List prices for Single-Family homes in San Mateo County have not decreased amid the pandemic.
Updated: Jun 21, 2020
A lot has changed in a few months. Nonetheless, unlike what people witnessed in 2008, the prices of homes have not decreased with the economic slowdown. You might wonder why that is the case.
Prices of homes, just like stocks or any other thing for sale, are determined by a set of variables. The demand and supply of houses and the GDP (production) are three of the main variables that affect home prices. Even though the GDP has fallen, the demand has not shifted by much because incomes of people who can afford homes have not fallen by much. And unemployment is mainly affecting people with lower-paying jobs, so the demand is still there. Moreover, the supply (available homes for sale) has shifted lower to keep prices steady. So why did prices fall in 2008 and not now? The homeowners this time own a lot of equity in their homes. A lot of homes were bought before 2008 by unqualified buyers. So supply of homes is a lot more elastic (more responsive to price changes) this time around because a lot less people have to sell to avoid forclosure. In real estate, rent prices are more responsive and a good indicator of what will happen to home prices. Rent prices in the Bay Area have decreased lately, so maybe home prices will follow.
Saeed (Sam) Mahjoubinia SILICON VALLEY EQUITIES ® CAL BRE #01804031 M.A., Applied Economics (Real Estate) email@example.com (650)222-2587 Bay Area Real Estate Services