Optimism for new-home purchases remains high

As the economy undergoes change, this time around, the “R” word appears not to be scaring away Bay Area new-home buyers from purchases, despite a springtime slowdown due to shelter-in-place orders. In fact, some builders say buyers are considering new construction as a safe way to invest not only in their futures, but in their well-being.

“Tracking interest rates for the past 50 years, current rates are the lowest ever,” says Colleen Edwards, marketing director for the River Islands community in Lathrop. “People are less worried about job security and their futures than they were during the last recession and they want to take advantage of these rates.”

She makes a valid point. This time, the risky bets of a subprime mortgage market aren’t behind economic slowing.

For new homes in particular, growing intrigue from buyers can be seen across price points, demographics, community sizes and home types.

“If I have any worry it’s that we’re going to sell out of product faster than we can replace it!” Edwards says with a self-deprecating laugh. She adds that, in 2019, the master-planned community sold 319 homes, a number that earned River Islands a spot on the list of bestselling, new-home communities in the country.

“Adding to that, we sold 100 homes just from mid-may to midjune this year.”

Edwards notices that after some time getting used to the new, notso-normal of life during a pandemic, and the inability to get out and see as many houses as they might, new-home buyers are relaxing about real estate. She believes they began realizing that this was a public health crisis, not a real estate crisis.

Edwards says that some buyers have looked at the pandemic as the motivation they needed to move from higher-density, urban or suburban apartment living into more open, less populous communities with all-new amenities.

“Everybody gets a fresh, clean home on a lot with a nice backyard,” she says, noting that River Islands includes the largest universal access for public recreation along the San Joaquin River via an 18-mile trail system.

Taking a look at buyers’ motivations in other new-home settings, Van Daele’s Baker + Jamison

community in Castro Valley is drawing summer move-ins for different, but just as compelling, reasons.

Located just a few blocks from BART and with easy access to Interstate 580, the three-story, attached townhome-style condominiums at Baker + Jamison feature generous master suites, spacious great rooms and attached two-car garages. Here, buyers discover pristine condominium homesites, each with its own private entrance along with enclosed porches and decks.

For those who can’t stand social distancing, but still must abide by it, Baker + Jamison offers wide-open, grassy common areas. And the community is positioned within easy walking distance to community parks, shopping, dining and BART.

Need to sell first?

Not to be ignored is the fact that many new-home buyers need to sell their existing homes before purchasing a brand-new home.

The California Association of Realtors (C.A.R.) in June announced that existing, singlefamily home sales totaled 238,740 in May on a seasonally adjusted annualized rate, down 13.9 percent from April and down 41.4 percent from May 2019.

At first glance, this may cause worry for new-home buyers who need to sell first.

But optimism is high in the resale market. Despite the C.A.R.’S explanation that the sharp sales drop in May was the steepest in a long time, encouraging signs indicate the market is recovering already.

C.A.R. President Jeanne Radsick said in a June 16, 2020 C.A.R. press release that the market “should continue to improve over the next few months,” adding that, “with pending home sales up a stunning 67 percent in May, buyer demand is on the upswing amid record-low rates that are making monthly mortgage payments $300 less than a year ago.”

Buyers (and sellers) have nothing to lose by having casual conversations with lenders and builder of their choice. Plan ahead by having your financial information available and making appointments in advance.