The Latest, Up-to-Date Information on East Bay Real Estate

The coronavirus pandemic is changing the face of our community on a daily basis. This is particularly true with East Bay real estate as local, state and national orders significantly impact buyers and sellers.

 

To help make sense of these changes, we have compiled this article, which consolidates the most current information about East Bay real estate as it relates to the coronavirus. We will update this on a regular basis. So bookmark it to access real-time information and insight.

 

[3/31/20, 5:30pm] Local government has deemed real estate an "essential" service as of Tue 3/31 at 7pm. Residential viewings may only occur virtually, or if virtual viewing is impossible and the residence is unoccupied, by appointment with no more than two visitors from the same household and one person showing the unit. We are working to get greater clarity on how this impacts all of the facets of the buying and selling process.

 

[3/28/20, 5:30pm] Governor Newsom and Homeland Security have deemed residential real estate an "essential" service. However, the county or city could hold more stringent guidelines, which would keep the category deemed "nonessential." Red Oak is working with local connections with the county health department and county government to see what is the case. Please standby until further direction is determined. This does not release us from the risk of transacting and spreading the virus. To that end, real estate licensees should follow all CDC and local health mandates: No open houses should be held and showings should be done virtually, if at all possible.

 

[3/19/20, 9:00am] The Alameda County office is closed but they are still recording. Title companies can drop documents in a locked box; the county picks up twice a day. If they drop off by 4:30pm the night before, they will receive an 8am recording and 10am for a late recording. The Contra Costa County Recorder's office remains open and they do have the ability to e-record.

 

[3/18/20, 12:15pm] San Francisco and Santa Clara County recorders’ offices have closed but are accepting closings through digital platforms. Alameda and Contra Costa recorders’ offices remain open. (Note: Alameda County does not process digital filings.) Title companies are crafting “gap” forms that will allow transactions to close escrow but not transfer ownership until the recorder reopens or is able to get through a backlog.

 

[3/16/20, 4:45pm] Title offices and their escrow officers are considering their services “essential,” so they continue to remain open.

 

The California Association of Realtors has released a coronavirus addendum. Red Oak has crafted language to protect buyers and sellers and their transactions. This includes contingencies related to:

 

• Down payments affected by the stock market

• Delays due to lender-related issues and appraisal

• Buyers unable to close on time due to any coronavirus-related issue

• Stagers unable to remove staging

[3/23/20, 2:00pm] Fannie Mae and Freddie Mac have stated that homeowners who have lost income or jobs because of the coronavirus outbreak are eligible to have their mortgage payments reduced or suspended for up to 12 months.

 

Additionally, Fannie Mae and Freddie Mac are offering temporary flexibilities regarding:

 

• Appraisals – "Drive by" appraisals allowed now for purchase transactions (First Republic Bank is doing the same)

• Title – For recording office closures, "gap" coverage is allowed

• Employment verification – This allows bank statements or paystubs to serve as the final check of verification of employment before close when no one can be reached in HR.

• Tightening continuity of income guidelines – They are warning underwriters to try to ensure that the COVID-19 disruption is not expected to negatively impact the borrowers’ ability to repay the loan.

[3/19/20, 10:45am] Conventional and A-paper jumbo loans are funding, but non-Qualified Mortgage (QM) loans have pulled out of the market. Jumbo rates may continue to increase and conventional loans should continue to remain liquid. Rates are between 3.75% and 4.5%. Additionally, appraisals continue to be taking place.

 

[3/16/20, 11:30am] From Faramarz Moeen-Ziai at Commerce Mortgage: The Federal Reserve announced on Sunday that it is cutting its benchmark rate to 0 percent to support the economy in the wake of the disruption from the COVID-19 virus. The Fed rate is not directly tied to mortgage rates, but is the rate that banks are charged for borrowing money from the Fed. Now that the money is free, the hope is that banks turn around and make that money available to businesses cheaply. The chart below shows the rapid deterioration in price that wiped out all of the gains from 2/14-3/6.

 

 

The money supporting mortgage-backed securities (MBS), which determine mortgage rates, is from private investors who participate in the MBS market. Last week, we saw a massive influx of supply and a shortage of demand in that market, which resulted in the largest drop in price, and largest spike in interest rates, over a four day period in market history. In addition to the rate cut, the Fed also announced that it will step in as an investor in MBS and buy $200 billion worth of mortgage-backed securities.

 

 

Due to the massive volatility, most lenders have not updated their pricing on earlier this week to fully reflect the pricing we are seeing in the market, fearing another steep drop. If MBS can stay steady over the next couple of days, we should see a return to pricing in the low 3s on 30-year fixed-rate mortgages and high 2s on 15-year fixed-rate loans.

 

 

What does this mean for you?

 

If you have an active purchase or refinance and your loan was locked before March 6, you probably have better pricing on your loan than what is available today. You should try to close your loan as quickly as possible. If you have an active purchase or refinance and your rate is not locked – wait for markets to stabilize this week and hope that pricing will return to the same levels that we had on March 6.

 

We are in uncharted territory with the COVID-19 pandemic so markets are not behaving normally, but if Fed participation can steady the markets, you should have an opportunity to lock in at a good rate.

 

If you are considering purchasing or refinancing a property, get your application in and supply all of the supporting documents to your lender so that you can be ready when the next opportunity presents itself.

 

[3/21/20, 10:30am] The California Association of Realtors has announced that the real estate industry is not considered an essential business and Realtors should cease showings, open houses and inspections. Active listings should be marked "on hold" or "withdrawn" on the MLS. Housing construction is exempt from this order.

 

With the shelter-in-place ordinance, the biggest challenge has been preparing and showing property. Stagers, inspectors, handypeople and construction crews are considered “non-essential” services, so they are mostly not working. The same goes for professional photographers and videographers. So how do buyers view homes?

 

Red Oak is working to find new ways to share homes with potential buyers. For example, sellers and listing agents might use pre-existing photography to create a video virtual tour, or if the sellers still live in the property, they can take the video then share with our marketing team to optimize and distribute the content.

 

As a company, Red Oak is taking a firm stance on putting the safety and well being of our entire community first and foremost by honoring the government-mandated Shelter In Place issued to our counties. Therefore we advise our clients, agents and staff to abide by the SIP order.