Thursday, April 16, 2020 / by Mark Palermo
During this tough crisis, we have definitely seen a change in homebuyer behavior, going from outright frenzy to cautious hesitation. Just a mere month ago, my buyers put an aggressive offer on a home in San Mateo that had 31 other offers and unfortunately, we came in the fourth highest...the top three being all-cash. At that time, I started to plan my year as if we were going to experience another surge of buying like we did in 2017-2018.
I also had an ‘opening weekend’ open house on a $2.9M home in San Carlos on March 14th with 60 groups touring. Four of those confirmed that they would be submitting offers by our deadline on March 17th. But between March 16th-20th, the stock market crashed, and all of those potential buyers suddenly wanted to wait and see what would happen in the ensuing days and weeks. The good news is, buyer interest in the home hasn't waned, but their mindset about our economy, their savings, portfolios and job status has. They are waiting it out to see what the future brings.
What a contrast from just a month ago.
So, what is the prognosis for the future? Is what we are experiencing now the new normal, or will the Bay Area innovate in a way that it always has, as a region focused on game-changing initiatives?
Historically, the Bay Area has always been unique and consistently robust despite the economic hand grenades thrown our way. We have a history of rollercoaster rides and each time we emerge stronger than ever. The chart below illustrates how real estate in in particular emerged from tough downturns.
In the spirit of the Bay Area's legacy of rebounds, my team at Compass conducted our own strategic planning sessions and arranged for outreach to thought leaders in the industry to come up with a plan to tackle the post-pandemic life.
The past few weeks have certainly changed the way Americans think about work-related functions. We have had to adjust to working, shopping, exercising and socializing remotely. For some, it has been a positive paradigm shift. For others whose careers are dependent on face to face interaction or in-office technology and equipment, it has been difficult. However, we’ve learned that there is a segment of the workforce that can flex their schedules to make life safer, and less stressful.
In the past month, we have seen a shift in priorities when it comes to work and home. With the health concerns of an in-office presence and the meteoric rise of video conferencing, the future may bring staggered work shifts to enable more physical distance between workers, which may also ease high traffic commute times.
With the closure of schools, education has shifted to the home. As parents make time and space for their kids’ homework and recreational activities, the need for flexible scheduling is undeniable.
All the change we’re experiencing in nearly every aspect of our lives sure seems daunting at times, but the Bay Area has always had a type of shapeshifting in its DNA. Many believe we will surface out of this pandemic in the way we started it – as a leader. We can lead the country with new, innovative ideas of how to live our everyday lives in a more secure environment.
How will real estate play a role? These are the shifts that we think buyers will demand as we shift from ‘business as usual’ to ‘business exceptional.’
More Interactive Home Gyms
It's no surprise that Peloton stock is hot right now. Due to the fact that most gyms and fitness facilities were among the first businesses to close, they may be one of the earliest victims in a post-pandemic world. There is a perception that sweaty, hot gyms that have high-touch weights, spin bikes, ellipticals and treadmills are a Petri dish of germs. It's no question that in-home workouts are a lower risk. Therefore, homebuyers will appreciate extra space for a home gym. Group fitness classes are extremely popular, so we may see an even greater shift to outdoor bootcamps with proper social distancing, outdoor running, biking, golf and other sports that don’t require close contact. Homes in neighborhoods that are near trails and parks will be in high demand.
Home Delivery of Just About Everything
Whatever your views on Amazon and other on-line merchants’ ever-increasing market share, we know that the COVID-19 scare introduced more people to e-commerce and home delivery. As this trend continues, we may see a spike in home security systems. In addition to security cameras and real-time notifications of deliveries, builders and remodelers would be wise to consider built-in delivery lockers to safeguard shipments from weather as well as thieves.
Home Theaters for Movies, Entertainment and Sports
The entertainment industry is part of the American way of life. I see no scenario where social distancing works here, except maybe in an outdoor venue. A plethora of technological ingenuity is needed to help the entertainment industry reinvent itself to please those that still like the theater experience. Maybe drive-in theaters will see a sudden resurgence? Nevertheless, look for advances in TV, Virtual Reality, Virtual Integration, and Augmented Reality offerings with more homes being retrofitted to integrate those technologies.
Eat, Grow, Play
In the April 5th edition of the Culture Section of the San Francisco Chronicle, there was an entire section on home gardens and micro farms. For those in the post-pandemic society that are still ambivalent about urban crowds, growing their own food could be the ultimate home project. Many developers are already installing gardens and containers as part of landscape beautification. Most of it is aesthetic, but going forward, it may just turn into a practical necessity. Backyard recreation, playgrounds, gyms, etc., will be important to a growing number of families when looking for a home to purchase.
Virus Destroying Air Filters
With problems come opportunities. A new industry is always around the corner. While there are commercial and hospital-grade air filters capable of destroying germs, one day soon we may see residential versions become as common as a furnace or air conditioner.
We live in interesting and ever-changing times. Thankfully, there is no other place in the US better equipped to rise to new challenges. Whether it's a natural disaster or economic downturn, we tend to adjust, innovate, grow and emerge stronger each and every time. Will the suggestions mentioned above help make us more secure and better prepared for the next event? History tells us they will.