Real Estate

Taking stock of real estate, post-COVID

As the virus fades, where do we go from here? Industry leaders weigh in

With people spending more time at home over the past two years, local real estate professionals say consumer demand has shifted toward homes on more spacious lots in areas such as Los Altos Hills and Portola Valley. Embarcadero Media file photo.

It's been a long two years since the pandemic brought the region to a screeching halt midway through March 2020, catapulting the home industry into a new reality. Everything has changed, from the ways properties are shown and marketed to what kinds of renovations, floor plans and home features are most desirable, given that the ways people interact with one another in public and private spaces have been redefined. And now as there appears to be hope of at last exiting the pandemic, the Palo Alto Weekly reached out to a handful of industry leaders representing construction and residential real estate to find out what might change and what lingering impacts of the past two years might be here to stay.

These same industry leaders shared their perspectives with the Weekly three months into the pandemic and again one year after the shutdown. Their interviews have been lightly edited for length and clarity.

Michael Repka. Courtesy Michael Repka.

Michael Repka

CEO, DeLeon Realty

What has changed since 2020?

"We are continuing to see buyers filter properties through online resources, such as narrated videos and 3D tours. This trend was occurring before (COVID-19), but the pandemic has made producing sophisticated online videos an even more important screening tool for buyers.

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Additionally, we have seen a reduction in the percentage of all-cash offers. Although speculation, it seems that the increase in financed offers is, in part, tied to buyers trying to lock in a low-interest rate before (rates) go up."

What are some unresolved uncertainties you see in your industry?

"The largest uncertainty is whether companies will continue to expand their workforce in Silicon Valley or move some operations to other areas with lower cost of living and low or no state taxes. Over the past two years, we have seen a lot of sellers moving to (other) areas. More recently, it has been more common for companies to hire in these other areas as well."

What's your view on the real estate market right now?

"The consumer demand for real estate has shifted toward nicer homes and larger lots. I think this is a direct result of so many people spending more time at home than they had in the past.

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Some of the areas that were historically the hottest — such as parts of Palo Alto, Menlo Park and Los Altos near town centers — have been a little cooler when compared to homes located on larger lots perhaps up in the hills or a little farther away."

Michael Repka is the chief executive officer, managing broker and general counsel of DeLeon Realty.

Derk Brill is a Realtor at Compass Real Estate. Courtesy Derk Brill.

Derk Brill

Realtor, Compass

What has changed since 2020?

"Real estate and practices have evolved since the start of the pandemic. The market went from uncertainty to gaining strong footing as buyers' needs and focuses changed — be it location, square footage or lot size. Working from home has given (buyers) the opportunity to live farther from traditional work and housing centers. With mandates eased and the public more comfortable with in-person showings, open houses have become very active again. In the beginning, open houses were not viable, and there was a shift in the marketing process, with all aspects of the home (photos, floor plan and videos) online."

What are some unresolved uncertainties you see in your industry?

"There are continuing challenges around available inventory, much of which is constricted by tax laws — rather than the pandemic — that keep seniors in place at the expense of market supply. With the end of the pandemic in sight, do you feel like the industry is heading back to the pre-pandemic normal? The local market has never been "normal" compared to the nation, but it has evolved along with society. People value neighborhoods in the Bay Area, and that hasn't changed. What they value in these neighborhoods has changed over time, and will continue to do so."

What's your view on the real estate market right now?

"The market continues it's strength and will remain so until supply pressures ease.

While there has been some movement out of state, today's local buyers remain focused on communities, schools and lifestyle."

Derk Brill is a Palo Alto native who has ranked among the top-producing agents in the United States during his 22 years as a Realtor practicing in his hometown.

Lisa Sten is CEO of Harrell Modeling. Courtesy Lisa Sten.

Lisa Sten

CEO, Harrell Remodeling

What has changed since 2020?

"Harrell adapted quickly to remote work for most of our office early in 2020. We still have a few folks who work somewhat remotely but ... most everyone is in the office every day now. Because of our strong company culture and team collaboration, our need to be together in person is important, and marked a turning point in the pandemic for us. As we're not a tech company, our collaboration and teamwork are an inherent part of our process and business."

What are some unresolved uncertainties you see in your industry?

"It is still a challenge keeping up with fluctuating prices and ever-changing lead times on cabinetry, plumbing fixtures, light fixtures, tile, etc., due to global supply-chain issues."

What's your view on the construction industry right now?

"I think it will continue to do well. People want to invest in their homes and want to enjoy them. We have limited land and a limited number of housing units (in the Bay Area). Home remodeling projects continued to be very robust through 2020 and 2021. We now have a bigger pipeline of projects in design than ever. Our scope of work also has increased. In our experience, the projects we’re seeing typically include several rooms rather than just one-room makeovers like a bathroom. The once "bathroom-only" project has become the 'east wing of the house.'"

Lisa Sten is an award-winning designer and chief executive officer of Harrell Remodeling. She joined the Palo Alto-based residential remodeling company's design and build team in 2000.

Xin Jiang is real estate agent with Compass in Palo Alto. Courtesy Xin Jiang.

Xin Jiang

Realtor, Compass

What has changed since 2020?

"The pandemic has definitely brought drastic changes to the real estate market. It has moved many variables in the market all at once. ... That's why 2021 was very active with the transaction volume at a 10-year high and home prices at a historic high. It triggered people to reconsider where they want to live and how they want to live. Those choosing to work remotely for a very long time now have the option to move into the mountains or next to the ocean. This out-migration has helped free up some housing inventory in the heart of Silicon Valley."

What are some unresolved uncertainties you see in your industry?

"I see a lot of uncertainties: How long will the tech economy continue to do well? Will Silicon Valley remain the heart of the innovation and keep attracting talents from the rest of the world? With the high cost of living and climate crisis, how long will the out-migration continue? If it rises and then outweighs the incoming demand, will home prices will start to fall? Will the two new Senate bills 9 and 10 really solve the housing affordability problem and reshape our communities?"

With the end of the pandemic in sight, do you feel like the industry is heading back to the pre-pandemic normal?

"To some extent, our community is forever changed. It'll be hard for those who let go of their homes during the pandemic to buy back based on the current upward price trend. Moreover, as the largest pool of the beneficiaries of a booming tech economy is engineers from China and India, the diversity of high-home-price areas will decrease inevitably."

Xin Jiang is Palo Alto real estate agent with Compass who has more than a decade of experience as an investment banker, stock analyst and fund manager.

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Taking stock of real estate, post-COVID

As the virus fades, where do we go from here? Industry leaders weigh in

by / Palo Alto Weekly

Uploaded: Mon, Apr 18, 2022, 10:30 pm

It's been a long two years since the pandemic brought the region to a screeching halt midway through March 2020, catapulting the home industry into a new reality. Everything has changed, from the ways properties are shown and marketed to what kinds of renovations, floor plans and home features are most desirable, given that the ways people interact with one another in public and private spaces have been redefined. And now as there appears to be hope of at last exiting the pandemic, the Palo Alto Weekly reached out to a handful of industry leaders representing construction and residential real estate to find out what might change and what lingering impacts of the past two years might be here to stay.

These same industry leaders shared their perspectives with the Weekly three months into the pandemic and again one year after the shutdown. Their interviews have been lightly edited for length and clarity.

Michael Repka

CEO, DeLeon Realty

What has changed since 2020?

"We are continuing to see buyers filter properties through online resources, such as narrated videos and 3D tours. This trend was occurring before (COVID-19), but the pandemic has made producing sophisticated online videos an even more important screening tool for buyers.

Additionally, we have seen a reduction in the percentage of all-cash offers. Although speculation, it seems that the increase in financed offers is, in part, tied to buyers trying to lock in a low-interest rate before (rates) go up."

What are some unresolved uncertainties you see in your industry?

"The largest uncertainty is whether companies will continue to expand their workforce in Silicon Valley or move some operations to other areas with lower cost of living and low or no state taxes. Over the past two years, we have seen a lot of sellers moving to (other) areas. More recently, it has been more common for companies to hire in these other areas as well."

What's your view on the real estate market right now?

"The consumer demand for real estate has shifted toward nicer homes and larger lots. I think this is a direct result of so many people spending more time at home than they had in the past.

Some of the areas that were historically the hottest — such as parts of Palo Alto, Menlo Park and Los Altos near town centers — have been a little cooler when compared to homes located on larger lots perhaps up in the hills or a little farther away."

Michael Repka is the chief executive officer, managing broker and general counsel of DeLeon Realty.

Derk Brill

Realtor, Compass

What has changed since 2020?

"Real estate and practices have evolved since the start of the pandemic. The market went from uncertainty to gaining strong footing as buyers' needs and focuses changed — be it location, square footage or lot size. Working from home has given (buyers) the opportunity to live farther from traditional work and housing centers. With mandates eased and the public more comfortable with in-person showings, open houses have become very active again. In the beginning, open houses were not viable, and there was a shift in the marketing process, with all aspects of the home (photos, floor plan and videos) online."

What are some unresolved uncertainties you see in your industry?

"There are continuing challenges around available inventory, much of which is constricted by tax laws — rather than the pandemic — that keep seniors in place at the expense of market supply. With the end of the pandemic in sight, do you feel like the industry is heading back to the pre-pandemic normal? The local market has never been "normal" compared to the nation, but it has evolved along with society. People value neighborhoods in the Bay Area, and that hasn't changed. What they value in these neighborhoods has changed over time, and will continue to do so."

What's your view on the real estate market right now?

"The market continues it's strength and will remain so until supply pressures ease.

While there has been some movement out of state, today's local buyers remain focused on communities, schools and lifestyle."

Derk Brill is a Palo Alto native who has ranked among the top-producing agents in the United States during his 22 years as a Realtor practicing in his hometown.

Lisa Sten

CEO, Harrell Remodeling

What has changed since 2020?

"Harrell adapted quickly to remote work for most of our office early in 2020. We still have a few folks who work somewhat remotely but ... most everyone is in the office every day now. Because of our strong company culture and team collaboration, our need to be together in person is important, and marked a turning point in the pandemic for us. As we're not a tech company, our collaboration and teamwork are an inherent part of our process and business."

What are some unresolved uncertainties you see in your industry?

"It is still a challenge keeping up with fluctuating prices and ever-changing lead times on cabinetry, plumbing fixtures, light fixtures, tile, etc., due to global supply-chain issues."

What's your view on the construction industry right now?

"I think it will continue to do well. People want to invest in their homes and want to enjoy them. We have limited land and a limited number of housing units (in the Bay Area). Home remodeling projects continued to be very robust through 2020 and 2021. We now have a bigger pipeline of projects in design than ever. Our scope of work also has increased. In our experience, the projects we’re seeing typically include several rooms rather than just one-room makeovers like a bathroom. The once "bathroom-only" project has become the 'east wing of the house.'"

Lisa Sten is an award-winning designer and chief executive officer of Harrell Remodeling. She joined the Palo Alto-based residential remodeling company's design and build team in 2000.

Xin Jiang

Realtor, Compass

What has changed since 2020?

"The pandemic has definitely brought drastic changes to the real estate market. It has moved many variables in the market all at once. ... That's why 2021 was very active with the transaction volume at a 10-year high and home prices at a historic high. It triggered people to reconsider where they want to live and how they want to live. Those choosing to work remotely for a very long time now have the option to move into the mountains or next to the ocean. This out-migration has helped free up some housing inventory in the heart of Silicon Valley."

What are some unresolved uncertainties you see in your industry?

"I see a lot of uncertainties: How long will the tech economy continue to do well? Will Silicon Valley remain the heart of the innovation and keep attracting talents from the rest of the world? With the high cost of living and climate crisis, how long will the out-migration continue? If it rises and then outweighs the incoming demand, will home prices will start to fall? Will the two new Senate bills 9 and 10 really solve the housing affordability problem and reshape our communities?"

With the end of the pandemic in sight, do you feel like the industry is heading back to the pre-pandemic normal?

"To some extent, our community is forever changed. It'll be hard for those who let go of their homes during the pandemic to buy back based on the current upward price trend. Moreover, as the largest pool of the beneficiaries of a booming tech economy is engineers from China and India, the diversity of high-home-price areas will decrease inevitably."

Xin Jiang is Palo Alto real estate agent with Compass who has more than a decade of experience as an investment banker, stock analyst and fund manager.

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