What has the coronavirus crisis done to Sacramento-area home values? You may be surprised

The Sacramento housing market this month is back from near dead. For the moment at least.

After some of the lowest spring sales numbers in years, when buyers and sellers hunkered at home due to coronavirus, sales signings have ratcheted up consistently over the last six weeks. And prices appear to be inching up following a small spring dip.

It doesn’t mean sidewalks are suddenly full of for-sale signs, or that buyers are flooding through open front doors.

But new data show that sales in the last week were only about 5 percent lower than the same week last year. That could be considered a pleasant surprise, given that home sales dropped 40 percent in March, April and into May, according to local real estate data banks.

“We’re inching back to normal,” said Ryan Lundquist, an analyst and appraiser who has been tracking the recent sales upswing, and noted the 5-percent figure. But it’s a new normal. “This is new territory for everyone.”

Median sales prices slid slightly during the initial months of the virus, from $400,000 in Sacramento County to $395,000, according to the Sacramento Association of Realtors.

But prices are rising again in the last few weeks, Lundquist said, potentially tacking on $10,000 or $15,000 in value, which would put the median back over $400,000.

Last year in May, the median sales price of an existing Sacramento house was $384,000.

The number of homes on the market remains unusually low (a several-year trend), which is bad news for buyers who find themselves competing for limited choices. And there are some signs that buyers are backing off as summer comes around and as coronavirus infections pick up.

Real estate sellers get creative

Yet, if anything, the strange spring selling season showed that houses that need to sell will sell, no matter the constraints. Buyers and sellers are turning to virtual and distance-based business deals to get done.

A Rosemont home recently sold in a bidding war among eight competing buyers – none of whom had actually been inside the house.

Instead, they all sat at their laptops and home computers on a Zoom meeting, watching as the seller’s agent walked around the house with a camera, showing the rooms and answering questions.

That sale happened during the most restrictive lock-down moment a few months ago, when state and county officials briefly prohibited buyers from touring homes in person if the seller family was still living there.

Realtor Pettit Gilwee of Lyon Real Estate represented the winning bidder, a family that lived in a smaller house in the neighborhood, and already knew how the house was laid out.

“That,” she said, “is a very unusual way to buy a house. I’ve sold hundreds of houses and I’ve only had one other site-unseen transaction. It’s been an interesting ride.”

Since then, health officials have loosened the rules, allowing a limited number of people to tour homes, wearing masks and sometimes gloves.

In many cases, sellers are asked to turn on the lights and open the doors beforehand, so that the touring agent and clients don’t touch the switches and doorknobs.

Instead of freshly baked cookies on the counter, there’s hand sanitizer.

Despite all that, Gilwee said her spring was relatively busy. Buyers and sellers who initially ducked out of the market in March began to come back in the following three months.

But would-be buyers continue to outnumber sellers. Homes are selling faster than the number of new homes being put up for sale. Zillow reported as of last week that homes in the Sacramento area were spending only 13 days on the market on average before they sold. That’s three days shorter than a year ago.

Coldwell Banker Realtor Erin Stumpf, a 15-year veteran, reports June was her second highest sales month ever (highest was July 2018).

The low inventory, coupled with growing coronavirus fears, could slow the market again this summer.

For the moment, though, low mortgage interest rates and Bay Area shoppers continue to fuel the market. And the fear factor from March when the coronavirus first hit has dissipated noticeably for now, said Rachel Lee Adams, who runs a real estate firm in Roseville,

“People are feeling it’s not as scary as it was,” she said.

Shopping for homes online

Adams says the virus has streamlined one portion of the sales process. Many potential buyers winnow their choices via online viewing, including video tours, before picking a few houses they want to see in person. And, she said, in many cases potential buyers have to show proof of funds and a lender’s letter before they can tour a house.

“It’s kind of nice. It eliminates the lookie-loos.”

The market has uncertain days ahead. Sacramento’s COVID-19 infection rate has been mounting in recent weeks, prompting some concerns that the reopening of the economy over the past month happened too quickly.

“If we go to ‘Shutdown 2.0,’ what will that look like?” Lundquist of the Sacramento Appraisal Blog said. “How strict will local and state governments get in locking things down?”

Some in the real estate business fear that people who lose their jobs for an extended period could end up unable to pay their mortgages and could lose their homes to foreclosure, as many did during the catastrophic real estate collapse 13 years ago.

Sacramento County health officials on Monday shut down bars, saying they feared close gatherings could spark more virus infections.

County health officials said they were not anticipating re-issuing stricter other shut-down rules, for the moment. If they do, industry officials say they believe they have adapted well enough to keep selling houses this summer and fall.

One thing, Adams says, she finds pleasing: “I think people have never had their houses so clean!”

This story was originally published July 1, 2020 at 5:00 AM.