Real Estate Sales Strong in Borrego
Last updated 7/6/2020 at 2:15pm
It started out like any ordinary season with homes selling at a good click and people flocking to our area to enjoy the many attractions the Borrego Springs area has to offer. The economy was running on all cylinders, unemployment was at levels not seen in decades, the stock market was at all-time highs, mortgage rates were very attractive, and people were feeling confident about making an investment in real estate.
Then the unthinkable happened! It started with a few headlines and not much worry, then the stock market went into one of the quickest contractions in history. States and localities started ordering all non-essential businesses to close and urged people to shelter in place. Unemployment shot up with light speed and within a couple of weeks the economy ground to a halt. In the middle of all this chaos, mortgage rates took another dive which caused a wave of refinancing applications. At the same time, the secondary mortgage market, the people who buy loans after banks originate them, froze up. Partly because everything was deteriorating so quickly that no one wanted to be left holding a bunch of bad loans, flash back to the financial crises of 2008. As a result, some banks were not able to originate loans. It was like a nuclear bomb had obliterated everything we thought was normal, and we were plunged into an eerie war like scenario. Realizing the crisis at hand, the government quickly came up with emergency measures to keep the economy on life support. From economic stimulus checks, to enhanced unemployment benefits, to small business loans, and much more, they were using every tool in their arsenal in an attempt to minimize the damage from this cataclysmic event.
There were a number of homes under contract when all of this started, and the vast majority of them closed successfully, but new purchases ground to an almost complete stop for about six weeks. Sellers were hesitant to have people walking through their homes. Buyers were afraid to venture out for fear of their health and of violating orders to shelter in place. Banks started raising lending standards making it harder to get a loan. What started out as a normal season of selling homes came to a screeching halt along with the rest of the economy.
As the weeks passed by, we were going through something that none of us had ever experienced before. People were adjusting to stay at home orders and doing whatever they could to entertain themselves without leaving the house. No more eating out at restaurants and bars, no concerts, no social events, no travel, no movies, no trips to the shopping mall, nothing. At the same time, virtually everyone with a social security number received a check from the US Treasury. Those who were unemployed started receiving an extra $600 per week on top of their unemployment benefits. And with no chance to go out and do anything, the savings rate in American shot up at a record pace. At the same time, people started getting cabin fever and could not wait to get out and spend that extra coin that they had saved.
After the lockdown restrictions started to ease, a curious thing began to happen. A few brave souls were poking their heads out and inquiring about property. As more and more restrictions were lifted even more people were taking to the streets and viewing properties in person again. At the same time, mortgage rates had dropped to the lowest point in history. With newfound confidence people started buying homes in droves. It was part pent up demand, part opportunity, and partly an underlying shift in the way people are thinking about where they really want to live. In the past month or so there has been a marked migration out of crowded urban areas into less crowded suburbs and exurbs, or rural areas such as Borrego Springs. After being locked down in a small space, surrounded by masses of people, sharing the same elevator or taking public transportation is no longer something that everyone wants to tolerate. There is also a hint that the shift to working at home or telecommuting is starting to open up areas like Borrego Springs to younger people who may be years from retirement. If you can work from anywhere, why pay the high cost to live in the city when just over the mountain there is a place that is still relatively inexpensive. You can get a larger home, with more space around you, all at a very attractive price.
We are continuing to see high demand for homes in Borrego Springs, despite the fact that summer has set in. Is this a trend that will continue or just a flash in the pan from a reaction to the events of late? That remains to be seen, but for now homes are selling like hot cakes.