Working from home is a new normal for residents in the Bay Area and is also making it harder to predict the future of real estate.
"We know there's not enough housing supply in the Bay Area, and as a result, many folks can't afford to live in areas that are close to their office," said Jordan Levine, deputy chief economist for the California Association of Realtors (CAR). Levine said that Bay Area workers will be "going to where the housing supply is."
The definition of "close to their office" has changed during COVID-19 and will, most likely, continue changing after, COVID-19.
Asked what makes it difficult to predict residential real estate market behavior, Levine said, "In the Bay Area it's really tough because the work-from-home component really influences the distribution of where folks are going to be living and how many folks really come back to work in the physical sense."
Levine knows the Bay Area. Prior to joining CAR, he worked with Beacon Economics for more than eight years researching and analyzing Bay Area real estate and economic trends.
The impact of working from home may be felt more in San Francisco and the Peninsula communities. Pleasanton's location approximately halfway between bedroom communities in San Joaquin County and the job centers in Silicon Valley may make it somewhat immune from the work-from-home forces impacting real estate in other areas.
Levine explained that buyers who once considered Pleasanton too far from jobs in San Francisco and San Jose may have a different view given the opportunity to work from home even just a few days per week. Conversely, those buyers commuting from Tracy or Modesto who had been considering buying in Pleasanton may also change their mind with the possibility of working from their current home.
"It's possible that it may be a wash," Levine said. "There's always going to be two sides to the shuffle: Some people are going to leave, and some are going to be coming who may have been reluctant to buy earlier. It's just a kind of reshuffling of who's there more so than a net outflow. The East Bay has traditionally been an overflow for San Francisco, and I still think that will be the case."
Pleasanton's proximity to San Francisco may not outweigh the benefits some buyers see in living in a large city. Levine said, "All of the things that make living in LA or San Francisco great cities and world-class cities are still there in terms of the attraction, the culture, the restaurants. People want to be there so I don't think we're going to see a mass exodus in any case, but it's still a question mark if we're talking about 5% or 10% of the folks are able to get out of the city or is it a bigger percentage? That all is still yet to be determined."
The COVID-19 crisis and associated shelter-in-place orders hit just as the spring buying and selling season was taking off. As a result, the number of homes for sale and homes sold was thrown off.
Levine explained the impact on real estate activity statewide: "We expect the year to end up with a 12% decline in closed sales, but there are other scenarios that include problems caused by more infections and problems in the financial markets."
Levine continued, "We don't have one single forecast and that gets to the heart of how uncertain these times are right now. Our baseline assumes there's no second wave of the virus in the fall and there's no big double-dip in the financial market and the labor market continues to come back as it has over the last couple of weeks."
Ultimately, the future of real estate throughout California and in Pleasanton will be tied to the future of COVID-19.
"If there's a major change in terms of the forecast for the virus itself, all bets are off and we're going to have to go back to the drawing board," Levine said. "It's a much different question for businesses to weather a storm from March through late-April than having to survive for six to eight months without a significant up-tick in their business. That's a different story."
Editor's note: David Stark is public affairs director for the Bay East Association of Realtors, headquartered in Pleasanton.