The Issue of Buyer "Love Letters"

 

In a highly competitive market, what serious buyer doesn't want his/her/their offer accepted?  A growing practice starting on an occasional basis, say, in the 1990s, to an almost constant basis in the more recent market, was for the buyer to accompany an offer with a personal description of themselves, their motivations, possibly their family, which sometimes included photos, all in the effort to obtain the seller's favor over another offer, because the most preferred neighborhood is, for example, the one where the park in the photo is located--there's a great school there, they have friends or family there, any number of reasons.  But this practice, which locally became the norm with offers, gave sellers additional information about the prospective buyer not available just from reviewing an offer alone, along with the issue of  possible unintended bias.  It finally came to the attention of REALTOR professional associations, and ultimately resulted, in California, in an advisory form published in October of 2020, given to both the buyer and the seller, concerning state and federal laws on fair housing and discrimination.  Because how would a buyer really know, especially after viewing photos and other personal history, on what basis a seller was choosing an offer? Sellers are human, and they sometimes have a preference for who they would like to see move into their home. It may not be based on race, it could be based on preferring someone with children, or not.  Personally, I've never liked this practice and never asked my buyers to use it.  The practice is not currently forbidden, but it is officially heavily discouraged in the profession, and I advise my clients to not submit such a "cover letter".  Offers need to stand on their own merits.  There are already enough challenges in the current market, i.e., a buyer needing financing vs. a buyer who can pay all cash.

The Fair Housing and Discrimination Advisory, published by the California Association of Realtors, is a two page form outlining state and federal housing laws, including the protected classes, a reference to the National Association of Realtors applicable Code of Ethics article, and examples of improper housing conduct which violates a protected class or characteristic.  The form also includes examples of positive practices.  These state and federal laws have long been in effect, for years/decades, and are included in a real estate agent's training on a regular basis, but the need to remind all parties involved in a real estate transaction became evident. Additionally, some appraisals have been questioned for similar reasons, read the story about the Oakland homeowner and an appraiser in that area.

If you would like a sample copy of this form, please contact me for more information.

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

Long Beach Market Update for July, 2021

As of July 1st-30th, the number of single family homes sold in Long Beach totaled 192, price ranging from $375,000 to $6,600,000.  The MLS shows that 39 sold under list price, all others sold at or higher than original list price, some times significantly higher--in all price ranges.  

For instance, 420 Monrovia Ave., in Alamitos Heights area of Long Beach, was listed at $2,299,000, on 6/18, then increased in price to $2,499,000, then sold on 7/26/2021 at $2,400,000.  It went into escrow the same day it became active in the MLS.

3817 Albury was listed at $549,900, and closed at $605,000, after 2 days on the market. 

Similar stories of a  sold price of $50,000 increase over list price are not unusual. 

The median Long Beach sale price for July was $705,000, where median list price was $705,000 and the median sale price was $738, 750.  The Long Beach average list price was $696,293, average close price was $714,770 with an average of 13 days on the market.

Yes, there are some properties that have been on the market for quite a while, still waiting for a buyer.  The longest is 346 days for a multimillion asking price in the Naples area, but another one listed for $799,000 has been waiting for a buyer for 114 days as of July 30th.  Park Estate, Belmont Heights, Carson Park, all have a few listings that are waiting for a buyer, so not absolutely everything is selling in less than a week, although buyers should be prepared for moving quickly on most properties.

There were 113 condos that sold in the same time frame, with the majority selling over list price also. But the median price is $436,500, median sell price is $445,500, days on market 12.

If you are thinking of selling, or would like to evaluate your possible sell price at this time, please contact me via phone or email.  I look forward to hearing from you!

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

Is the California Real Estate Market Going to Fall in 2021?

California has just experienced the strongest house price ever recorded in May 2021.

In this housing presentation in May for Orange County Realtors, a lot of the  current market issues were covered by the CAR Economist Jordan Levine.

Statewide, prices are up overall $100,000 since 2006, and so are mortgage payments.  The highest dollar amounts cashed out in home equity were in the 2004-2007 years (as much as $80 billion in one year), and in 2020-2021 another increase in the $40-$50 billion range is here, explaining what?  Remodels? helping the adult children with their down payment?

Even with lower interest rates, affordability is not keeping up; 27% of Californians can buy a median priced home, compared to 50% in 2012. And building permits for single family homes has not increased significantly in 10 years--about 50,000 issued in 2020 compared to 150,000 permits issued in 1988. However, as affordability rate declines, the 2021 median home price is predicted to be $712,000 for the state, and in some areas is already higher than that. 

For a home evaluation, please contact me via text or email, even if you're not thinking of selling in the near future, an idea of your home's value whether condo, SFR or multi-unit, is wise to keep track of.

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

JUST SOLD Just Listed: Long Beach Home at $599,000

 Update:  Sold on 9/3/2021 for $640,000.  CRMLS PW21127965

 

Now available

as of 7/12/2021.

This is a spacious single family home, contemporary style built in the 1960s, which is over 1400 sq ft on a lot about 4700 sq ft (not exact amount), with large 2-car attached garage with direct access into the house.  The interior and exterior have been completely repainted, and new vinyl flooring installed throughout, and other repairs have been made.  MLS PW21127965.

There are 3 bedrooms and 2 baths (each with tub shower), nice living room with large raised hearth fireplace, a kitchen updated with granite counters several years ago (exact date unknown), and a spacious bonus/family room with its own outside entry.  Rear yard is completely fenced, has mature trees.  

This home is a very nice opportunity for the size and space. It's also close to a public park, and within walking distance to public transportation and shopping along Atlantic Ave or Long Beach Blvd.

Please contact me for how to see this property, (and home is occupied), and contact me for further information on this property!

 

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

Appraisals Are a Large Reason for Delayed and Terminated Buyer/Seller Contracts

The National Association of Realtors June 21, 2021, Realtors Confidence Index Survey showed:

Problems encountered for a delay of contract closing were due to:

    1. Issues related to obtaining financing - 21%.

    2. Appraisal issues - 26%.

    3. Home inspection/environmental issues - 8%.

    4. Titling or deed issues - 11%

    5. Contingencies stated in the contract - 6%

    6. Issues in the buying/selling of distressed property - 2%

    7. Other - 26% (???) 

Problems in terminated contracts:

    1. Appraisal issues - 13%

    2. Issues related to obtaining financing - 7%

    3. Buyers lost job - 1%

Note that in both groups, appraisals were the largest issue, not unexpected in the huge and fast rise in home prices in the country as a whole.  Low appraisal values are sometimes overcome by the seller being willing to make an adjustment, the buyer having more money to put in, or a loan adjustment made when the buyer is already making a large down payment, or a switch to a different type of loan, or an increase in value when nearby properties justifying the price have just closed escrow.  If there is enough market data, an inperson appraiser visit may be waived and online data is viewed as satisfactory.  This doesn't always work though, and buyers and sellers must not assume that there won't be a problem with trying to close a price that is $100,000 over list. Agents really have to know their local market pricing to avoid an appraisal issue.

 

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

May Housing Report for California

May 2021 Sales and Price Report

The market up until May has been at a dead heat for the buyers, but has been showing signs of a little cooling as some buyers may be taking a break.  However, as the economy is now reopening, how the market may change is yet to be seen.  

The higher end of the market has surged:

"Robust demand of higher-priced properties contributed to the record-setting statewide median price. With million-dollar home sales surging more than 200 percent from May 2020, its market share is nearly double what it was a year ago when it was at 15.6 percent. More million-dollar properties were sold in the past couple of months than homes priced below $500,000."    

Overall, the Southern California market grew by 33.1% increase in median price (surveyed from 90 California MLS systems) compared to May 2020. This was second only to the San Francisco Bay Area.  The unsold inventory statewide still remains under 2 months supply (meaning it would take only 2 months to sell all properties at the current rate of sale--the traditional normal was 6 months before 2012).   49 out of 51 counties dipped more than 20 percent in the number of active listings  compared to one year ago, however active listings were at the highest level in the last 6 months.

The 30-year mortgage interest rate was under 3% in May compared to 3.23 percent average in May, 2020. 

The Los Angeles metro area median single family home price for May was $725,000, compared to $535,000 in May, 2020.

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

Reopening Guidelines for California Real Estate

 

As of June 15, 0pen house and property showing restrictions are mostly removed--
no physical distancing, no cleanings, no posted rules for entry, and happily, no PEAD forms (required before showing each and every property).  

But unless entrants are fully vaccinated, masks are still required indoors.  Additionally, sellers may impose their rules for property entry if they wish, i.e., require masks for everyone who enters.  

Door knocking and handing out flyers in the neighborhoods are once again permitted (unless of course one sees a sign to the contrary at the property).  See more information at California Dept of Public Health.

 

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

California April Sales and Prices, Higher Than Ever

 Inventory, Inventory, Inventory. There's less of it, and yet.... not everything is selling within 7 days. If you are interested in selling or buying and would like more in depth information about the current market in Southern California for residential properties, just contact me via phone or text. 

Why there are fewer homes on the market has more than one possible answer, but this shortage has grown since 2012, back when 6 months inventory was more the norm, not 1.6 months. 

Last September, Long Beach had 2 months supply of homes on the market, in April 2021 it was 1.1 months.  And this is the time of year when we traditionally see much higher inventory.  In the last 7 days, 79 homes and condos came on the market, but 77 closed in the same period, and 120 went into escrow.  So the new listings are not keeping up with the overall sold volume.  

To help the situation for some reluctant sellers, the passage of Proposition 19 can assist for certain age 55-and-over sellers, or disabled, or natural disaster victims, who want to minimize a change in their property taxes if they choose to move.   Or, if you plan on relocating, study in advance the areas that may be economic advantage to move to. And for certain sellers, a purchase with a reverse mortgage can be an option.  Selling first before buying is the most optimal for sellers, but if you  can't, you want to make sure that finding a new property is a #contingency in the contract with the buyer.

Buyers who are willing to accept a property that needs some work that fits in their budget may actually be able to find the right home.  Some of those properties have been sitting on the market for a while longer and without the fierce competition of multiple bids.  And feel free to use the property search tool on the site below.

 For more market information about your area of interest, please contact me via phone, text or email.

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

Buyers Feeling Squeezed in This Market, or "What is an Escalation Clause"?

With multiple offers, lowered inventory, and 15 minute showings, buyers have been under considerable competition and pressure so far in 2021.  In order to "weed out" the offers, sellers have been making certain requests, or buyers with several times losing out experiences have voluntarily been relinquishing their standard contingencies.  How?  By upping their offer price (even $100,000 over list price), shortening physical inspection time periods (i.e., 17 day to 10 days, or less), removing appraisal contingencies (putting their deposit at risk if they back out over a low appraisal), as examples.  

Another form of competition is an "escalation clause".   This is where the buyer offers, or the seller counter offers, to automatically increase the price by a certain amount, say $1,000, over any other offer. Of course, without any other language added, the buyer could be forced into paying $1,000 over another bidder offering $50,000 over list price--can the buyer really afford that? Well, what if the buyer puts in a "not to exceed" a certain price?  But now the seller know that buyer's maximum bid, and could use it as leverage to obtain higher amounts from other buyers.

If the buyer offers a "floor price" or $1,000 over the highest offer, the buyer may end up paying a higher price if no other offer matches the buyer's floor price.

To not blindly make offers using one of the above methods, the buyer should include language in their offer or counter offer that "the buyer  receive a copy of the highest offer (upon acceptance) and that the buyer has a right to contact that other buyer or their agent to verify that they made a bona fide offer," or words to that effect.

But California Association of Realtors cautions buyers about making offers with escalation clauses, stating that the enforceability of such offers is not 100% assured, and the buyer is advised to obtain legal advice prior to making such an offer.

For a the complete Guide, please contact me by phone or email.

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

A Strong Percentage of Homes Are Selling Above Asking Price

In January, 2021, over 56% of homes statewide sold over the asking price.  This is according to a Southern California April presentation by a California Association of Realtors economist as shown in the slides to the right.

The over-asking statistics may vary in areas, so for example, in a combined look at 180 sales of condos and houses between 4/8 and 4/15 in the 10 cities of Bellflower, Cypress, Harbor City, Long Beach, Carson, Torrance, Lakewood, Lomita, San Pedro, and Signal Hill*:

71% (approx.) or 127 homes out of 180 sold over asking.  

7% (approx.) or 12 homes sold at original list price.

19% (approx.) or 35 homes sold under original list price.

In lower prices starting at $300,000, the increase may be $900 to $15,000; in the $500,000 range the increase in closing price grew in some cases to over $50,000 higher, and in the $1,000,000+ category it may $150,000 higher.  However, one single family home listed in Long Beach for $595,000 recently closed at $700,000. 

For sellers such overbids may help them more easily into their next purchase, but for the huge number of first time buyers looking for opportunity with very low interest rates, there is much frustration. On many properties, multiple offers abound, often 15-20 offers from which the seller may pick, sometimes outright, sometimes countering back to a select group of buyers.

In a March 2021 Google Consumer poll, 64% of sellers thought it was a good time to  sell, while 28% of buyers thought it was a good time to buy. In 2020 however, 44% of buyers had more than a 20% down payment, and obviously many of them have the ability to bid some much higher prices to beat out the competition.  This leads to another issue:  appraisals.  Not all overbid prices are appraising, leading buyers to come up with more money, and how some are doing this is detailed in this article about the appraisal gap.

Who's not buying so much? Rental property investors, as COVID issues came to the frontline.

What will make the situation easier in the future?  Rising interest rates, more housing inventory, and an ongoing improving economy.
 

*as reported in CRMLS 

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

Housing Supply Stats for Los Angeles County, as of February 2021

LA County 2/21 Housing Supply

This graphic for Los Angeles County quickly shows a 27% decrease in listings compared to February of 2020.  This is a theme repeated over and over throughout other cities and the state. The top right bar graphs show in green where listings are this year compared to last year in red.  Last year's Time Trend show the huge dip as the pandemic conditions were being dealt with, and then an increase above the line  for 2021, but no where near the activity for 2020, shown in green bars. 

The pricing on Active Listings demonstrates the under-$200,000 market is very slim, with approximately one-third of the market priced between $300,000-$750,000, another (approximately) one-third between $1.0 million to $1.5 million, and the remaining third priced over $2,000,000.  All price ranges see a decrease in numbers of listings, but the largest deficit is in the lowest end of the market.

 

 

In the Home Price Interactive, the bottom right graph

Income vs. loan payment, LA County

shows how income has risen in Los Angeles County since before 2000, from $35,000 annually, up to the present $75,000 annual income.  But the payment line (green) has dipped up and down over time, reflecting the downtimes of the Great Recession and foreclosures after 2007, and  recovery period after that.  But according to this graph, the difference between current mortgage payment levels and annual income is at a midpoint, similar to the loan payment-annual income scenario prior to 2000.

 

 

 

 

 For a home valuation, please go to my website for an automated valuation, or contact me directly for a comparative market analysis.

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

Fire Protection: Home Hardening Law for 2021 in California

Are you a property owner who's considered fire resistant materials for your home? If you already have made certain changes, you're probably closer to protecting your property in case of wildfire. Wildfires are not just in a certain part of the state, for instance, they could happen anywhere you live near brush and vegetation. A new law came into effect January 1, 2021 that requires a disclosure for properties that are:

• Within high or very high fire hazard zones 

• Built before 2010 

• Residential one to four properties; condominiums or other common interest development units; or manufactured homes    

The fire zones are disclosed in the natural hazard disclosure statements required in property transactions, where the box is checked on the form for which zone(s) the property is in.  Natural Hazard Disclosure reports and statements, required in California, are most often completed by professional sources which assume the liability for and have access to statewide reports concerning the hazard zones and required disclosures in California law.  California Association of Realtors now includes a disclosure form for sellers as part of their transactional documentation in a sale to cover requirements under the new law.

Fire hardening measures include Class A fire rate roofing materials (composition, tiles, steel), using 1/8" mesh at chimneys and vents, using screens over rain gutters, keeping vegetation at least 5 feet from the property, and multi-paned tempered glass.  

Parts of Los Angeles and Orange Counties may be significant for taking measures, but even in non-high-fire zones, they are a good idea for overall home maintenance and protection.

CalFire's website https://www.readyforwildfire.org/ contains this agency's advice on preparing for wildfire.

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

2020 Single Family Review for Los Angeles County

LA County House Snapshot for 2020

Last year saw a  consistent dip in all housing metrics after the beginning of the pandemic shutdown, but then a recovery began mid-year that hasn't stopped since.  The current market is marked with multiple offers and prices shooting upward since the end of January 2021.  The close of February showed an average house price for the County sitting at $1,232,890, an increase of 23% over one year ago, while the median price was $830,000.  February's average County-wide home price of $1,232,890 exceeds any average home price since 2008 and before. Some of the properties are seeing an increase of $50,000 sale price over list price, while others are  selling at or just above list price; one property in California Heights in Long Beach was listed at $699,000 and sold for $850,000.  It's not unusual for 15-20 offers or more, for houses that are move-in ready and partially or fully upgraded.  Months inventory, meaning how many houses are actually available for sale, is critically low, and it is this low inventory that fuels the upward price surge.  For January and February, months supply is 1.8 months (normal inventory supply is 6 months, but that's been gone since 2012).  Interest rates have been well below 3%, but with a recent increase in rates, mortgage applications have slowed. 

If you would like a market evaluation for your home or condominium, please contact me.  It's an ideal time to sell.

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

How Is Housing So Strong Right Now?

If you're a potential buyer or seller sometime in the past year, you've had some experience with Property Entry and Advisory Declaration (PEAD) forms, required for all prospective buyers to sign before entering a listed home on the market. 

PEAD Data

To backtrack a little, both the national and California economies have recovered, and COVID figures are on the decrease at this time.  Looking back to Feb.-April of 2020, earning data shows that job losses for people earning over $100,000 annually were at 12%; job losses for earners under $100,000 annually were at 88% -- the retail, food industry and other service jobs were the hardest hit, while the other job categories over $100,000 income were not hit nearly as hard.  Interest rates are at historic lows and are likely to stay that way for sometime to come.  Mortgage applications dipped last Spring, but climbed way up in January 2021, all of which is fueling home sales in 2021.  California saw a 22% increase over last year in number of homes sold, over 484,000 in one month (but compare to January of 2005 when over 600,000 sold).  

In December, 2020, total California home price rose to $717,930 (+16.8% from last year); fueled also by low inventory (-48%), leading to median of 11 days on market and a list-to-sales-price ratio of  100.1% (+1.9%). 

Southern California home prices have increased to $650,000, overall, over 16% since one year ago,  and sales have increased 13% year over year: By county, OC at $971,000; LA at $697,660; Riverside $495,500; San Bernardino $390,000; San Diego $730,000; Ventura $776,000.

This is the strongest growth in California in 7 years.

Only 5% of sales are all cash, but two of five homes were sold to first time homebuyers.  And 33% of those 1st timers had more than 20% down payment!!  Yes, parents, friends and family are helping them out. 

So as the charts above show, showing traffic shows the homebuying momentum as the PEAD forms are tracked in various counties.  Lately the showing pattern is: put home on market mid-week, showings take place at 15 minute intervals Friday, Saturday, Sunday, offers are due in Sunday or Monday, by Wednesday of the following week, the buyer is found.  Needless to say, winning offers are completely documented with solid loan pre-approvals and proofs of funds.  This is a hectic time for buyers who must compete and be prepared (on some properties) to overbid. 

With the lowest housing supply in years, most sellers who can think about making a change will get showing activity.  If you're wanting a home value estimate, this is a good time to contact a Realtor.

See the complete housing report here
 

 

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

Long Beach Sales Volume and Price Comparisons in 2020

2019-2020 Sales Volume Comparison, Long Beach

As broken down by area, the highest number of sales for 2019 and 2020 took place in the North Long Beach area, followed by the Bixby area and Lakewood Plaza.   Most areas had fewer sales in 2020, but Belmont Shore/Naples areas actually had higher sales volume in 2020 compared to 2019.

See how average Long Beach single family home price (blue) rose in 2020 compared to 2019 with lower inventory (green) for single family homes! The top average in 2019 was under $800,000, whereas the top average in 2020 was just under $1,000,000. The Corona virus and the restrictions placed on how homes were to be shown (for the really motivated buyers and sellers) the market prices continued upward, fueled by the lowest inventory and lowest rates seen in recent times.

 

2020 Average sales price Long Beach

2019 Average sales price Long Beach

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

New Real Estate Laws Which Might Affect You in 2021

 Condominium or other homeowner association homeowners may be accustomed to establishing the number of rentals allowed in the association, but under AB 3182, the common interested development must now allow at

Happy 2021!

least 25 percent of owners to rent or lease out their units starting January 1, 2021, regardless of whether the HOA has formally amended their governing documents. This also includes ADUs related to the property:  if the owner occupies his own unit then renting out a space within the unit, an ADU or junior ADU must be permitted. No matter what, the existing rights that owners currently enjoy to rent out their units cannot be changed. Thus in a 30 unit building, 25% of the units is 8 (rounded up from 7.5) which may now be allowed to rent out, regardless of what current rules or CCRs state.

 Rent moratorium and other state and local laws affecting landlords and tenants are in effect, or may soon expire.  They are numerous and complex, so without mentioning them further here (AB3088 and SB 1079 would be two of those laws), any landlord or tenant is advised to consult with their local city and/or county, and/or apartment association attorney, before selling, renting, raising rents, or evicting concerning his/her property.

The law authorizing the revocable transfer on death deed which allows a transfer of property by deed to a named beneficiary has been extended for another year.  (SB1305). This is another legal instrument which the property owner is wise to seek some legal advice about before making such a transfer.

Home hardening disclosure which requires a seller of a home built before 2010 in a designated high or very high fire area to povide a buyer with documentation that it is in compliance with local laws about vegetation management and defensible spaces. Look for more information here from Cal Fire https://www.readyforwildfire.org/.

 AB1885 increases the homestead exemption to $300,000 or the countywide median sale price of a single family home, whichever is greater, not to exceed $600,000.  In Los Angeles County, that would be $600,000.  Existing law exempted $75000 to $175,000 (depending on residents' situation) of a home's equity from a judgment debt.  The new law increases this equity exemption amount to the higher levels, and will be adjusted annually for inflation.

AB2463 prevents foreclosure of a principal place of residence based on a judgment lien if it was based on consumer debt. 

This is only a portion of new laws affecting California property owners, for instance the new laws passed under Proposition 19 have been discussed in 2 earlier posts.  For a complete list and more explanation of new laws concerning renting and rent control, consumer privacy act, foreclosure forbearance, exemption from reassessment after a declared disaster, and more, please contact me for a digital copy.

 

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

Cost vs Value 2020 from Remodeling Magazine

This annual report from Remodeling Magazine covers 12 project areas, broken into different levels of job costs, resale value, and cost recouped.  This is usually an interesting and viable resource for homeowners who are contemplating a remodel, or for those who already have completed one this year.  Resale value, in my opinion, is always a good thing for the remodeler (homeowner) to consider, as sometimes what will boost the value of a home is sometimes overestimated.  The reader may go online and download a full report for his or her area, see link below.  This report is based on the Los Angeles area.

There are five projects covered in this post, chosen according to highest return on value, regardless of the original investment amount.  Many times homeowners can maximize their sale price without plunking down a huge investment.  

Second highest return on cost:  As in past several years, garage door replacement brings in over 100% of investment (106.6%). The replacement is a four-section steel door with foam insulation and windows in the top panel, insulated glass. The motorized door opener was not replaced.  Cost:  $3,956.

Highest return on cost:  manufactured stone veneer with a return of 120.2%, which involved removing a 300-square-foot of vinyl siding from front of property, and replacing with manufactured stone veneer.   Additional installation included two separate layers of water-resistive barrier over bare sheathing.  Total cost: $9,699.

Minor kitchen remodel: 95.1% return on value. This involved replacing cabinet fronts on original cabinetry with new wood panels and drawer fronts, including new hardware. Replace cooktop/oven range and refrigerator with new energy-efficient models. Replace laminate countertops; install sink and faucet and new flooring, new painted walls, trim, and ceiling. Cost $26,993.

Entry Steel Door Replacement: 91.2%, cost $2,119. This is a factory finished door with same color on both sides, lockset replaced, included dual-pane glass panel.

Composite Deck addition;  84.4%, 16x20-foot deck composite material in a simple linear pattern. Include built-in bench and planter, stairs, assuming three steps, railing using a matching system made of the same composite. Cost $23,911.

Surprisingly, bath remodels or additions, which vary in cost, did not recoup as much as  the kitchen mentioned above.  Roofing and siding replacements fared higher in return than bathrooms.  For more complete cost comparisons, and costs in different regions, please review a download of the Remodeling article.

All project information in this post is from: Remodeling 2020 Cost vs. Value Report (www.costvsvalue.com) ©2020 Hanley Wood Media Inc. Complete data from the Remodeling
2020 Cost vs. Value Report can be downloaded free at www.costvsvalue.com

 For a market estimate of your property, and to find out what recently remodeled properties in your area have sold for, please contact me for a professional valuation.

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

The Change to "Green" -- Why Does This Matter?

 

In geographic areas where the homes are commonly 50-plus years old, and the most recent tracts were built up in the 1970s, the push for retooling may just feel like an uphill push only.  But in these times of need to financially conserve, there are ways to get your foot in the door towards more sustainable housing and lower expenses. To completely retrofit an older home may not bring a good cost-benefit return financially, but may other steps can be taken to improve a home's efficiency.

California has already passed laws concerning implementation of low-flow appliances, so if your living quarters haven't been changed out yet, they should be. And if you're not using light bulbs that save electricity, you're spending unnecessary money.

If a property owner is doing a major remodel on an older home or rental property, then he or she may be looking at retrofitting costs.  Part of that cost is estimating the time period to recoup the original investment.  According to some sources, adding low flow showerheads, installing LED lights and adding home insulation bring the fastest payback period for the lowest costs, most within a one year period or less

Ways to Save:

There are advanced green certifications as LEED or ENERGY STAR, which require following many steps towards certification.  But the average homeowner wishing to enhance features can do certain things that will build towards energy efficiency and more comfort without costing a lot:  

• window retrofits (more expensive but will save over time) which will also enhance the value of a home to a prospective buyer;  
• Replacing all the interior and exterior light bulbs with LEDs which use 25% of the energy of an incandescent bulb and may last up to 25 times longer, and save $75 or more each year.
• Efficient refrigerators may be 20% more energy efficient, and EE ceiling fans may be 50% more efficient. 
• Using weather sealant for doors and decks, and check insulation for proper "R" values, and wrap your old water heater to save up to 10%.
  
• Waterproofing paint generally leads to a longer lasting, more sustainable building. 
• Using renewably sourced construction material such as engineered woods, recycled woods, bamboo construction.
• Caulking, weatherstripping, sealing air ducts, installing a fireplace flue plug are additional ways to prevent air from escaping.  Thirty percent of energy in a California home is for heating and cooling, and these measures will help to reduce escaping air.
  
• A Smart Thermostat allows for programmable hours for work and vacations, another way to control home expenses up to 10% annually.  Find more energy management tools (EMTs) to save money.
  
• Xeriscaping, which calls for water conservation through low maintenance landscaping, can save over 50% of residential water use.  It's not necessary that your home look like a desert in order to achieve this, but planning with the right plants will reduce the amount of water on your grass lawn.
• Greywater is repurposed water for outdoor irrigation, and may involve a small filtration unit to direct water from the house to the outside.   
• Unplugging home printers and computers when not in use may save up to $200 annually in electricity costs!  
  

Buildings in the U.S. produce about 40% of the overall CO2 emissions, and scientists are expecting the world to need 40%-70% less CO2 emissions by 2050 to counteract the worst of climate change.  So energy efficiency is not just fashionable, it's important.  An energy efficient home is estimated to produce 2.5 fewer tons of CO2 each year! And an energy efficient home is less costly and more comfortable to live in.

For more information, check with your local city for incentive programs in place.

Further resources:

https://www.huduser.gov/portal/consumer/financial_incentives.html

https://www.benefits.gov/

http://www.dsireusa.org/

https://www.energystar.gov/rebate-finder

https://www.energyupgradeca.org/home-energy-efficiency/upgrading-your-home/ 

https://www.energy.ca.gov/programs-and-topics/programs/home-energy-rating-system-hers-program 

https://moneywise.com/a/easy-tips-for-saving-money-by-going-green     

https://greenhomeguide.com/     

https://greenlivingideas.com/              

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

Luxury Market is Active, Long Beach Quarter Ending September 2020

The luxury market in many areas has taken a surprising jump up, Long Beach included.  In fact, Los Angeles County for the quarter ending September, 2020, has had the most sales over $1,000,000 compared to the rest of the state, including the Bay Area. 

In Long Beach 90803 zip code alone, there were 52 residential sales over the $1 million mark ending in the 3rd quarter, and the average of the median price was over $1.382 million.  That was up 4% from the prior quarter.  Bixby Knolls was up 325% from the prior quarter, with 17 sales with median average price at $1.370 million.  Zip code 90808 (east Long Beach) had 11 sales averaging over $1 million, and 83% increase over the prior quarter.   The most expensive home sold in the last quarter was over $4 million.

The graphic shows more detail about Long Beach luxury sales.

 

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

What Proposition 19 Means in PropertyTax Changes for California Homeowners and/or Heirs? Part II

The passage of Proposition 19 was won, but not by a landslide in November's election.  There are both positive and negative issues to this proposition, which puts some things on the table and takes others off.

While it allows more 55+ homeowners to sell and move on a statewide basis, as of April 1, 2021, up to three times taking advantage of the new property tax basis, widely regarded as a good thing, it eliminates past rules about a child inheriting a parent's house.  Consider your capital gains exclusion at this point in time, and whether you took title as a joint tenant or as community property with right of survivorship. 

Since the new changes for parent/child exclusions come into effect February 16, 2021, this would be the time for some people to review the new law and how it may affect them.

If a new home is purchased at same or lesser value than former home, the former home's taxable value is taken to the new home.  But, if a new primary residence is bought, and is of a greater value than the one it's replacing, the new residence's value is added to the prior residence's tax base--it is calculated by adding the difference between the full cash value of the prior home to the full cash value of the new home's taxable value.  So if the prior home, with a taxable value of $400,000, sold for $900,000, and the new home was purchased for $1,000,000, your old tax base would carry over, plus the $100,000 difference in value would be reassessed for adding onto your original tax base, making a new taxable value of $500,000 for your new home. So while your property tax will increase, you still benefit by keeping the lower tax base (especially if you bought in 1970s for example), instead of paying the entire current tax rate on a $1,000,000 home.

However, effective February 16, 2021, the parent and grandparent grandchild exclusions from property tax reassessment only apply to transfers of a family home, not investor properties*, and only if the child or grandchild moves into the home within one year of the transfer (and supposedly the way the law reads right now, if there's more than one child, then all children must live in the home to have the exclusion apply).  Additionally, under earlier Prop. 58 and Prop. 193, there was no value limit on the parent's principal residence, but NOW under Prop. 19, if the home's current value exceeds its existing tax assessment by more than $1 million, then the excess value is added to the current assessed value to compute a new tax value!! If the new value after transfer to the child does not exceed $1 million, then there's no reassessment.  In today's California market that cap of $1 million could affect a lot of properties.  

Additionally, if an aging parent moved into a facility and passes away there, not living in the primary home, that home will be assessed at full value of property taxes, so if it's worth $1.7 million in today's market at the time of the parent's death, those taxes could be over $21,000.

* Residential, industrial and commercial rentals and family vacation homes are no longer eligible under Proposition 19.  Only principal homes occupied by child or grandchild (meaning child of deceased parents) are included under this Proposition.  So if your child is living in one of your rentals, that will no longer work under this Proposition.  So while there are many good aspects to this new law, there are other consequences--current homeowners may want to make decisions now in order to minimize future effects. 

• You can gift property to your children now, i.e., rentals (but do they want to manage them?), but they will lose the stepped-up basis at the time of your transfer to them, which would mean them getting the parent's adjusted basis and paying capital gains on the new basis and the value at the time of property sale.
  
• You can do nothing.
• You can in the future buy property and put directly into an LLC.
• Put property into an irrevocable trust (not the same as a living trust).  
•  Link to Proposition 19 bill
•  Link to chart on Proposition 19 at Board of Equalization.
  
• 
  

This is the time to consult with your trust attorney and/or tax advisor.  I am not a tax advisor, and do not give legal or tax advice, but as a Realtor I sometimes have clients who need to know about these issues in advance of closing escrow on a property.  Please feel free to contact me.

 https://longbeachrealestate.blogspot.com/2020/11/what-could-passage-of-proposition-19.html

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

California Housing Market Prediction for 2021

The California Association of Realtors with Leslie Appleton-Young presented the annual market outlook (this year it was all online, so we missed our annual Expo and Luncheon as we sat at our laptops), which at the very end always gets to the final price and sales volume predictions for the coming year.  So to break all suspense, I'll show that slide first (there were 100 slides covering the entire state's regional markets and economic conditions, I'm just hitting the highlights), which shows the predicted increase in the California home sales market to be 3.3 percent, at a median price of $690,000+ (up from $476,000 in 2015).

 

California Housing Market 2021 

• The impact of COVID-19 seemed to cause buyers to get out there and buy, rather than stay home, so prices in many areas have jumped considerably as inventory in many areas was still quite low, especially in the affordable range (something under $600,000 in the So Cal metro regions).  
• The lowest mortgage interest rates since long before 1971 allowed more buyers to purchase at the upper end their loan qualifications.  
• By August, sales and prices were up, inventory was down statewide to 2.1 months, but keep in mind inventory has generally been low since 2012, and 1-2 months inventory in some So Cal areas is not uncommon.  
• The total home sales in August was the highest in 10 years, 2005-2006 was the last time California saw a much higher sales volume extending up to 600,000 residential units. 
• The share of first time buyers was the highest in 10 years and investor buyers the lowest since 2001.
• More sellers leaving California, highest since 2005 (hello, Proposition 19); Los Angeles and Bay area sellers are mostly moving to the Inland Empire and other cheaper counties; the Inland Empire and other cheaper counties are moving out of state
  
• Potentially 600,000 foreclosures nationwide, perhaps 60,000 in California, due to job loss, etc.
• California is the 5th largest economy, with $175 billion in annual exports--economy still strong.
  

 

CA worst case scenario 2021

 For the complete presentation which goes into much greater detail, please contact me, very easy to email.  For an market valuation of your residential or income property, please contact me for the latest information in your area.

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

What Could the Passage of Proposition 19 Mean for You and Your Property Taxes? Part I

Proposition 19 has officially been declared a winner, receiving 51.1 percent of the votes cast.  Key supporters included California Professional Firefighters, as well as key endorsements from Gov. Gavin Newsom, Secretary of State Alex Padilla, State Controller Fiona Ma, the California Democratic Party, Republican legislators, labor unions, chambers of commerce, seniors, and wildfire survivor, and 1.5 million signatures were collected to put it on the ballot.  It was supposedly opposed by 16 major newspapers, including the Los Angeles Times, but endorsed by one major newspaper The San Diego Union-Tribune.  It was also strongly supported by the California Association of Realtors.

This proposition was officially named The Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act.  Up until the present, for many years senior home sellers could benefit from Propositions 60 and 90, which allowed the freedom to take their property tax base either anywhere within their home county, or to one of just several reciprocating counties (they varied over time) elsewhere in California which agreed to participate in this program--but owners were restricted to a certain formula of being able to purchase a new property slightly higher in price, otherwise they had to find a lower priced property to buy.  

As market prices increased, changing homes became very difficult to achieve, and caused many people to move out of state, taking their equity with them.  The rest stayed put, which meant they may not be able to move closer to family members as they aged. The passage of Prop. 19 has changed this--not only does it help the general population over 55,  it also helps people with severe disabilities and victims of natural disasters such as wildfires by allowing them to move closer to family members or medical care who can aid them, or find a home that better fits their needs.  It limits property tax increases on wildfire victims who replace a damaged home and gives funding for fire protection and emergency response in such cases.  Last, but not least, it can open up the market for first time homebuyers and other buyers throughout the state because of the greater ability for those over 55 to move.

In the past, children who inherited their family property were not required to live in it, but could rent it out.  That is no longer possible--in order to obtain a net increase in property tax revenue to the government, and the tax advantage to heirs, the property must be occupied by an child of the deceased parent(s), so there are no more second homes, vacation homes, or income properties--but Proposition 19 will continue to allow the tax benefits of earlier Propositions 58 and 193 which allow the passing down of homes by parents and grandparents for use as a primary residence by heir(s). 

Family farms, schools, cities and counties also receive local revenue from this proposition!

 If you're interested in finding out more, and what your current home value may be, please contact me.

LA Times Article

Widipedia article 
 

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

You'd Like to Move to Greener Pastures, And Keep Your California Property Tax Base?

 Propositions 60 and 90 are tools for helping sellers keep their property tax base if they are over 55: 

"(they)allow a person who is over age 55 to sell his or her principal place of residence and transfer its base year value to a replacement dwelling of equal or lesser value that is purchased or newly constructed within two years of the sale."  California State Board of Equalization. 

The number of counties participating in Prop. 90 fluctuates, it is currently at 10: 

• Alameda
• Los Angeles
• Orange
• Riverside
• San Bernardino
• San Diego
• San Mateo
• Santa Clara
• Tuolumne
• Ventura
  

 Currently this is a one-time only benefit, and one of the owners must be 55 years or over.  This is for principal residence only, not your investment properties unless you're living in one of them. There are certain guidelines if you buy one or two years after the sale in which the transfer of value may take place.  Depending on the county, a seller may have to relocate some distance to get into a new home purchase that is in a similar or lower price range, so this is not always viable.  If you stay with

in your own county, the transfer works in any county, but if you're moving out of your home county, then it applies only if you go to one of the other 10 counties.  In a rising market, this can be limiting, and some people cannot afford to move without that tax benefit.  

To find out about the Proposition 19 on the November ballot, go to this link for a summary, a yes vote allows more people to move and transfer their tax base anywhere in the State, along with other benefits.

For an estimate of current value on your home, please go to my site below for an instant estimation at the What is Your Home's Value?, or contact me directly.  I have been a licensed Realtor since 1994.

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

New Listing, $599,000, Beautiful Single Family Home with Patio

It doesn't get any nicer than this two-story house just waiting for the new owner.  Beautiful custom touches, spacious plan with vaulted ceilings and a lovely patio area for outdoor relaxing.  All three bedrooms are upstairs, with a half-bath off the entry hall, and two full baths on the upper level. The large kitchen has plenty of storage and counterspace. Newer flooring and carpeting, tile floor in kitchen, living room fireplace all complete the ambiance. Over 1700 sq ft inside.  Two car attached garage.  Go through the separate laundry room to access the garage. It's a great price at $599,000, MLS PW20178644.  Near Lakewood shopping and the freeway!

Rear patio, fountain, room for dining

Large kitchen, dishwasher, double sinks

 

 

 

 

 

 

 

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

What About Mortgage Forbearance? What Happens?

 

Here's a nice article from Bankrate, dated last April, about what forbearance means.  First of all, somewhere, depending on the source, between 4,000,000 and 6,000,000 people (mortgages) are in forbearance now.  Forbearance offers the opportunity to avoid foreclosure, a worse evil that the banks do not want to repeat from the last recession. But the consumer should be as informed as possible. The CARES Act covered some plans for forbearance, but just know that even though this Bankrate article says "No, mortgage forbearance does not appear on your credit report as a negative activity," some people are experiencing credit problems.  They have found entries on their credit reports about having a forbearance, and as a result, some credit card companies are shrinking the amount of available credit for these customers.  Others are having a hard time getting loans due to their credit reports.  Nerdwallet advises consumers that unless the lender has agreed not to report forbearance (which can be a possibility) it will be reported to your credit bureaus.  So if you are, or have, participating in a forbearance, you might want to make an inquiry first to find out what your lender's policy is.  Having your credit cards impacted, and the ability to buy using them, is a difficult thing to undergo.  Your FICO score is built on several factors, including your debt percentage to your overall available line of credit.  If that available credit is pushed down, your debt ratio now goes up, and your FICO score could take a big hit as a result. 

 

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

Infographics on Los Angeles and Orange County Housing Reports for July 2020

 For Orange County, existing house sales were up in July from last year, but in Los Angeles County sales were down by about the same amount.  In both counties, the number of active listings was down over 40% from last year.  And in both counties the median price increased over 4% and 6% from July, 2019.  

What is driving the upward price trend?  Lower inventory and continuing buyer demand for homes.

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

The Pandemic Has not Lowered Prices, Nor Kept Buyers from Buying

 Realtor.com just came out with its study of the 10 hottest zip code markets in the U.S., based on turnover and number of views of the property.   (See links below.)

At the top of the list is Colorado Springs, followed by the rest which are located outside of California.  

But overall, the pandemic market has not lowered prices, nor kept buyers from buying.  

 Locally, zip code 90803 (Long Beach, Naples, Belmont Shore, etc.), one of the most expensive certainly in Long Beach and elsewhere, had an average sales price of $1,473,357 ending in July, but turnover has slowed somewhat for that price range, over 80 days average, 60 days median, on the market before going into escrow.  

By contrast, east Long Beach including Park Estates and Los Altos areas was a median of 10 days on the market, 27 average days on market, at average sales price of 870,877.

Going to west Long Beach,  to 90810, the average sales price was $519,045 and houses sold on average in 21 days,

 Going to north Long Beach, to 90805, the July average sales price was $539,559 with average days on market at 15 days.

 So with lower priced markets that are more affordable, the days on market is gradually shorter.

Overall, the entire City of Long Beach finished July with only 2 months supply of inventory, continuing the demand for more listings to accommodate the buyers who are looking and constantly competing with each other in this market.   Nearby cities of Cerritos, Bellflower, and Lakewood are in the same low inventory crunch, less than 2 months of inventory.

Compare the Long Beach prices (lower compared to other  coastal cities) to the hot zip codes in the Realtor.com study:   https://www.realtor.com/research/hottest-zip-codes-2020/ where the median list prices are under $644,000!!  And yet, buyers throughout Southern California are looking for sellers who want to sell.  

Will homes sales continue to defy expectations?  Here's more from chief economist Lawrence Yun with National Association of Realtors,  Defying Expectations

If you or someone you know is interested in selling, I can show you how to get your house on the market and get it sold.

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