No industry seems immune to the economic fallout imposed by the global pandemic. In California, where cases exceed much of the rest of the country, the financial hit pushed nearly 2 million people into unemployment. For comparison, the entirety of the Great Recession saw 2.2 million unemployment claims from California. As a result, homebuying took a steep dive over the preceding weeks.
With data collected by ReportsOnHousing, Jonathan Lasner writing for the Orange County Register revealed a 30 percent drop in homebuying year over year in Southern California.
In Los Angeles County, listings fell 33 percent. The number of new escrows opened fell 35 percent. Orange County fared worse. There, listings fell 39 percent and new escrows fell 35 percent.
Overall, across 4 counties, Los Angeles, Orange, San Bernardino, and Riverside, only 8,837 new escrow opened over the last 30 days. 24,107 listings occupy the market in those 4 counties.
Homebuying Lowest Since 2014
The current dip in homebuying demand marks a new recent low. The last time demand for new home sales dropped beneath this level was 6 years ago.
The reason, unquestionably, is the economic impact of the novel coronavirus. In mid-March, stay at home orders issued by Governor Gavin Newsom also imposed stringent business limitations.
Real estate effectually ground to a halt. With far fewer people willing to venture out for even necessities let alone open houses, demand fell. Thus, the market witnesses a dramatic slowdown. Previously, it appeared home sales were powering through the pandemic. However, that observation happened prior to the governor’s order.
A week ago, restrictions on real estate business eased, reclassifying the industry as essential. Still, that may not prove enough to reverse the outbreak’s impact.
While the slowdown certainly hurts real estate agents, hope for a strong bounce back makes an argument using low supply figures. ReportsOnHousing author Steve Thomas believes the continuing, historic low supply could aid in a speedy recovery, balancing the market.