Something in yesterday’s Alameda Journal just caught my attention. It’s an article out of the December 18 edition called “Renter’s Hunt for Deals and Short-Term Commitment.” Why do we care? They are renters, not homeowners or buyers right? Here are the things I got from the article and my Bay Area Real Estate Market 2021 Prediction.
One in Five Bay Area renters are looking for shorter-term lease
The first thing is one in five Bay Area renters are looking for a six month lease or shorter. They’re looking for something flexible, something very short term, in general. What’s interesting is on a year-over-year basis, that’s almost doubled in San Jose, San Francisco and Oakland. So we’re seeing this all over the Bay Area.
What is this telling us about our population in general? About our housing needs as a bigger community? Number one, people are looking for short-term housing more than they used to do. Number two, prices are down substantially.
Prices are down substantially
San Francisco took a 20% price reduction year-over-year on their average rents. Oakland was only about 5.6% reduction. You get the picture. Rents are down and occupancy is down substantially as well.
So what can we learn from this? If occupancy and rent prices are down across the board, and the fact that the renter population is looking for a shorter term commitment– what does that mean? Well, psychologically, I think what’s happening is people are uncertain about what’s going to happen in the future. Whether it’s their job, whether it’s because of COVID, whether it’s the economy, less people want to be tied into something long-term, especially when there’s uncertainty.
What happens when things are uncertain
Overall, when there’s uncertainty, people make less long term decisions, and therefore, that could trickle into the buyer pool. Now, obviously, with rates being so low, and the housing supply being what it is, which is minimal at the moment, the likelihood of us seeing a huge dip immediately is low. However, I think that something like this, the psychology that you’re looking at, relative to the renters, could permeate to a lot of buyers.
The uncertainty of “Am I going to move to Idaho? Or Nevada? Am I going to stay here because we’re going to reopen the office in the middle of 2021?” That may just take the edge off the prices, the bidding wars, all of that stuff. So instead of getting five or six offers, maybe you’re down to two or three.
Bay Area Real Estate Market 2021 Prediction
I’m not suggesting that we’re in for a crash, that there’s all of a sudden can be no buyers, and everyone’s gone from the marketplace. It doesn’t necessarily mean that the buyer pool will suddenly implode and inventory will just sit. That being said, I do think you might experience, especially in some of those entry price points, a little bit of a “taking the edge off” of that buyer pool.
Maybe there’s one or two less offers per house, maybe the price has a little less heat on it, or there’s a little bit more of a contingency because of the uncertainty that people are experiencing broadly. And I don’t think that that will all out crash the market (which I also did a video on) but I do think it might take a couple of percentage points off here in the near future.
Over all, everyone’s talking about the market crashing. I don’t think it’s going to happen but I do think that this shift towards leaving options open and the general uncertainty will lead to a self-correction in the Bay Area Real Estate Market in the near future.
I hope my blog about the Bay Area Real Estate Market 2021 Prediction has helped you.
You can read the whole article here: https://www.timesheraldonline.com/2020/12/15/bay-area-renters-hunt-for-deals-short-term-covid-commitment-2/
Also, if I can give you more context on the process of buying or selling your home, please do not hesitate to reach out. My information is below.
Here’s to all your success!