What Happened in 2023 in the California Real Estate Scene

Graphic showing 2023 market data in California

 The 2023 housing market had ups and downs, but buyer competition remained, and prices continued upward for the most part, in spite of inflation, shrinking insurance availability, and increased mortgage interest rates.

Home sales slowed, but the housing market hasn't crashed. Mortgage rates went to 7 percent, prompting many homeowners to not sell, and those who did were sometimes offering incentives to the buyers.  Housing shortages are reflected in the December to December 23% decrease in new listings, and the overall 20% decrease in closed sales.  But median and average sale prices both increased.

For 2024, the chief economist of the California Association of Realtors, Jordan Levine, predicts continued price improvement, and sales volume improvement compared to 2023. Mortgage rates are already easing, which lowers the monthly mortgage payment amount, and perhaps will fall to the 6-6.5% range. To combat the inventory shortage, expect widening support  for accessory dwelling nits and the conversion of empty office buildings into residential space. Insurance carriers may continue to withdraw, and cause an increase in prices while forcing the buyers to look at outside carriers.  The California Fair Plan is a growing option, but comes at a higher cost for only basic coverage.  Buyers should do their  best to find as many insurance carrier options as possible.  A new down payment assistance resource directory may offer help for some buyers, contact me for a program that may work for you.

You're probably aware of ChatGPT generated information, and the discussions about using Artificial  Intelligence (it's not new, a Magnum P.I. segment in the 1980s had Magnum and his consultant friend talking about and referring to artificial intelligence and what they were discovering then what computers could do!) are now frequent in the real estate profession. Some property descriptions, marketing materials and social media posts are online from AI.

The median-priced home in California is now $830,620,  in Long Beach the December 2023 average sales price was $1,060,056 and for a condo it was $557,532--but that varies: the 90803 zip code average price for condos was $741,333.

With the softening of interest rates (remember, an 800+ credit score gets you the best rate, so take care of your credit), buying a home may be more possible for buyers and sellers alike.  Please contact me with any questions, sometimes all it takes is a conversation to help get you started.

 

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

Long Beach November 2023 Residential Market for Condos and Houses

 The November average sales price for a single family home continued up from November 2022 (on a monthly basis), as did the median price, by over 12%! However, the overall average decreased slightly compared to the same time last year.

Condo prices went up on both a monthly comparison and for the over all year compared to one year ago.

New listings for SFRs were down compared to November of last year, showing the inventory crunch (a pattern found in just about all markets); but for condos new listings were up, but pending sales and closed sales were down from one year ago.  And for both types of sales, the number of days on market are longer.

 The good news is that the 30-year interest rate has recently decreased, which makes a difference on the buyer's prospective monthly payment! So we hope to see more of this in 2024.

 For an estimated value of your property whether it's one, two, three or four units, please contact me. I can help you plan before you take any actual steps.

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

Purchasing Power Calculator for Use by California Buyers or Sellers for Houses and Condos.

 

Interest rates are climbing again, today they are up to 8%, the highest rate in decades. While buyers should realize there are other things to keep in mind about buying besides the interest rate, such as the chance to build equity, sellers also need to keep in mind how interest rates are affecting asking prices in some areas, and what to expect in an offer from the buyer.

To see the impact on both sides of the transaction, the Purchasing Power Calculator gives an immediate picture of monthly payment, number of properties available, reduction or increase in asking price, and information gathered from California counties' markets. 

Buyers should keep in mind that interest rate is also impacted by credit scores, type of loan, and other factors. The purpose of this calculator is to give an immediate picture of choices, both housing inventory-wise and financially.

Just click on the link to see the calculator.

For more assistance, please contact me via text, email or phone call.  For a  property search, go to my website.

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

A Slowing of Rate Increases, Finally?

The sequence of four straight hikes of 75 basis points (.75%) in a row was capped last Wednesday Dec 14 by a rate hike of 50 basis points (.5%), all in an effort to cap inflation.  Federal Reserve Chair Jerome Powell recognize the stress of these rate hikes, and continues to promise to be vigilant in fighting inflation, but it perhaps has been having the opposite effect.

"Indeed, the statement released by the FOMC pointed to “ongoing increases in the target range” in order to bring inflation back to the Fed’s 2% target. New economic projections issued Wednesday by the central bank revealed that officials now anticipate inflation to close this year at 4.8%, gradually dwindling back to 3.5% in 2023 and falling to 2.5% in 2024."  The Fed's policy rate is now at 4.5%, the highest since 2007.  https://www.scotsmanguide.com/browse/content/fed-finally-backs-off-of-75basispoint-hikes-with-december-rate-increase

However, the federal funds rate and mortgage rates sometimes move in opposite directions, such as in early December when mortgage rates fell in response to declining inflation.  "Although there's merely an indirect link between mortgage rates and the federal funds rate, the Fed does have a direct influence on the rates charged on home equity lines of credit, which typically have adjustable rates." https://www.nerdwallet.com/article/mortgages/fed-mortgage-rates

California Association of Realtors, in its October prediction for 2023, was somewhat stark in its prediction of the market and the economic factors affecting housing for 2023:

Inflation will not return to pre-pandemic levels until 2024; interest rates will surge again; home sales will dip as costs of borrowing rise; housing affordability will be in the headwinds in 2023, but home prices will not fall as they did in 2009 era.
 

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

Housing Update in Los Angeles County and Southern California

Interest rates and inflation are issues right now, not just here but globally.  Older populations in some other countries are problematic, without replacement population the consumer consumption is less. 

In the U.S., the Fed is trying to slow down inflation with rate hikes on many instruments, such as credit cards, but the Fed doesn't control the mortgage interest rates, per se.  Mortgage interest rates were over 6% in June, but are now down to just over 5%, with it being an extremely volatile market.  6.5% is a slight buyer's market, 4.5% is a slight seller's market. 

Do two negative quarters of the GDP indicate a recession?  The National Bureau of Economic Research calls the recession, and doesn't use the model of two negative quarters, but uses several other combined market indicators which it says are not yet flashing red. The jobs statistics came out very strong, and with current consumer consumption, which accounts for 70% of the U.S. economy, keep from calling a complete recession.  And recession doesn't equal a housing crisis, with interest rates going lower there is an increasing demand for housing.

Inventory in Southern California has climbed from 10,000 listings in January to over 30,000 listings in August.  The peak is projected to be in September, which means we are not yet back to pre-COVID market norms. In Los Angeles County, 31% of inventory has reduced its price, due to the current market shift and slow down.   Last year time on market was 33 days, today it's 77 days in Los Angeles County, which is still considered a seller's market, 90-120 days on market is considered a balanced market, and above that is more of a buyer's market.

Sellers:  Rather than reduce your price, offer the buyers a rate buy down.

Thanks to Steven Thomas for his excellent Housing Market Report.

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

The Shape of the Housing Market to Come

According to Tian Liu, Chief Economist at Enact, remote work is still driving the housing market buyer preferances.  COVID-19 has shaped the choices and home desires, and will continue to do so well into the future.  Homes are the complete center of people's lives as they assume the roles of work center, recreation center as well as family living center. According to a recent survey of 1000 Americans, 44% want to work from home without venturing elsewhere. Rental homes fall into the same category:  "According to Invitation Homes, a major single-family rental company, rents for new leases grew by 13.8% year over year in second-quarter 2021, while rents for renewals grew by 5.8% year over year. These figures represent significant increases in the value that people place on single-family homes." 

For younger buyers, when to buy is a timely question--for each of the past five years, 5.5 million people reach their 33rd birthday--peak homebuying years. Historically low interest rates have helped to push many of these people into the buyers market, rising last year from 2.65% to 3%. The higher rates anticipated this year may bring a correction to prices, or at least a slowing. 

Rapid home price growth has also been fueled by the lag in new home construction. Many homes for which permits have been issued are anticipated to be completed in 2022, growing the inventory significantly and impacting the sellers market into a more balanced one.  Buyers are cautioned to be realistic in their home appreciation expectations if they buy now--historically homes have provided modest appreciation in value.  Like many other investments, they should look to the long term.

https://www.scotsmanguide.com/browse/content/the-pandemic-continues-to-shape-the-housing-market

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

In the Middle of a Pandemic, the Real Estate Market is Healthy

Some astonishing facts about the current market:

Interest Rates, Lowest Ever


• Median home price in California is $700,000 (September), lowest interest rates have led to fastest sales growth in a decade;
  
•  Average U.S. homeowner with a mortgage saw their equity rise over $9800 this year.
• The number of homeowners in forebearance dropped to under 7%, according to the Mortgage Bankers Association (September)
• The So Cal six county region broke a median price of $600,000 in August
• September mortgage demand was up 25% from one year ago.
  

 To see how your opportunity exists, take a look at the sample $500,000 selling price for a house, where a 2.99% rate could be $325 dollars less every month than the next 4.27% rate next to it.  It saves monthly, and it may also help a buyer qualify better to get in a slightly higher priced home.

To find out more, please contact me.  I'll be happy to provide you with a home value report.

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

Another Interest Rate Cut to the Federal Funds Rate

What does it mean for home buyers and owners when the Federal Funds Rate is lowered?   (More information is on Investopedia about the Federal Funds Rate, which is what banks charge other banks.) This Funds rate doesn't directly impact mortgage rates, which are hard to predict and are more closely tied to mortgage-back securities and 10-year Treasury notes, but the Fed rate can impact adjustable rate mortgages and home equity lines of credit, and credit cards.

So in this larger picture are still historically low rates for home buyers, which means increased purchasing power because of the lower rates, refinancing to eliminate mortgage insurance or to get a lower rate, consolidating debt, or utilizing home equity to fund home renovation.  So if you were pre-approved 6 months ago, for example, but haven't made a move yet, go back to your loan officer to renew your buying potential, it may have improved!

If you are interested in selling to move up or move on, or looking to purchase a home, please contact me for more assistance!



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

What Does It Mean to Be a Co-signer on a Mortgage?

In today's world where there are higher home prices, many first time buyers, or younger buyers especially, are fortunate to have parents or grandparents to help them out financially.  There may be different reasons for seeking a co-signor on a mortgage loan, and sometimes there is another adult willing to help in that way.

According to an article by Lise Howe in REALTOR Magazine, 22.8 percent home purchase loans in 2017 included a co-signer, an increase from 2016 (data from ATTOM Data Solutions).

Frequently, buyers and sellers look to their Realtor as a source for answers during a transaction, but there are times we cannot advise when the question involves legal advice, tax advice, and other issues which are not included in a real estate license.  So a buyer and his/her co-signer really need to obtain advice and information about the responsibilities of being a co-signer.

So keep in mind, if you're a co-signer:

1. You are completely responsible for the loan payments if the buyer is unable to make payments.
2. The co-signer's credit report will reflect problems, if any, with the mortgage.
3. The loan affects the co-signer's own debt-to-income ratio, which could affect their own purchase plans in the future for borrowing capacity.
4. The co-signer's debts and financial information must be given to the lender as part of the buyer's loan process.
5.  Is your risk in the situation covered, i.e., your cash flow?

The decision for what type of mortgage to obtain is the buyer's responsibility, and it's the buyer's responsibility to search out their best options for borrowing.  So buyers, please talk to your tax advisors and a financial planner to make sure whatever you're considering fits into your financial capacity.

An option that does not involve co-signing is for the buyer to obtain help on the down payment only; with interest rates having dropped lately, buyers can qualify for more and possibly not need a co-signer. 

Please contact me if you would like more information about making a home purchase.  I have worked with many first time buyers in my 24-plus years of real estate experience!


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

Top Five Reasons Investors Bought

What do you think of when you hear the word "investor"?  A large entity such as a corporation or company where individual names and identities are not easily known or seen? But according to a recent California survey, three-fourths of all investors are "mom and pop" type of investors who own from 1 to 10 properties, and the preferred type of property purchase is most often a single family home. Low yields on alternative investments is one reason for the demand for real estate investments.  These investors are looking for profit potential, as the median purchase price was under $300,000, which was the most frequent reason, with location being the least frequent reason for buying.  (Often, when first time investors say they want to buy an investment property, they frequently object to the location.  There might be a good reason for doing so, but selecting a location based on personal identification with a certain area is perhaps a sign the "investor" is looking for a place to move into some day.)

The five top reasons for an investor purchase in this survey were:
1.  Profit potential
2.  Good price
3.  Low interest rates
4.  Personal
5.  Location

The majority of these investors were interested in long-term potential of about six years, and over two-thirds in the survey rented out their properties after purchase.  About 25% of investors fixed and re-sold their purchases for profit, or "flipped" them, a phenomenon seen frequently in the less expensive housing markets in some cities.

The top countries of origin for foreign investors--27% of the total--were China, India and Mexico.  For all investors, the median rate of return was about 14% and the majority self-managed their properties.

Most investors found their properties through the MLS, so for an opportunity to find a property by working with a local real estate agent who knows the local market and can help you "pencil out" your investment figures, contact me via phone or e-mail! 562-896-2609.

How Much Can Be Saved With a 15-Year Mortgage Payment?

15 year loan vs. 30 year loan payments

A 15-year loan mortgage payment is not what all buyers can afford, but lower rates are making them very attractive for those consumers who have the ability to make the higher payments.

The 15-year mortgage accounted for nearly a third of all refinanced loans in the first 7 months of 2012, compared to 2007 when they made up just 8.5%.   And the California Association of Realtors reports that "statistics from the Mortgage Bankers Association show that a 15-year loan accounted for 23 percent of refinancing applications in November of last year."

Not only are the long term interest savings for a new purchase evident in the chart to the right, some owners could also actually reduce their current 30-year payment depending on when they took out their existing mortgage:

". . . a couple who signed up for a 30-year $300,000 mortgage in January 2004 with a 5.75% fixed rate would have a roughly $1,751 monthly payment. By refinancing the remaining balance of about $255,828 into a 15-year fixed rate loan at 2.81%, the new monthly payment would be slightly lower at almost $1,744."



Another advantage is that equity is built into the home faster with a short term loan.  Don't miss the opportunity to take advantage of today's lower interest rates if you possibly can!



Complacency Could Kill Real Estate Opportunity

The Current Market is Offering Incredibly Low Interest Rates!

This afternoon I did an interesting calculation because I was playing around with a feature on my website. First of all, did you know interest rates are well below 5% on a 30-year fixed, even as low as 4.25%? Second of all, do you expect that to last forever? It's lower than any rate since the 1960's and before, and certainly lower than any rate in the last 15 years since I've been helping buyers and sellers.


I did this calculation for my 2 bedroom/2 bath condo in Bixby Knolls which is currently listed at $182,500. The default down payment was 20%, the default interest rate was 6%, so using those numbers for calculate principal and interest (only), the monthly payment came out to be $875.34. (That's the price of a one-bedroom rental in some areas.) But knowing that interest rates are much lower right now, I changed the assumptions to 4.25% and assuming an FHA buyer, I used 3.5% down, and based on a loan amount of $176,112.50, the monthly P&I payment came to approx $866.37!! (Please do not use this scenario for your final loan calculations as disclosed by a lender, this is intended for general information only.)

In other words, with lower interest rates right now a buyer could be saving the difference between $6387 and $36,500 to get the practically same payment for less money compared to the higher interest rates of just 1 and 2 years ago.

Back to my earlier point: it won't last forever, so why not take advantage of the market now if your only reason is that you're "waiting"?

I am here to help you with finding a new property, so I hope you'll let me do that, because you will be helping yourself!

California $10,000 Buyer Tax Credit Is Coming Very Soon!

Some of you may not yet know about the $10,000 California tax credit which will go into effect on May 1, 2010, until the end of the year, or until the funds run out. $200,000 million total is allocated--half to new construction purchases and half to an existing home purchased by a first time homebuyer. Purchasers must reside in the home for two years, and there are no income limitations to be met, and no repayment as long as the purchaser stays in the home for two years. The status of funds available (there's no guarantee how long this money will last) will be published at http://www.ftb.ca.gov/.  Note: May 6 update article.

The credit is either $10,000 or 5 percent of the purchase price, whichever is less. So if a $500,000 home is purchased, the buyer would receive the $10,000 credit, which would be payable in equal amounts over 3 years.

The homeowner submits a certificate to the FTB after entering into a purchase contract.

Buyers who are not taking advantage of the IRS tax credit, ending April 30th, have this second opportunity given by the State of California.

In case you need more of a picture of how things are working in the buyer's favor, please see the interest rate histories at http://www.housingmatrix.com/index.php/interest-rate-histories.html where the viewer may look at the 30-year history, 10 years, etc.

Current interest rates (which are moving up right now) are still close to the range of where rates were in the late 1960's and early 1970's, unlike the high peak during the early 1980's when rates were in the 18-20% range. However, a snapshot of last week shows rates moving above 5% when they have been below 5% much of the last year for 30-year fixed mortgages. So for a $400,000 loan amount, the monthly principal and interest payment at 5% would increase by $61.00 a month if the rate goes up to 5.25%, or $732.00 annually.

For a customized list of homes, please contact me, very easy to send via e-mail. For February's trends in Long Beach, see my earlier post on trends in condos and houses, and the inventory.

For a similar report on your immediate neighborhood or zip code, contact me via phone or e-mail. I can easily send you one by e-mail.
For a current property search, go to http://www.juliahuntsman.com/ for condos, houses, income property and other MLS listings. And, join my fan page (see column to the right) to keep up with information and important tips!

The Cost of Waiting to Buy Revisited

Six months ago (they've passed quickly), I covered this topic via an article by Pat Zaby complete with payment scenario.

Last week's upset in the Treasury bond market , a more complex subject, ultimately sent mortgage interest rates up, with higher payment impact, that the earlier post referred to:

Let's make an assumption that the prices may still decline 5% more before they start appreciating again. If while a buyer was waiting for the price on a $250,000 to go down 5% to $237,500, and the interest rate goes up one percent from 5.25% to 6.25%, which is entirely possible, the buyer's monthly payments will increase almost $79 per month.

Or putting it another way, some buyers who qualified before last week may now have lost as much as 10% of their original buying power. In fact, some mortgage professionals feel that because of the current economic forces driving the purchase of bonds vs. mortgage-backed securities, the edge on low interest rates--below 5%--is gone, and maybe gone for good. If you're just starting in the market, figure it's the luck of the draw. But if you've been looking for a very long period of time, or renewing your search after being away from it for a long time, your loan information probably needs to be updated.

One brighter spot is that the procedure is being put in place for the imminent start of a statewide down payment assistance program offering a "silent second" for first time homebuyers (up to 3% of purchase price, income restrictions apply, FICO score over 680) and which may be used in conjunction with the FHA 3.5% down payment. If you're in that category, you might still be ahead if you fit this program.

See my earlier post on waiting to buy.

Lowest Interest Rates in 50+ Years

The e-mails from the lenders are pouring in to my inbox this morning. As of this morning, the 30 year fixed Fannie Mae Rate (conventional loans) is now 4.375%, and the FHA 30 year fixed is 4.750%!!! Even Jumbo 30 year fixed rates to $3 million are now 5.375%!!! And, if you're willing to pay a point (not a bad thing if you plan on living in your home for several years), your rate can be even lower, saving you thousands over the life of your loan, and maybe hundreds off your payment now.

Get on board with the new buying opportunity! Please contact me immediately if you would like to be prequalified for a higher purchase price.

How Today's Rate Cut Affects You

Quote of the day:

"Long-term rates, such as those for mortgages, don't respond directly to the Fed's short-term rate moves. Sometimes, mortgage rates move in the opposite direction when the Fed reduces the federal funds rate. But more often than not, mortgage rates eventually follow the Fed's lead. That might be one of the motivations of the central bank, (Richard DeKaser, chief economist for National City Corp) says -- "to help the housing market by lowering the refinance rate on many resetting mortgages. That makes it easier for people confronting resets, which we know are rampant right now, to achieve more affordable rates."

If you have a Home Equity Line of Credit, that will be favorably affected. But keep on eye on mortgage rates, because taking a cue from last week's volatility where there was an almost-unheard-of-three-quarters-of-a-percent movement in one day, you could definitely save money.

Long Beach long beach real estate 'Voice this!

What Does the Rate Cut Do For You?

Whenever the Federal Reserve increases or decreases rates as it did today, it means different things for different people. The winners will be people with good credit scores because the better your score, the better interest rate you receive. This means that if you have an adjustable rate mortgage, it's a really good time to refinance into a fixed interest rate mortgage. It's also a really good time to look for a new home--your payment will be lower with lower interest rates.

The other reason your credit score is so important is not just the rate you'll qualify for, it's the type of loan available to you. I'm including this somewhat pessimistic article (to appeal to the conservative among you) on today's rate cut, how it affects mortgage rates, and tighter lending standards compared to those of 2-3 years ago which have made certain loans out-of-reach that were once available for borrowers with lower FICO scores. At the same time, FHA loans (usually made with a very low down payment) are on the table with the Senate-passed FHA Modernization Act for an increase in loan amount to assist first-time buyers. There are in fact numerous first-time buyer programs available. In fact, the Los Angeles Times and the California Association of Realtors are hosting a free first time homebuyer fair at the Los Angeles Convention Center in April, 2008.

So if you're looking to refinance or purchase for the long term, you may have a great opportunity at this time.

Long Beach long beach real estate 'Voice this!

Selling Price is Not the Whole Story

With this week's low interest rates, the opportunity to buy is better than ever. Did you know a half-point drop in your interest rate makes a huge difference on your monthly payment? Let's say you are taking out a $300,000 mortgage, and you have been expecting to pay 6%. What if the loan market changed, and/or you decided to pay an additional 0.5% to 1% towards buying down the rate (or you negotiated with the seller to do that for you!), and now you're able to get that same loan at 5.5% (an historically low rate). Your monthly principal and interest just lowered from $1798.65 to $1703.37.
What if you had that same $300,000 mortgage with a 6% interest rate and suddenly other economic factors in the market caused a jump up in rates, and in order to close on time, you're now going to pay 6.25%--you're payment is now $1847.15.
It really pays to not wait, whether it's making an offer, finding the right loan, getting that loan locked at the right time.
If you're thinking about waiting 6 months because you think home prices will be coming down further, just remember that even if that's true to a certain degree, the selling price of the home isn't the only thing that will impact your monthly payment.

Long Beach long beach real estate 'Voice this!