What Will 2025 Bring For the Housing Market?

A Merry Christmas Santa

Predictions don't always work out, so in the meantime, please enjoy your December holidays, however you  celebrate them!

2025 will possibly bring:

California median home price of $909,000, a 4.6% upward growth in price.

Statewide higher sales volume than the previous 2 years at 304,000 (but that's 100,000 lower than 2016 sales).

A continued housing affordability index of only 16%, compared to 31% in 2016.

A 30-year fixed rate mortgage of 5.9% (watch for Fed's meetings December 17 and 18).

Insurance costs are still rising along with stock market volatility.

Housing inventory has been increasing (as seen in higher sales volume figure) so that means it may be easier to make a move than in the last 2 years. When sellers can sell, more buyers are able to enter the housing market.

Election outcomes? **If capital gains exemption (some Congressional efforts have been made in the last 2 sessions) is doubled as hoped, that will be another big step for many sellers to move forward. An increase from a $500,000 exemption to $1,000,000 will be a huge help for the California markets. **Will state and local income tax (SALT) deductions increase for California? **Will tax cuts and tariffs help or hinder inflation--because some economists suggest that tax cuts will hinder a decline in mortgage rates. **And, the controversy of deportations may also suggest that deporting immigrants with no documentation is not likely to affect the housing inventory crisis at all: it's actually the millennial generation which has driven the increase in numbers of new households, while only 4.8% of U.S. households have immigrants here illegally. Housing shortages are also a result of land cost, construction costs, and housing programs that need to  be fixed. Read the link at Stateline for more on this issue.

Home insurance will probably continue to rise for some owners, depending also on location. Owners with newer roofing and updated electrical (a problem in some property sales) will fare better with their insurance companies. Contact your insurance agent to find out what you can do to avoid a premium increase as much as possible, and visit the CA Department of Insurance website for more information.  This is important, because 31% of homebuyers in 2024 had problems obtaining home insurance on their new purchase, and a buyer cannot close escrow unless the lender sees proof of obtaining insurance.

Long Beach Market, November:

In November, a single family average price for the city was $1,183,570, an increase of +3.2%.

The average price for a condominium was $580,235. 

The average price for a duplex was $1,151,280, an increase of 0.8%. Living in one and renting out the other could be a great option for some buyers.

If you would like to know more about your property value, just contact me.

And have a Happy New Year!

Julia Huntsman, REALTOR, Broker | http://www.abodes.realestate | 562-896-2609 | California Lic. #01188996

California Insurance Issues May be Affecting You

Numerous residential insurance companies have stopped writing certain policies, most recently it is State Farm cancelling the insurance of approximately 42,000 apartments. This affects anyone who owns units they are not living in if they have a State Farm policy.

In spite of State Farm's cost issues of coverage on claims, catastrophes, reinsurance and decades of working with old insurance regulations, "State Farm recently reported a net worth of $134 billion, up $3 billion from the year before. The state insurance commissioner says that raises serious questions about its financial situation — questions the company must answer to regulators." But supposedly the claims payout is $1.08 for every dollar taken in on premiums in California.  Read more here: https://www.nbcbayarea.com/news/california/california-homeowners-insurance/3492251/  As the article states, you must receive at least 60 days notice of cancellation from your insurer. And, by the way, water claims are always a sensitive subject, it's better to avoid them if at all possible.

House sitting at edge of eroded beach

For buyers and sellers of residential or income property, it's important to find your insurance coverage very very early in your transaction.   Long gone are the days when a buyer could line up insurance coverage 7 days before closing.  In the current market, buyers must make sure they can get coverage within a few days after going into escrow, if not before. Some people (in fact, many people) are turning to the California Fair Plan, but it is now inundated with requests. A prospective owner is better off turning to either their current agent if they can work with outside carriers, or start searching multiple insurance sources.  One source to turn to is the website for the Insurance Commissioner.  What, you don't like this guy? Forget it, what's important is finding ways to meet your insurance goals. It's tough, you probably will end up paying more (as we all are anyway) than your current policy, and different coverage (I already received notice of less coverage on my earthquake policy from the State), but it's important to get it to meet your goals and satisfy your lender's requirement to be covered. 

Someday, I believe, the crisis will be past us, or at least the worst of it.

Julia Huntsman, REALTOR, Broker | http://www.abodes.realestate | 562-896-2609 | California Lic. #01188996

Higher Home Prices and Higher Interest Rates, But Homes Still Sell

The National Association of Realtors data shows home prices increased in 60% of the nation's largest metro areas, while 30-year mortgage interest rates hover around 7 percent in the Freddie Mac survey of rates.

New inventory on the market is hampered by homeowners with mortgages at 3 percent rates and below who do not want to sell and move into a higher interest rate market which would of course increase their costs on monthly payments.

As an example however, twenty-three (23) out of thirty (30) single family residences as listed in CRMLS which sold in Long Beach in the last 30 days--from the date of this post--closed with buyer financing, including conventional, FHA or VA loans. Five properties closed all cash, and two listings did not indicate cash or mortgage.  So those buyers are obtaining loans, and they are obtaining home insurance as required by the lender (another challenge for some buyers in this market). A total of 100 single family residences sold in Long Beach in the previous 30 days, so the pool of 30 above would indicate that approximately 76% of homes are successfully closing with financing.  Insurance tips here

 If you are interested in an evaluation of your property, please call,  text or email me. I am here to help.

For buyers who need assistance in the current market, I'm also here to help, using my 28-plus years of Realtor experience.

Julia Huntsman, REALTOR, Broker | http://www.abodes.realestate | 562-896-2609 | California Lic. #01188996

Insurance - California Homeowner Policies - Tips on Finding and Keeping

Insurance is the Key!

Several companies have stated they are not issuing new policies to new customers, and some existing customers are receiving cancellations.  Below are some advisory tips whether you are in escrow and need insurance for a new purchase, or you're in an existing home and have received a notice.

 If an insurance company is not going to renew your policy, you must receive notice 45 days before the expiration date. If you didn't receive the property notice, the California Dept. of Insurance may be contacted at 1-800-927-HELP or online at www.insurance.ca.gov. Look for renewal provisions in your policy to see what you might qualify for under certain conditions.

Contact your insurance company immediately to see if there are fire-hardening steps you may  take to change the company's decision about non-renewal.

If you don't have an insurance agent, check online with the Department of Insurance in the Consumers Section to help you find an agent, and check if the agent works exclusively with one company or has access to multiple carriers. 

 Check the Residential Insurance Contact List on the DOI website for a list of admitted insurance companies.

Ask questions of the insurance agent: Does it cover current cost of rebuilding per current construction codes? Does it cover replacement cost value? Will the policy cover cost of rebuilding to pre-loss condition? Cover demolition and debris removal? Coverage on temporary rent and expenses while home is being rebuilt? What loss causes are not covered? 

Non-admitted carriers, i.e., surplus lines, do not have CIGA protection, but may be a solution for you. Investigate financial strength of a non-admitted carrier at A.M. Best.

As a last option, try the California FAIR Plan, which only covers fire and smoke. However, if you currently can find no other carrier, this Plan will provide you with coverage required by most mortgage company to keep your loan, or get a new one. It was designed to be a temporary option only, but this may be gap coverage until you are able to obtain a policy with more coverage. 1-800-339-4099. A Differences in Condition policy can be obtained separately to cover theft and liability.

IF YOU ARE IN ESCROW OR ABOUT TO BE:  Do not delay the search for home insurance. Begin immediately. Some insurance companies are using a monthly pool amount to issue policies, so if you qualify and are told you will get insurance, your transaction must close on the date you give to the insurance company, or otherwise if it's delayed in closing, you will lost your place in line, get rolled over to the next month where you start over again--the seller may not go along with this unless it was agreed upon in writing, and given the competitive nature of the housing market, there may be another buyer in line with an offer.  So do nothing to delay your closing date if this is how you are advised you're getting insurance coverage.  

Thanks for California Association of Realtors for the above information.

Julia Huntsman, REALTOR, Broker | http://www.abodes.realestate | 562-896-2609 | California Lic. #01188996

What Could the Potential Loss of Insurance Mean for a California Home Transaction?

The news about State Farm not writing new policies is part of a larger story.  

It's not news that premiums have increased and that areas of wild fires have seen a pullback from insurance companies. The refusal by insurance companies is not just in climate zones, many  types of properties are now affected, including areas that are low risk of fire and flood.

If you're a buyer or seller and currently in a transaction, be aware that the buyer contingency in a standard California Association of Realtors contract allows for investigation of the property, including insurance issues that may prevent coverage.  This is very important that the buyer understand their contracts, and follow up completely on insurance coverage.  Under standard timelines, the buyer contingencies are removed assuming the buyer is satisfied with various areas of investigation. However, since lenders offering a mortgage want to see proof of insurance coverage prior to close of escrow, buyers are strongly advised to obtain an insurance binder or evidence of commitment to insurance coverage as soon as possible in the escrow period (the 1st day it opens), and not remove their buyer contingency until they know they will have insurance policy on that property. Otherwise, they may risk losing their buyer deposit under the terms of their contact with the seller.

Homeowner associations are seeing increases in their master policy premiums, changes in coverage limits, or a refusal to renew policies.  If an HOA master policy isn't renewed, then the mortgages of the condominiums owners are also at risk, since lenders want proof of that policy coverage for the common areas. Or, in the case of some associations, the increase in premium may be so huge it causes a special assessment: one HOA reported in the San Diego Union Tribune ended up with an $8,000 per unit cost for master policy insurance coverage.

If you're a homeowner with current coverage, do not let it lapse, because it may not be renewed.  The California Fair Plan may be an option for some residents and businesses; it protects the home for fire risk and will satisfy a mortgage company's insurance requirement, but it does not cover theft, flood, earthquake, hail, vandalism or personal liability (only special earthquake policy provides coverage for that). 

Insurance brokers are reporting challenging coverage searches for their clients, and are not always successful.  The one area of insurance so far not reporting a problem is renters insurance, which does not cover fire risk.  

If you are not currently represented by a Realtor in a transaction and are interested in finding out what the buyer contingencies are in a purchase transaction, please contact me via phone, text or email.

Julia Huntsman, REALTOR, Broker | http://www.juliahuntsman.com | 562-896-2609 | California Lic. #01188996

Protecting Your Home: What About Earthquakes?

Long Beach house built 1922

Some aspects of climate change have brought more catastrophic events to different regions--in California earthquakes especially have long been present due to geologic features, such as the San Andreas Fault. Native Californians or others who've spent most of their lives in this state may have experienced past quakes to one degree or another:  further in the past was the 1933 Long Beach quake, more recently were Sylmar/San Fernando and the fall of the Oakland Bridge (Loma Prieta).  There have been many earthquakes in California, see the list at the link.   The major ones can be devastating, causing loss of life, displacement of homes, disruption in lives.  

There are things that property owners can do to at least minimize impact to themselves, their families, or their tenants.  One is obtaining earthquake insurance, and another is preparing your home's physical structure doing some simple things: foundation bolts and plywood bracing for certain older homes with cripple walls (when you bought your house the seller should have provided you with a booklet concerning this)--for a more extensive strengthening an owner might want to do a retrofit.  There may also be a grant available for such help--find out more at the California Earthquake Authority site for units over garages, mobile homes, hillside houses, post and pier homes, etc.  

There are over 500 active faults in California and most Californians live within 30 miles of an active fault. Based on a study in 2014, there is a 75% likelihood of one or more magnitude 7.0+ quakes striking Southern California in the next 30 years.

Homeowners can add earthquake coverage to their home insurance, and condominium owners, especially those in a multiunit multifamily style homeowners association which does not have a master earthquake coverage, may purchase their own coverage for the interior of their unit--it not only gives replacement value but can also provide living expenses for some time into the future.

Communities that have been struck by disasters can recover more fully and completely when its members have had the financial means to do so..... If you're a homeowner it would be advisable to take steps to protect your home. Don't be surprised if you live in  an older home (built before 1933) and your neighbors tell you their house isn't bolted, or they don't know for sure -- just think about how an unbolted house can jump off the foundations.  If you can't pay for those repairs yourself, what are you going to do? Here is a link to brace and bolt grants.

Julia Huntsman, REALTOR, Broker | www.juliahuntsman.com | 562-896-2609 | California Lic. #01188996

What is the Difference between Home Warranty and Home Insurance?

When purchasing a new home, it’s important to do in-depth research on all facets of the homebuying process. One thing you’ll need to understand is how to best protect yourself and your investment if anything were to go wrong. Check out the information on home insurance versus home warranty below to educate yourself on your options.

Home Insurance

Homeowners insurance pays for any accidental damages and loss that are caused by fire, lightning strikes, windstorms, and hail, however, damage from earthquakes and floods is typically not covered. It also covers the replacement of personal property in case of theft or damage and liability if a person were to get injured in your home or on your property. According to American Home Shield, the average annual cost of a homeowner's insurance policy ranges between $300 and $1,000, and the bank usually asks you to obtain a policy before the mortgage is issued. Make sure to keep in mind that each type of coverage in the policy is subject to a limit and, in most cases, you will have to pay a deductible. Another consideration is whether you are purchasing a single family home, or a property such as a condo situated inside a homeowner association which also carries a master common area policy.  Be sure to find out about the coverages available.

Home Warranty

A home warranty is designed to cover the cost of repairs and replacements of larger appliances and crucial systems in your home that may fail or break due to age and wear and tear. This includes but isn’t limited to HVAC, electrical, or plumbing components, kitchen appliances, and your washer and dryer. With a home warranty, you are required to pay premiums year-round, even if you do not use it, and it won’t cover damages if appliances were not maintained properly or if the damage is from a fire or other disaster.  Some home warranty policy coverages may be quite extensive, so if you are covered through one when you close escrow, be sure to review what's included before calling a repair person, because savings may be considerable if you have coverage. The upfront home waranty fee for a repair call is usually much less than paying a full cost repair man or plumber.  Although not required, often a seller is willing to pay such a home warranty premium for one year, through escrow for the buyer.

Julia Huntsman, REALTOR, Broker | www.juliahuntsman.com | 562-896-2609 | California Lic. #01188996

How Will Living in a Flood Zone Impact You in Southern California?

Belmont Shore Flood Zone Area (some
properties may have been revised per specific
elevation studies)

Let's take Belmont Shore in Long Beach as a sample area which is officially designed by FEMA to be in a flood zone as shown on the map.

This is not the only affected area of Long Beach which also include the Alamitos Bay area, areas along the flood channel in Wrigley on the west side, etc., so a homeowner should look at maps at the link at the bottom of this article.

By clicking on the map a larger view will be seen, along with the names of the flood zones.  FEMA's description of the flood zones are found on their site.  Also, by going to their site, the viewer can find his/her particular neighborhood.

What does this mean for the property owner?  First of all, if you buy a home with a federally insured mortgage, you will be required by your lender to buy flood insurance if it is located in one of the high-risk flood areas.  This type of insurance may be purchased through your insurance agent utilizing the National Flood Insurance Program.

A homeowner's insurance policy does not cover flooding, so a separate flood policy will be required. If you are in escrow, or will be soon, you will want to investigate as quickly as possible if there have ever been prior flood claims involving that property. One of the standard ways of finding out about prior claims is by ordering a CLUE Report (Comprehensive Loss Underwriter Exchange) which gives a 5-year history of the property.  These reports have been an established source for a number of years and are available at a minimal cost of approximately $20.00.  Other sources such as the seller's Transfer Disclosure Statement, a natural hazard disclosure report, and a professional and qualified home inspector are also ways of learning of prior claims and potential for flooding, and location in a flood zone.  Be aware, however, that California and federal guidelines differ on whether or not a specific property is partially located in a zone, so final determinations are made when the flood insurance is applied for.

The cost of such policies vary by type: coast policies, high risk policies and preferred risk policies. The cost can range from an extra $5,000 a year, to $196 a year, depending also on prior claims and type of coverage.

According to one local insurance agent, quotes made for the local area after October 1, 2013, are significantly higher than before, and are over $3000 for an annual quote.

Property owners, if you live in such a coastal area or other flood zone area, please find out about Elevation Certificates. By obtaining one and providing it to your insurance agent, you may obtain accurate information about your risk, and actually lower the amount of your premium in some cases.  An Elevation Certificate compares your property with the Base Flood Elevation (BFE), a marker for a flood with a one percent chance of occurring.  Insurance rates are based on the building's elevation above this base elevation.   The elevation can save the owner money, as the higher above the BFE a building is located, the lower the insurance premium will be.  Surveyors who perform the evaluations charge varying amounts, so by contacting your insurance agent you may find the most qualified professional for Elevation Certification.

If you are considering selling your home, considering the recent cost increase in this flood insurance, do you think this would be an important certification to obtain prior to putting it on the market?  Yes, it would be, because if a buyer finds out in escrow how much more the additional flood insurance is, it might be a deal breaker.  But if you, the seller, have the up front information, that is important information to provide to a buyer who can then decide if the extra insurance is feasible, or if they have options in level of coverage.

To find out more information, go to http://www.floodsmart.gov.  Find more Southern California mapped areas .  If you are unable to find a local insurance agent, please contact me for this and a FEMA Fact Sheet about Elevation Certificates.  This information is current as of 12/19/2013.
 
For an evaluation of your home's current market value, I am always available at no obligation. 

What Does Homeowner Insurance Cover, or Not Cover?

What does your homeowners insurance cover? 

The short answer is: A basic homeowners insurance policy (called HO-1 in insurance lingo) covers your home and possessions if they’re damaged or destroyed by these things:

Fire
Lightning
Windstorm (unless you live in a hurricane zone)
Hail (not available everywhere)
Explosion
Riots
Civil commotion
Aircraft (and things falling from aircraft)
Vehicles (and things thrown from vehicles)
Smoke
Vandalism (although some policies exclude this)
Malicious mischief
Theft
Volcanic eruption.

But many states don’t allow this basic policy to be sold. Instead, you have to buy an upgraded policy that covers more perils.

Upgraded Homeowners Insurance

That upgraded policy (called HO-2) adds protection to your home and possessions from even more perils. You get protection from everything on the HO-1 list (above) plus:

How Does an Owner Cope with a Coastal Property Near Rising Water Level?

If you live in California, and Southern California in particular, your property may be near the coastal areas and at or near sea level--and therefore closer to the water table levels. At certain times of the year there are annual high tides, i.e., the one seen almost up to the asphalt level of Pacific Coast Highway through Huntington Harbour.

Houses with basements, or more likely crawl spaces under the raised foundation, may show signs of moisture or even flooding. This is dealt with by creating sumps--or holes in the ground to collect water--and installing sump pumps. The pumps may be set up with connectors (i.e., a hose) to carry the water off the property, via drains, or whatever method complies with local codes.

While a buyer should obtain professional assistance about the best type and system to install, if you're buying property almost level to the water, don't be surprised to find out you may have to deal with this.

In more extreme cases, you may want to find out about subsidence and call in another expert. You will want to review the natural hazard disclosure reports, and even local flood zone reports available online through FEMA. Also, be aware that if the property is in a specific FEMA flood zone, additional insurance may be required before your lender will fund your new loan, or otherwise require you to obtain the additional insurance if you already own the property. You may be able to obtain an elevation certificate issued by a qualified surveyor if your property sits at a high enough elevation.

For more information about contacting an appropriate local professional, please feel free to give me a call.

Getting Your Home Insurance Lined Up

Home insurance coverage in California is important for everyone, but this article about Allstate Insurance is why homebuyers especially need to be vigilant. Insurance coverage for homeowners is cyclical, and depends on the disaster climate in which companies underwrite. Although they say they are no longer to give coverage, or coverage is contingent on certain factors being present, insurance companies have been known to change their minds later. Nevertheless, when you're in escrow, or even when you are house shopping, start researching possible insurance companies. There was a time when coverage could easily be obtained about 10 days before escrow closed, but that hasn't been around for a long time, and it's getting stickier. Your credit may be checked, and prior claims on the property you wish to insure may impact which company will insure you. There's really no time to waste for finding coverage before you close escrow. If you're obtaining a loan, it will be required by the lender, and you should get it regardless.

Local Credit is Very Global

What constitutes news and relevant information about real estate? About you as a real estate consumer? Well, a lot of things, not just pictures of residential property. Someone was recently upset because of an article about vehicle license renewal and what may happen if you’re stopped and maybe you just haven’t paid your overdue fees yet because you thought you had until the end of the due month on your license tag, and the fact that police have immediate access via computer to see if you’ve paid your annual fees on the due date. If it went unpaid (not that we must assume the worst, but here it is), notice of that goes to the Franchise Tax Board where it would ultimately appear as a tax lien connected to you. Then think about your credit report and what gets reported on it.

Think about your credit score being a reflection of financial events connected to you. Did you know that when you apply for insurance, or a bank account, your credit report is viewed? Then think about the fact that mortgage loan underwriters also take a look at that credit report, including recent events of all kinds just before they decide to give you a loan. The workings of our bureaucratic world are very important to know about when it comes to getting a loan. That way, when you get the loan, you can get the house. You may obtain your free annual credit report at http://www.annualcreditreport.com/.

Long Beach

What About the CLUE report?

This article is another reminder to be careful about claims on your homeowner insurance. All buyers and sellers should be aware that a previous owner's, not just the current owner's, claims may affect the current buyer's ability to get certain insurance coverage on their new home purchase. The Comprehensive Loss Underwriting Exchange is the insurance industry's database about claims history, especially related to water and mold problems. This article should emphasize the point of vigilance about home maintenance issues to prevent the unexpected as much as possible.

What You Need to Know Besides the Selling Price.

It's no news to most homeowners that home insurance premiums have risen in California, or that the reason is due to claims against insurance companies because of mold and water-related damage. But have you ever thought about a Realtor's insurance coverage during your transaction? Errors and omissions insurance premiums have more than doubled--there are fewer carriers willing to carry risk in California. This is a result of the sharp increase in claims against Realtors, even though only a small percentage are actually valid. Consequently, some brokers no longer can afford this coverage. The working relationship between clients and their Realtors, if given some advance thought and preparation by all concerned, could alleviate misunderstandings. This article explains more.