the past five months than all of last year… I can’t put my finger on why that is, other than there seems to be a “feeding frenzy” amongst buyers and listings are not sitting on the market, unlike in the past where the listings sat for months and months.”  He continued, “Buyers are beginning to understand it only takes a week or two of shopping to realize that they need to be more aggressive and move quickly in order to obtain the homes that they want…Transactions overall are taking less time.”  


In the past, real estate transactions would be a back and forth process of offer and counteroffer with a longer escrow of up to 40 days, he said. By contrast, now, “what used to take two weeks, or more is now transacted rapidly…put in an offer and 21 days later the transaction is done.” 


COVID-19 impacts and future predictions


“COVID-19 has made buyers more willing to be aggressive and move quickly” when purchasing a home, McIntosh says. “Buyers spend less time in the shopping process that before COVID-19.” 


Agents are able to do more transactions in the COVID-19 era as a result of changes in industry procedures.  Before COVID-19 it would take weeks to prepare a listing for sale.  In the COVID-19 era, listing agents who invest their time and money prior to publishing the home for sale on the MLS, are experiencing rapid turn arounds in home sales. 


McIntosh mentioned that procedurally, agents are realizing that what worked before and was time consuming can be done more efficiently.  He indicated that real estate procedures during COVID-19 will evolve as the market need evolves.


Asked what buyers such as Shar and Jian, who want into the real estate market right now at a lower income bracket and home price point, can do to actually purchase a home, McIntosh noted, “At the lower price points, homebuyers and investors are hypercompetitive.”  His recommendation?  “Hang on a little longer.”  He believes, “What will happen is once the COVID-19 restrictions are removed-- and they will not last forever--at some point life will go back to some semblance of normalcy.  When that does happen, we will see a large ghost inventory of homes come on the market” from those who held back selling due to COVID19 restrictions and concerns.  


He predicts, “These homes (ghost inventory) will gradually hit the marketplace at the same time…More homes will be on the market and give buyers more breathing room to take time to find the right home. Time on the market will go up.  We will see prices level out with a sense of normalcy, allowing buyers to be choosier while making sounder home buying decisions.” 


McIntosh believes that post COVID-19 “sellers will not have the ‘world is my oyster’ kind of thing, where they are currently not being required to fix anything and setting their own terms (for the sale).” He also believes that post COVID-19, sellers will need to be more mailable when selling their home.  


Alan Nevin of Xpera Group: Market conditions still strong despite pandemic


Alan Nevin, director of economic and market research at Xpera Group, researches and compiles the San Diego Association of Realtors quarterly economic report. During our interview, he outlined many factors impacting real estate sales in the San Diego region. “Prior to COVID-19, the market was still very strong, and that trend has continued,” he said. “June was the best sales month so far (2020)…July will match it.“  


In San Diego County most families require a two-person income to afford a home. The median cost of a single-family home is $600,000. According to Nevin, “An entry level buyer can still obtain a condominium unit for $300,000-350,000 in one of the eastern, northeastern, and southern suburban areas.  It may be a converted apartment or a small townhome, but it is available.”  New homes and outliers like the Mission Valley home building project may charge $600,000-$1,000,000 for a condominium or town home with a remarkably high monthly or annual homeowner’s association fee.  


According to Nevin, the irony is that buying in the resale and new home markets has not been slowed by COVID-19.  “The buyers can get a very low interest rate and there is an absence of acceptable inventory.” In addition, he observes, COVID has likely led to even fewer homes for sale.


“Due to COVID-19, homeowners who would ordinarily have placed their homes on the market for sale are unwilling to have open houses or realtor caravans traipsing through their homes,” Nevin said. “Cash buyers are always available and, of course, want a discount off the market price. The reality is that unless you are desperate to sell, you probably don’t want to contact a cash buyer.”   


Ron Schoonover, Compass Real Estate: COVID-19 strategies to help homebuyers


Ron Schoonover is a lifelong East County resident who has been in real estate since 1999 and served a broker since 2007.  Like many of us, he has faced challenges in his chosen field of real estate due to COVID-19. Schoonover has seen many similar changes in the real estate market as Brian McIntosh has described.  


Schoonover discussed the impact of COVID-19 on the market and on procedures to buy and sell real estate.  From his office at Compass Real Estate, he discussed the 13.9% June 2020 unemployment rate in our community due to COVID-19.  


“There are many people in our community who were struggling financially pre-COVID 19,” he stated. After the pandemic hit, “Those who qualified for unemployment have been provided an additional $600 a week in unemployment benefits payments (which expired July 31). This created a financial buffer for those who lost their jobs or were on temporary furlough from their employer.  For others on unemployment they were provided additional income above what they normally earned. This became an additional safety net for homeowners who would otherwise have lost their homes due to COVID-19.


Schoonover continued, “The San Diego economy is unique…A large number of workers are either employed by the federal government (civil servant employees in Homeland Security, Military, FBI, and other local agencies) or are active duty. This creates a ready group of homebuyers with funding available to purchase homes.  These individuals compete against the rest of the community to purchase homes,” adding to the already competitive real estate market.  “Although unemployment is high in our community, those with steady employment (federal, state, and local government employees and military) have an edge when purchasing a home,” he pointed out.


The inventory of homes in San Diego is low. This is due in part to COVID-19 factors such as “fear of selling because people would walk through a home” creating health concerns, Schoonover noted. He agreed with McIntosh about the “ghost inventory” of homes that have not hit the market due to COVID-19.  


Those who do sell their homes are experiencing rapid turnaround as this is a seller’s market, he confirmed. Competition is steep with offers going in, being accepted, or rejected; buyers look for the next home when an offer is turned down.  Like Shar and Juan, many continue to experience rejection of offers, with some homes having 20 or more offers well above the asking price. Schoonover told ECM.  


This is knocking lower income families out of the home ownership process.


To combat the lack of inventory, according to Schoonover, “If a client wants a home in a specific area and no homes are listed, I will call homeowners to see if they would like to sell.”  Sometimes he is successful, other times not.  In the cases where homes are not available, Schoonover leads the family to other areas within their price point using the Multiple Listing Service, or MLS. Sometimes a family can actually get a better home in a different area of San Diego than envisioned. Other times, Schoonover will know an agent who has an unlisted property that may go up for sale and shows the property to the clients.


In order to market and sell a home, most real estate agents have begun to pre-list (coming soon) and utilize online video marketing as part of the home selling/buying procedural change. Once a pre-listing hits the marketplace, the home begins to generate interest. This is the better time to look at a home and potentially put in offers for homes prior to them hitting the market fully. Real estate agents have the ability to connect the buyer with the seller of these pre-listed homes.


COVID-19 has changed homebuyers’ purchasing habits. In the past, homebuyers would spend  an afternoon driving to homes and open houses with an agent. COVID-19 has forced a procedural change where many homebuyers are actually reviewing homes on the MLS in their price range, allowing the buyer to narrow down the home search. Once the homebuyer has selected homes to view, the agent arranges a safe home walk through or viewing.  


This has created a potentially lasting change in the real estate market with buyers becoming more aggressive in their research and offers for homes at all price points.


Getting the right home for the right price


You have ensured that your credit score is acceptable to purchase a home through your lender while ensuring that your debt to income ratio is low enough to afford your dream home.   You have an approval loan letter for a home purchase, saved for your down payment, and are ready to purchase your home.  What next?


As McIntosh and Schoonover have stated, real estate purchasing has changed.  You will compete against a lot of people for a home. This experience will be a cycle of find a home online, drive by and preview, coordinate a viewing with the real estate agent and then put in an offer. If the offer is rejected, repeat the cycle until your offer is accepted. The entire process can lead to a sense of desperation to own a home – any home.  


When coupled with investors purchasing lower cost homes to either flip or hold onto as investments,  this adds to the sense of mental, emotional, and behavioral exhaustion when purchasing a home. If you are fortunate enough to buy a home, expect a short escrow period, around 21 days, with little to no contingencies on your home purchase – basically the seller probably will not fix very much, especially if there are multiple offers.  


To attain your dream home, both Schoonover and McIntosh agree that the purchase of a home is based upon relationships within the real estate industry.  These include relationships with lenders, brokers, and agents. Communication between agents and lenders is critical to the purchase. Sending in an offer without communicating with the listing agent can lead to rejection – especially when there are multiple offers. You can offer $10,000-$20,000 over the asking price; yet, without the relationship between the listing agent and your agent, the higher offer does not guarantee you will have a new home. Having professional communications and a relationship between your agent and the listing agent may increase your possibility of homeownership.


Purchasing a home well above the market value because you want the home is a personal and financial decision. Buying when the market prices are high carries its own risk even if a bid is successful, should prices later fall and you need to sell.


Yet, as Brian McIntosh recommended, sometimes patience will win out. There are homes that will come on the market in the future due to the “ghost inventory” being withheld resulting from COVID-19 and fears about having people enter homes. 


Ultimately, the COVID-19 pandemic will eventually end whether it is from a vaccine, other therapies, or some unknown innovation yet to be developed.  Until then, if you are in the real estate market, be patient.  Your home is out there, but timing is everything.


For more information about the home buying process, please read the Housing and Urban Development’s (HUD) Common Questions for First Time Buyers and the VA Home Loan information website


Dr. Helen Horvath is a psychologist, organizational development consultant and published author on a variety of psychology and business topics. As a speaker, she has presented at the American Psychological Association Annual Conference, Society of Industrial and Organizational Psychology, and other key professional organizations.  She is a former marriage and family therapist and published a relationship book entitled “Put a Period to IT: When Divorce is the Option.” Dr. Horvath writes for East County Magazine relating to COVID-19 topics.  

East County Magazine gratefully acknowledges the Facebook Journalism Project for its COVID-19 Relief Fund grant to support our local news reporting including impacts on vulnerable communities during the COVID-19 pandemic. Learn more: #FacebookJournalismProject and https://www.facebook.com/fbjournalismproject/.

You can donate to support our local journalism efforts during the pandemic at https://www.EastCountyMedia.org/donate.


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HOME SALES are great!

Our family home was on the market for less then 8 days. Multiple offers including $10,000 over asking. Yes a lot of jerk -Flippers out there. Just ignore them.. But don't fear potential home buyers! Gov. Newsom's continued actions to destroy California and increase the property taxes even more will continue the huge mass exodus from this dying Democrat state and there should be plenty of homes on the market soon.