by Lex ShanIf you follow news, I am sure you have read the bay area home prices are growing in double digits even during the . The home affordability problem is exacerbated while people are most vulnerable. Fortunately, home sales is only one side of the equation. The other side of the equation, the , is far less talked about.
is reduced 15-20% across different cities of the bay area
According to Zumper March National Report, San Francisco bay area has dropped anywhere between 15-25% during the pandemic. The more urban the rental location, the more severe the drop. Most of the appeal of urban living was wiped out by the closure of restaurants & bars. Night life is nothing but watching Netflix. Many workers whose jobs allow them to work from home moved out of the expensive bay area after their leases ended. in the urban areas shot up all of a sudden. An extraordinarily high and a weak demand put an enormous pressure on asking . To help put things in perspective, a San Francisco 2 bedroom used to $8400 is now only renting for $6700, a whopping 20% drop.
Numbers with more bedrooms are disproportionally impacted
Owning even a small condo unit in the college town Berkeley used to be a very profitable business for a . I bet the bearly had any in the past. Not any more. Students used to turn a 1 bedroom unit into a 2 bedroom by putting a bed in a living room partitioned by a curtain. Now, students are less willing to share rooms or apartments. Students who can afford it will want the unit for themselves. Those who can’t, will simply pack their belongings and move back home. Classes are online-only anyway. According to Rentometer.com, the more bedrooms the unit has, the more it’s impacted COVID. A 3 bedroom unit used to house 6 students can now only house 3, assuming they are still willing to share, that is. With people 3 students to split the , the budget shrinks quite a bit.
Number of rental showings needed to a unit is decreased
Number of rental showings needed to Due to the decrease in , leasing agents are collecting a proportionally smaller commission check. There is one silver lining out of this looming picture; it takes less showings to out a unit.
As a serving the bay area, we have first hand data. 70% of our units take 8 showings or less to out after the bay area shelter-in-place started in March 2020. Compare that to pre-COVID era, 70% of our units were rented out in 13 showings or less.
In the diagram above, one can easily identify the shift to the left between two series of data. We attribute this to the change in behavior. Before the , going out to tour apartments is a fun activity to do with friends and family as a . After the pandemic, renters who want to move do most of the research online. In early April, renters were so cautious that we rented out several units via video tours only. In one case, the signed a based on 3D WALKINTOURs alone.
Should you or should you sell?
As , should you your or should you sell it? As a full service firm, we have helped many out their units and also helped numerous owners sold their units. We realize the hold-and- vs sell decision boils down to two things:
Sell your single family home rentals
If you are a owning a single family home, you are in luck. You will realize your value grew dramatically in 2020 while the you can get dipped slightly. In some areas, you may see a small increase in . If you have a right now or will soon have a , we recommend selling your now to take advantage of the single family home buying frenzy.
One big reason against renting out the single family home is, the rental laws in California is significantly favoring tenants in the . The law allows tenants to not pay and stay in your if experiences COVID 19 related . While a may receive or from various organizations, a has few remedy at her disposal. You cannot charge and you cannot evict the . The Judicial Council of California once stopped accepting any case, period. Although courts start to process them now as the pandemic eases, there is a huge backlog of cases to process. Evicting a that experienced COVID 19 related is basically out of question. If you out your single family homes now, there is no telling what cards the new may pull out.
Hold onto your condo or multifamily
If your is a multi-family unit, your is most likely reduced during the pandemic, whether due to asking credit or increased . You may also realize the value of your condo also dropped. That is caused by a shift of buyers’ demand from condo to single family homes. During the pandemic, who wants to share an elevator and hallway with a neighbor? We recommend holding onto your because we believe this buyer demand shift is temporary during the . Its value will bounce back. Selling it now does nothing but benefit the buyer.
While holding onto your , one way to hedge your risk against not paying is to it out to non-profit organizations. There are many such organizations that provide transitional to homeless families such as East Oakland Community Project and victims of domestic violence such as Ruby’s Place. These non profit organizations receive grants from federal and state governments to fund meaningful projects to the society. Once they commit on your , they set the fund aside to ensure they can meet the obligation during the term of the . As a , we are proud to have worked with these organizations with a good experience.
To sell or the hold is a complex decision. This article is barely scratching the surface of this topic. There are many more factors to consider that’s beyond the scope of this article. If you want to get advice for your specific case, feel free to get in touch with us (team@theCalAgents.com) and one of our agents will help assess your specific situation.
