The real estate market boom reported last fall has kept pace into the new year.
Houses for sale and rentals continue to get swept up shortly after listing despite inflated prices and a pandemic raging in the background. With housing inventory at all time lows, there is speculation about a rise in homelessness.
All the while, commercial real estate seems unbothered.
Experts do not expect the housing market to change any time soon.
“I don’t see much change for the next six months to a year,” Dena Clark said, President of the Tulare County Association of Realtors. “I expect a strong 2021.”
According to Clark, inventory is at unprecedented lows creating a market flooded with offers, despite a 15% price increase in some areas. In the first week of February Zillow.com listed only about 500 homes for sale in Tulare County versus almost 1000 listings a year earlier.
Real estate companies and professionals in the industry have been struggling to keep up with the demand.
“Title companies and lenders are all completely swamped along with brokers right now,” Clark said. “There are appraisers that are getting 50 a day.”
The rental side of things isn’t much different.
Steven Deurre, President of Property Management at Equity Group, revealed that inventory is arguably thinner now than ever before.
“I usually have a 4% or 5% vacancy factor, but now there’s less than 1% vacancy in my portfolio,” he explained.
That means while Deurre usually has around 100 units at any given time to show to prospective tenants, he now only has about 20.
And it’s been like that since last summer according to Deurre.
But perhaps it has been even longer. A market summary provided by a local realtor revealed that the number of listings has been dropping and prices have been rising since early as April of 2020.
Like Clark, Duerre doesn’t see this trend ending any time soon. In fact, the consensus seems to be that the boom will continue as long as the pandemic is forcing people to work from home and enticing “out of towners” to set up shop in more affordable areas like Tulare County.
And while the influx of money seems to be great for the sellers, lenders, appraisers and contractors, the effect on locals struggling to find a home is discouraging.
As a result, realtors have been advising prospective buyers to make offers significantly above listing price.
For landlords, they can be pickier than ever before when choosing tenants because they now have “several qualified applicants” with dozens of applications per unit.
And with inventory dwindling ever closer to absolute zero, there’s speculation that the competition and lack of housing might create a breeding ground for more homelessness.
Housing assistance non-profits like Self-Help Enterprises are running at 0% percent vacancy according to President Tom Collishaw. The lack of inventory has limited their ability to assist more low-income families outside of their program.
The housing crisis has been the cause of some unusual new trends in homelessness recently.
Machael Smith, Executive Director of the Kings-Tulare Homeless Alliance, explained that there are more new faces in the system and people living out of cars, something they have not encountered before.
The connection between the housing market boom and these new developments in homelessness has not been explicitly linked to the lack of inventory on the market. But Smith expects that there will be a surge in homelessness once the eviction moratorium ends this summer.
One of the few sectors that has not been significantly affected by the pandemic has been commercial real estate.
According to Shari Aguierre, a broker with Zeeb Commercial Real Estate, 2020 was similar to any other year.
This surprised Aguierre because the pandemic largely affected businesses across the country and resulted in shopping centers in cities like Santa Monica going dark. It appears, however, that businesses in Tulare County have managed to adapt to the restrictions mandated by the state.
And while there are some businesses that have struggled or closed down it hasn’t taken long for new ones to take their place.
Matt Graham of Graham and Associates stated there has been turnover in the commercial sector, but they have not experienced long term vacancy and things are looking good.
“2021 has so far shown some good traction in the marketplace,” he said.