Real estate now listed as an essential industry in California

This is Good News!
https://www.recorderonline.com/news...cle_43685f00-735e-11ea-9c6a-1ff896520923.html

The California Association of Realtors announced over the week real estate has been established as an essential industry in the state.

The U.S. Department of Homeland Security Cybersecurity and Infrastructure Security Agency, CISA, updated its list of essential services, which included real estate. This list is being used to determine the state?s essential services.

The order now includes residential and commercial real estate, including settlement services as essential services in California.

City and county restrictions, though, still take precedent over state and federal guidelines. If a city or county has an order with a more restrictive standard regarding  essential services, or any restrictions on what can be done, those guidelines take precedent.

The association stated on March 20 when real estate was a nonessential service that all face-to-face sales should be halted. But the association still stressed existing protocols for protecting against the spread of COVID-19 must be followed, otherwise the rules could be changed, including removing real estate as an essential service.  The association added this could mean all real estate activity being restricted or stopped.

The association?s economist, Leslie Appleton Young, stated on Facebook: ?Of paramount importance is that any activities be undertaken with the strictest adherence to health and safety guidelines.?

The association stated all CDC and local health mandates should be followed. The guidelines include stating no open houses should be held and showings should be done virtually.

The assocaition?s statement is as follows: ?Notwithstanding this new development, all real estate licensees must take into account the health and safety of their clients and fellow licensees, and follow the existing protocols for protecting against the spread of COVID-19. If such health safeguards and protocols are not followed, the rule for the state could easily change to stop or restrict all real estate activity. To that end, in conformity with current health guidelines, real estate licensees should follow all CDC and local health mandates.?

The state?s economy has taken a hard hit as a record 189,809 filed jobless claims for the week of March 21. Many people have also stopped house hunting and the number of new escrows has fallen.

In addition the association has stated the essential designation doesn?t mean business as usual. And some realtors are actually wary of the designation as they?re concerned about their own health.

It seems the asking price those selling homes in Porterville hasn?t been impacted yet by the coronavirus. Four-bedroom homes in Porterville listed on Zillow in the last couple of weeks have been listed in the $280,000 to $385,000 price range. And a four-bedroom house in Springville has been listed for $1.3 million.

But the price of a four-bedroom house in Springville listed on Zillow has been cut by $4,900 since it was listed to $185,000.

Before the coronavirus crisis, Zillow was high on Porterville?s home market. The median home value in Porterville at the end of 2019 was $210,658, an increase of 5 percent over the past year. Before the coronavirus crisis, Zillow expected home prices to increase another 5.9 perceent this year.

The percent of delinquent mortgages in Porterville was also 1.o percent, lower than the national average of 1.1 percent., which is lower than the national value of 1.1%. But the percentage of  homeowners underwater on their mortgages, meaning they owe more than their home is worth was higher in Porterville at 10.1 percent as oposed to 9.4 percent for the Visalia-Porterville Metro area.

Yup, the realtor association sent an email last week stating that realtors now fell under the essential category. Considering that we involved in helping people buy, sell, and rent homes I tended to agree.  That being said, open houses are not allowed for the time being and virtual tours are encouraged whenever possible.

National Agencies like Compass and Redfin have begun furloughing staff:
https://www.redfin.com/blog/redfin-furlough/
https://www.fool.com/millionacres/r...-that-have-announced-layoffs-due-to-covid-19/

Soylent Green Is People said:

National Agencies like Compass and Redfin have begun furloughing staff:
https://www.redfin.com/blog/redfin-furlough/
https://www.fool.com/millionacres/r...-that-have-announced-layoffs-due-to-covid-19/

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Redfin has had an entire business cycle to show a profit and they haven't done so yet.  Startups generally aren't profitable while they are scaling up so that's understandable, but for a RE brokerage to be showing a loss at the peak of the cycle is a bad sign.  It will be interesting to see how they weather this storm.

Just like in 2007-2009, the weak links realtors will be weeded out of the system as there have been a lot of new agents come onboard in the past 5 years as the market has been good and there have been more and more real estate reality shows on TV in that time. What's funny is that I still get sales calls from Zillow over the past month wanting me to purchase some advertising from them (which I'd never do)...I wonder when they'll be cutting staff.

Liar Loan said:

Soylent Green Is People said:

National Agencies like Compass and Redfin have begun furloughing staff:
https://www.redfin.com/blog/redfin-furlough/
https://www.fool.com/millionacres/r...-that-have-announced-layoffs-due-to-covid-19/

Click to expand...

Redfin has had an entire business cycle to show a profit and they haven't done so yet.  Startups generally aren't profitable while they are scaling up so that's understandable, but for a RE brokerage to be showing a loss at the peak of the cycle is a bad sign.  It will be interesting to see how they weather this storm.

Click to expand...

They've been working working towards that as they've been dropping their rebate from 50% about 10 years ago to something like 15-20% (they use some kind of black box formula as it can vary materially for homes that pay the same commission agent). The major flaw in their business model is that they pay salaries for their agents so when the net commission value drops the losses will mount. I wonder if they'll revise their compensation model to a lower base plus a % of the net commission for each transaction their accounts close. They called me a few years ago asking if I was interested in joining Redfin and I politely passed.

My working theory is that if Redfin goes kaput, about 80% of most realtors will as well. These agents can't figure out how to market homes correctly on-line, much less in the traditional manner either. Without Redfin's site, they'd have to rely on the ever terrible Zillow, or the much worse Realtor.com to market. Their listings will get completely lost in the noise.

We will see....

SGIP

That's an interesting take SGIP.

I think almost everyone here uses Redfin to browse but I don't think it will hit 80% of the realtors because they existed before Redfin and someone (if not the other sites) will fill the void.

I don't think Redfin will go away but they will get smaller and probably get completely out of the home buying business, as will Zillow.

Both Zillow and Redfin have stopped about a month ago (from what I'm told) and probably won't come back for more than a year - if ever.

Why do I think agents will drop? How will buyers find their homes quickly if they don't have a very robu$t $ale$ and marketing plan. The$e thing$ co$t $$$ and even then they don't always work. Door knocking is a loser, as are door drops. At least in our neighborhood we've had two agents marketing our tract for two decades with garage sales, holiday coloring contests, giveaways, mail and door drop marketing pieces. 20 years = 1 listed and sold home. Hard to say it was worth it. These are relatively name brand agents in my area. Now stretch this out to the 80% who can't even take a good listing picture with their iPhone.

Hard times are coming. When they do, FNMA/FHLMC and the Banks are going to need REO agents. The  2008 REO market saved a great number of realtors from exiting the business. New agents have swarmed what was at one time "easy money". Now that hard times are back, very, very few of the newbies know how to sling an REO, so they may be toast. The survivors from 2008-2009 have some life still left in them but time is not their friend. The Banks may not be as willing to use an Agent now that the internet has "grown up" since 2008, perhaps relying on bulk sales to hedgies or on-line only arrangements.

It's a future with 10,000,000 variables, and all this is speculation. Still, there are some indicators that home sales and marketing as we know today may not look the same 2-3 years from now.

My .02c 

Soylent Green Is People said:

Both Zillow and Redfin have stopped about a month ago (from what I'm told) and probably won't come back for more than a year - if ever.

Why do I think agents will drop? How will buyers find their homes quickly if they don't have a very robu$t $ale$ and marketing plan. The$e thing$ co$t $$$ and even then they don't always work. Door knocking is a loser, as are door drops. At least in our neighborhood we've had two agents marketing our tract for two decades with garage sales, holiday coloring contests, giveaways, mail and door drop marketing pieces. 20 years = 1 listed and sold home. Hard to say it was worth it. These are relatively name brand agents in my area. Now stretch this out to the 80% who can't even take a good listing picture with their iPhone.

Hard times are coming. When they do, FNMA/FHLMC and the Banks are going to need REO agents. The  2008 REO market saved a great number of realtors from exiting the business. New agents have swarmed what was at one time "easy money". Now that hard times are back, very, very few of the newbies know how to sling an REO, so they may be toast. The survivors from 2008-2009 have some life still left in them but time is not their friend. The Banks may not be as willing to use an Agent now that the internet has "grown up" since 2008, perhaps relying on bulk sales to hedgies or on-line only arrangements.

It's a future with 10,000,000 variables, and all this is speculation. Still, there are some indicators that home sales and marketing as we know today may not look the same 2-3 years from now.

My .02c

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That's a lot of $ signs lol. So true with the "can't take a decent picture with iPhone" comment. Then there are agents with AOL emails, refuse to use Showingtime or send a 50+ MB attachment of scanned paperwork instead using e-sign. But sadly, reality is people choose agents based on referrals and those who want to buy or sell expensive real estate have plenty of referrals. They usually can't differentiate between a competent and an incompetent agent, at least in the beginning.

IMHO, Redfin and Zillow will be here to stay but their business models could significantly change. Amazon should buy them out at the bottom of the market and revolutionize the whole industry by getting rid of the inefficiency and lack of transparency. That might be bad news for majority of the agents though.