Week One of the Bay Area "Shelter" awoke the "other me" -- the journalist and columnist I used to be. I was moved to reflect and share insights inspired by the very personal interactions my role exposes me to ... in this extraordinary time, as we all adjust and react to hugely impactful events. As the words COVID, lockdown, uncertainty, and volatility - economic, political and emotional - crept into our everyday parlance, I watched "the new normal" unfold in the lives of my clients, even before we knew what "it" was. This message is for those of you who like to think and read. If you have a moment, I hope you get something out of my "thought piece."
So it is today, in this unprecedented time now indelibly inked as the double? triple whammy? of a pandemic that crept in undercover the backdrop of an irrationally exuberant Wall Street, then erupted causing the tumble that followed. This insidious virus and the ravages it has wrought world-wide are entwined in a way I can't say I've witnessed before. You can't discuss one without the other rearing up for attention. You can't fight one evil without risking more damage by, or to, the other.
At first I wondered if the panic exceeds the actual impacts. Whether we believe this is just one big, bad cold, or a lethal flu, impacts there are -- beginning with the responsibility each of us bears to not unwittingly carry contagion anywhere it can cause harm ... which is everywhere. By now we understand the need to stall the outbreak or risk overwhelming the capacity of healthcare systems. At the same time, we see the impacts on people's livelihood, the interruption to productivity and profitability, the tanking of supply chains, and, like the spread of the virus, the spread of economic risk from industry to industry, worldwide. None of us is immune -- from either threat.
But all of us together can prevail. Optimist that I naturally am, I can already see some silver linings we can reap. I hope you do too. I'll get back to that.
My point being ... I'm no sage ... but I feel like we almost saw it coming. As if the clouds were forming and rolling in, then the skies darkening for the storm, the pandemic was unfolding in my clients' stories beginning as far back as early February. Now with hindsight, it is fascinating to see more clearly what was in fact taking place, and to learn every day of another vignette in this drama as one by one and in droves we grasp the dawn of a new, hopefully short-lived, reality.
Bloomberg / Getty Images
Still, Q1 2020 was shaping up to be a great time to buy and sell homes (just not perhaps that one). Our team closed 7 sales by the beginning of March, and has two closings to go in the next month. And so I was happily shopping with a San Francisco family -- mom, dad, three kids, renting a too-small-for-them condo in the city while eyeing the comparative mansions the same monthly expense could bring them in the Oakland Hills. This, over a period of two years since we'd first connected ... watching, learning, shopping and saving for their down payment -- the only missing piece. Husband and wife are both employed at start-ups, relying on growth in their company equity for the 20% target they'd set. Every week, the family crossed the bay, and seemed ready to roll come February. Before March madness set in, I felt them getting nervous. Their companies both had been impacted with slowdowns. And before they could collect the final stock sale to pull the trigger on an offer, the word pandemic was published, oil deals shifted, and the market crashed. At home a week ago with the kids home from school, the dad sounded glum and so disappointed to admit, his down payment has been halved, and his company faces a long recovery that can't begin until the virus has been conquered. The business is based in public events. If there are none for too long, he's not sure where the income will come from, let alone the down payment. Strike 2.
Strike 3 came March 8: my meeting about listing a Cragmont home while shopping for its replacement was canceled, just an hour before our start time. We'd waited a month to find the timeslot -- after mortgage prep, after shopping and discussing strategy. We knew about the virus by now. Santa Clara had seen a death, and cases were popping up throughout the Bay. That Sunday morning, the family all had sniffles, coughs and aches. The dad, a surgeon, feared he'd been exposed at work, and had gone in to be tested. Of course we didn't meet. By Day 1 of Compass' WFH protocol, later that week, the wife reported they'd take a longer pause now. Her husband had tested positive for the virus. He was feeling much better and they remained quarantined. What worried them, though, was that for the two weeks before the symptoms, the contagious incubation period, the doctor was seeing patients ... and operating. This is how an insidious virus infects. We don't know if we are carrying and contaminating. We can't know who around us is at risk.
Now I get it. Three crystal illustrations of how the "foreign virus" and its economic ravages, came home to roost ... dashing hopes and dreams for young families, mature retiree-wanna-bes, and everyone in between. Three chapters in how the best of times has turned the corner to uncertain times.
It is proverbial in real estate ... whatever world events or the economy bring, Life still happens. People still move. We are reminded that sales still transacted in the wake of Loma Prieta in 1989; I personally bought and sold right after the 2000 market meltdown. And anyone who bought in the Bay Area between 2009 and 2012 can lead the charge today! No matter what the news brings, houses still need to be sold and people still want to buy. Overwhelming demand for homes here has not abated in a decade or more ... and it will be quite some time before we have enough listings to sate the hunger of a generation now ready to own. We are here to make the most of any opportunity for our buyers and our sellers.
For those who want to wait? It's OK. It's understood. And we expect that once the virus abates, we'll have a rush of homes to market, and it will be met by a rush of buyers with awesome mortgage financing to scoop them up.
Conditions will re-balance. They always do. In my own adulthood, we overcame the 1987 crash, the burst of the tech bubble in 2000, 9-11, the 2008 crash and recession following. Yes, we suffered -- not to minimize that. We lost human lives and some fortunes first. So it will be again. We also rebuilt our beloved NYC and our investment portfolios, we innovated new businesses and business models, we mostly fixed the specific broken parts that led to each of those economic downturns. We still fight the war on terror.
Real people. Real stories.
Human beings and how real estate mirrors Life, here and now.
Working in real estate, functioning as advisor to people undertaking huge financial actions, not to mention some of the most personal, most impactful decisions in their lives, I feel like I have advance tickets to the cinematic preview of how the "outside world" impacts individuals, families and communities. Whether decisions are driven by money, culture, aesthetics, or even fads, it seems I see the film rolling before headlines hit the news (or posts hit social media).
Bloomberg / Getty Images
Three Strikes
My eyes first opened while meeting with clients planning to sell their historic Berkeley home, a delightful storybook cottage design that they've carefully updated with grace and style over three decades. It's not often I walk into a home as market-ready as this one. But, no. Just in time for our meeting, the owners determined that rather than claim the home's equity to make their dream move into retirement years, they must deploy capital, including possibly the value of the home, into his business. The company makes and sells athletic products, with components sourced ... you guessed it ... in virus-ridden, closed-for-business China. With no supply chain since winter, he needed to re-source components from new suppliers, or risk having no product to sell by the critical Christmas season. Company resources already spent, the house became an important potential resource. Bye-bye homesale. Hello to economic reality -- we must diversify product sourcing! It was an "a-ha" moment for me. Until then, before the deaths in Seattle, before anyone admitted the virus may have been here, the virus was a story far, far away. Suddenly, early in February, while the markets were soaring, it dawned on me ... this is going to affect us, here, in ways we have not yet foreseen.Opportunity Knocking
Some of my clients see opportunity in the moment. The lowest interest rates ... ever? One of our team put her own house into contract this past week. Another on our team submitted an offer for a buyer the morning Shelter was announced. I'm working this week with buyer clients to close their first home purchase. This week's (virtual) office meeting lacked none of the exuberance of new listings ready for market. We've struck strategies for virtual showings to help sellers and buyers come together even when we're not supposed to be out showing property. (The Bay Area's Shelter Order does not count real estate as "essential" to life under current constraints, yet, we're finding ways to keep going.)Strike 4? Or, Our silver lining.
Now, economically, politically and socially, we have new challenges -- perhaps the pause given by this virus will give people time to reflect. About who we are. Who we protect. Who we "save" from perils and how. How truly we are all in this stew together, like it or not, and how poignantly this bio-hazard underlines that it does not discriminate -- red or blue, black, brown or white, part of the 1% or one of the rest -- we are all in this together. Perhaps, leadership will emerge in this pivotal year with new comprehension of what really is needed to take our populace into the future.
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