Thanksgiving Update for Local Long Beach Area Market

Horn of Plenty Happy Thanksgiving

We're constantly reading about the shortage of housing units, in California and nationwide, and its effect in creating rising prices (still), yet the actual activity in many areas shows constantly decreasing prices and longer times on the market, because at the same time many buyers struggle with the higher interest rates.

And then there's this:

The number of homes on the market has grown amid the collapse in demand, but in emailed comments, Lawrence Yun, chief economist for the National Association of Realtors, said new listings are lower compared to the same period one year ago and that housing inventory overall remains near “historic lows.”  Forbes.com article.

In the midst of buyers who struggle with obtaining loan approval at higher interest rates, there are also those buyers who are exceptionally well qualified, and can buy well over the list price of the house they make an offer on, and also know that in the current market sellers may be feeling the pressure of selling, so they bid low, sometimes very low, well under market value. The property with very recent upgrades, i.e., new kitchen or new bath, is likely to fare pretty well, but still much depends on location, floor plan, and size factors. Out of 37 closings in the last 3 days in Bellflower, Long Beach, Lakewood, Cypress and Signal Hill, and Los Alamitos, 12 sold over last list price, but not necessarily with the huge overbids of 2021. 

Long Beach zip code median single family prices for October:

90806   $705,000  Please see my Wrigley listing

90803   $1,477,000

90808   $895,000

90815   $983,000

90805   $628,000

90807   $1,020,000

So while these prices may still look healthy, all these areas are down from the peaks in April and May of 2022, when the median SFR price in April for all of Long Beach was $1,040,000, compared to October when the median SFR price for the city fell to $850,000.  (Average prices produce a different number in some cases, but the median price is not dragged up or down by an outlier price they way an average price may be.)  Both buyers and sellers have  been caught off guard by the volatile, and literally overnight, changes in interest rates, up as high as 7.2%, and then recently returning to the high 6%'s.  There are various projections about future rates, discussed in California Association of Realtors annual market prediction.  The future is hard to predict, and buyers and sellers should act promptly -- buyers who want to wait 6 months out to buy are chancing what could be a very different environment, and this is true in any market.

For an evaluation of your property please contact me for more area market information.

And, oh yes, Happy Thanksgiving!

 

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

New California Laws Affecting Real Estate in 2023

• As long as an owner lives on the site, an HOA may not ban the rental or leasing of a portion of the home.  Assembly Bill 1410.
• Clarification of existing laws to make it easier to build ADUs (Accessory Dwelling Units). In addition to procedural changes, this law attempts to make it easier to build ADUs in two ways: by prohibiting "local governments from imposing front setback standards that make it impossible to build a new ADU; and by incorporating the proposed changes to ADU height limits that are proposed in SB 897 which would facilitate two-story ADUs in certain locations that are amenable to that height, such as near transit, when the ADUs are part of a multi-story multifamily project, or when the ADU is attached to the primary home."  Assembly Bill 2221.
• Under Assembly Bill 2170  prospective owner-occupants, nonprofits, or public entities of foreclosed properties have prioty. This law also prohibits institution from bundled sales of such residential one to four properties, and must sell them individually, in order for individual purchasers, rather than large investors, to have an opportunity to buy.
  
• Homeowners may add up to two bedrooms in an existing dwelling unit without requiring a public hearing. This law applies to all cities, and only to a permit application for up to two additional bedrooms.  Assembly Bill 916 
  

 For additional information on more housing laws, please contact me and I will gladly send you additional summary. 

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

More on California's 2022-2023 Housing Market Outlook

For Southern California as a region, inventory has come up to 3 months, but is still not considered a "normal" amount of housing on the market. Compared to Sept. 2021, price has increased by 3.8% while homes sales decreased over 32% in same period.  In Los Angeles County, September 2021 showed 3,630 home sales, but the September 2022 volume reduced to 2,481 homes sales, and list price to sales price ratio was 97.8%, meaning on average sales prices were over 2% lower than list.  Orange County homes sold even a little lower percentage at over 3% below list.

 

The market is not as competitive

Housing affordability in Los Angeles County in 2nd Quarter of 2022 was at 16%,  Orange County at 12%, meaning these counties are in the bottom third of housing affordability in California. Lassen County stands at highest affordability rate in the state -- at 54%.

Fed Funds rate predicted to come down

Buyer demand in the housing market is dipping below pre-pandemic markets, as shown by the dip in mortgage applications in most of 2022, compared to 2018-2021.

Housing supply constraints continue, as shown by the number of housing permits issued, plus the number of years owners stay in a home before selling, another great cause of limited inventory. The current average length of stay is 10 years, whereas in 2006 it was 5 years before selling. 

Don't expect a surge in foreclosures, California has the lowest rate of foreclosure at .6%, and most other states are under a 3% rate for foreclosures. In recent years buyers have had higher down payments, creating greater equity in their homes, and the percentage of California buyers with second mortgages has decreased from 43% in 2006 to 2.2% in 2022.

California's median home price for 2023 is predicted to reduce to $758,600 from 2022's $831,000.

• Housing demand will continue to pull back as economic uncertainty and affordability challenges remain
• Supply shortage will still be an issue despite improvement in housing inventory in the short term
• Prices will soften in the next few months but should begin to stabilize in H223
• Inflation will remain a threat to the economy and the market in 2023
• Rates will rise further and will peak in mid-2023
• Buyers and sellers need REALTORS® even more to navigate through the market uncertainty

 Demand will continue to slow in 2023, and home prices will slow, but the type of market seen in 2009 is not predicted to occur, inflation is not predicted to abate until 2024, interest rates may continue to rise as the Fed tries to fight inflation. 

 

Thanks to CAR's Oscar Wei, Deputy Chief Economist, the source of this information at our Fall Forum.

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

California Housing Market for September, and 2023 Annual Prediction

 According to California Association of Realtors report on current sales and pricing for September, the existing home price in September for Southern California was $783,380, a year to year increase of over 3%, but existing home sales slipped since last May and are down over 32% year to year.  Sales dipped as rates climbed - pending sales fell more than 40% as mortgage rates hit 20-year high.

So Calif Housing Prices/Sales

The California median price is up from last year, but dipped to a seven month low, $821,680 and the median price for a condo/townhome is $620,000.  The sales price to list ratio dipped to the lowest level since 2019, and the share of homes selling above asking price was 28.3% vs. 72% in the Spring of 2022.

In Los Angeles County in September, approximately 30% of homes sold over list price, the highest being San Francisco County at 64%.  

While inventory slipped a little, it's still comparable to pre-pandemic levels of being under 3 months (normal is 6 months, not seen since 2012).  Active listings have increased over last year but still lower than 2018 and 2019.  Southern California has seen the largest growth in active listings over all other California regions.   Time on market was a median of 22 days, double that of one year ago. Sales to list price ratio was 97.7%.  The median reduction amount for reduced price listings was 5.6% while 44.5% of listings had a reduced price.

2023 Calif Housing Forecast

The October annual CAR forecast at the Long Beach Convention Center predicts an overall softening of the housing market for 2023 by about 7%, where the median price is $758,000 vs. the current $821,680. This may be a relief for some buyers, however the 30-year Fixed Interest Rate is predicted at 6.6%, and in recent days has threatened to increase even more.  Buyers may be interested to know that mortgage lenders are bringing back programs that will help some buyers with grants, etc., to help their buying process.

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