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

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

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

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

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

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

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

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

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

Saving Money with Sustainable Home Upgrades

1970s photo of an 1865 house

Property owners of both residential and commercial properties know that it's becoming more critical to understand "green" features during a time of rising utility costs and changing weather conditions. When the house at the right was built, there was no electricity, no indoor plumbing for bathrooms, no telephones, maybe a water pump in the kitchen. By the time my great aunt and uncle bought it in the 1950s, there was indoor plumbing and electricity -- people had to keep up with the times and what was current then. Now, 70-plus years later, there are new features, but still, not all homes that were new in the 1950s have the most current features of a new "smart" home completed today.

Buyers want to know what cost-saving features a new home may have -- in a high-cost environment they also want economic efficiency. Many agents say their clients are evaluating environmental risk during the purpose process.

Realtors are faced with evaluating such features when assisting a seller determine a list and sale price for a property.

The National Association of Realtors 2023 REALTORS® and Sustainability Report is based on a REALTOR member survey about sustainability issues facing the industry, click on the link for a summary of that Report.

Included in the Report are what clients found important: "home features that clients listed to their agent or broker as very important included windows, doors, and siding, proximity to frequently visited places, and comfortable living space."  An important thing to know for buyers and sellers is whether or not the MLS listing a property features categories for "green" features -- in my case in Southern California and beyond, the local MLS (CRMLS) does have such categories, and are listed as: energy generation, energy efficiency, sustainability, water conservation, and walk score, power production, and green energy verification. Such features may lessen the environmental footprint and reduce monthly energy costs.

Green Home Features List for Clients in NAR 2023 Report

"The NAR survey shows that 17% of REALTORS® say a high-performance home—one with improvements made to increase health, operational efficiency and durability—saw an increase from 1% to 10% of the dollar value offered compared to a similar, non-performance home. That could equate to thousands of dollars." "What’s more, energy-efficient home projects could save homeowners up to $2,500 a year on their energy bills, according to a recent survey of 1,000 consumers conducted by Thumbtack, a home services website. For example, installing energy-efficient lighting or smart thermostats could trim yearly energy bills by up to $200 and $100, respectively, the report shows." Article by Melissa Dittman Tracy, NAR REALTOR Magazine, It's Becoming More Critical to Understand Green Features, May 3, 2023. Go to Title 24 link for more information about  energy efficiency standards in California. For more information on the features in your home, please contact me via text, email or phone!

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

Snapshot of Single Family Home Market in Los Angeles County and Long Beach - March 2023

The Los Angeles County update for

Los Angeles County Market Update

March 2023.
 

Median Price for Single Family home: $718,370

Home Sales are Down - 30%

Unsold Inventory - 2.2 Months down 22%

Median Time on Market - 19 days

 

 

 

 

 

 

 

 

Long Beach Market for March 2023

Long Beach Market Update

Median Price for Single Family Home $916,000 - Increase over 2%

 Home Sales are Down - 35%

 Active Listings  Down - 21%

 Median Days on Market - 12 days

 Sales to List Price - 100%

 Active Listings w/ Reduced Prices - 30.4%

 Overall, time on market continues to drop, and supply is tight as new listings decline from last year.

California's 50 of 51 counties experienced a sales drop compared to a year ago, with 35 counties dropping more than 30% in sales volume, with weather having a major impact.  Median price statewide for March was $791,490, compared to the $851,130 median price for March of 2022. California Association of Realtors reports:

"California’s median home price grew for the first time in seven months in March, increasing 7.6 percent from February’s $735,480 to $791,490. March’s price also was lower on a year-over-year basis for the fifth consecutive month, declining 7.0 percent from the revised $851,130 recorded last March. With home prices rising more sharply than the normal seasonal pattern last year, the market could see larger year-over-year price drops as it moves through the spring home-buying season."

Even with interest rates higher than last year, prices locally in Long Beach remain strong, while inventory is low and buyers are still competing with each other. If you would like to get an estimate of value for your home, please contact me. Getting a home estimate is a good planning tool, even if you are not sure you're selling right away.  While there are online estimates of value available, automated valuation systems do not select for certain property features, and may vary greatly with one another. Ask a professional.

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

No "Mansion Tax" in Long Beach, A City of Beautiful Homes

The City of Long Beach has many fine homes in the luxury category currently on the market. If you're looking for historic or a more contemporary style, water views or not, Long Beach has much to offer.

View of Downtown Long Beach

And, unlike the City of Los Angeles, there is no "mansion tax" (Measure ULA) such as the one effective April 1 which adds thousands of dollars in the form of a 4% transfer tax for sales above $5,000,000. According to this Los Angeles Time article, the market over $5,000,000 has slowed considerably since then, not generating the planned funds for housing for homelessness.

 

To search homes available as of May 5, 2023 over $2,000,000 in the area, look at these Long Beach opportunities to buy in Naples, Park Estates (listing designed by Lloyd Wright), Belmont Heights, Alamitos Heights, and Virginia Country Club.  For buyer representation, contact me on any property of interest.

In the Long Beach market in the last 6 months there were 21 sales of single family homes between $2,000,000 and $4,000,000, and currently, in the same price range, there are 27 single family homes in escrow or actively listed on the market.  Although properties in the past have sold well over $5,000,000, currently the market is under $5,000,000, a good opportunity for the luxury home buyer.

Naples home, water view

Take advantage of this opportunity now! By using the search function on the link above, a buyer may change the criteria for any price range and type of property for many cities in the Southern California market.   

 

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

Changes in the Single Family Home Long Beach Market in 2023

December 2021, April, 2022 and December 2022

Long Beach Market Graphic 2021-2022 - Single Family

  

Long Beach Market March 2023 - Single Family

Buyers and sellers alike felt the shift in interest rates in the summer of 2022 -- buyers were driven out of their desired price range into a lower priced market which was more competitive, and some buyers were discouraged altogether by qualification issues.

In comparing the 2021-2022 graph for December 2021, April 2022 (just before rates started to climb) and December 2022, certain things stand out.  The number of closed sales decreased by 46%, and the number of listings, already low for available buyers, dropped even lower by 17%.  By December 2022, the median sales price dropped over 7% to $839,000 and the average sales price dropped to $894,176, a decrease of over 12%. Pending sales dropped over 53% compared to the previous December. The months supply of inventory showed an increase by December, but still quite low by historical standards, but in actual numbers of homes for sale, the inventory increased 40% by December, 2022.  Note that April's median and average sales prices were over $1,000,000  before dropping to December's level. 

However, by March, 2023 the median and averages sales prices have increased to $899,000 and $982,386, but not up to the high in April 2022, while months supply has increased to 1.6 month -- higher than 2022 figures. Days on market has also increased to 33 days in March - a far cry from the 7-day average frenzy during the Pandemic with its super-low interest rates. Pending sales in March 2023 also increased from December 2022, a sign of more buyers in the market.

It's a time for seller's to be realistic on prices, even though there is a continuing demand for inventory, and competitive bids. While qualified buyers are able to buy in the higher priced market, they expect value for their money.

For a qualified Realtor's estimate of home value, please contact me.  I've been serving sellers since 1994 in residential property in the Long Beach and surrounding areas.

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

Appraisals -- What Do You Know About Them?

Sellers have been in a multiple offer market again this year, with buyers getting the "Buy Now" feeling in order to get  a home. But buyers nevertheless want a good value, and appearance, condition and location are still extremely important.  That all goes into value for the buyer.

So sellers, pricing your property for sale goes hand-in-hand with preparing your property for sale, which ultimately can affect the perceived value and thus, the sold price, of the property. 

So how does a seller decide on the right list and sale price? Your Realtor should explain transactional aspects, the contract, the current market trends, and, unless you obtain an all-cash buyer for your home, the fact that there will be an appraisal performed, which must be no lower than the agreed-upon contract price of the property (if further issues are to be avoided). And, possibly your Realtor may also have some experience with pricing listings using some of the same guidelines the licensed appraiser uses.

The buyer's lender's appraiser will have the ultimate word for value -- yes, theoretically it's possible to appeal but most often that is not successful, or it may require the buyer finding another appraiser, at buyer's cost. 

Many sellers are familiar with "comparables" - but what goes into that word?  It means they must be within the area, similar properties and recent active, pending and solds. Remember, an appraisal is an "opinion of value", so opinions may vary somewhat from one professional to another.  Usually, about 6 properties are selected. Closed sales must be within last 6 months, maybe more recent within last 90 days, within one mile, and within 20-25% of the property's living area square footage (GLA). If the buyer is obtaining a conventional loan, all square footage must be permitted to be included in the appraisal; an FHA loan requires "permittable" square footage.  Have you heard of bracketing? That's where properties both lower and higher in value, less and more in GLA, lot size, possibly age and other physical characteristics such as upgrades and remodels, are used as comparables. So, for example, a 900 sq. foot house is not compared to a 2500 sq. foot house. And the appraised value of your home cannot be higher than the highest priced sold comparable.  So comparable selection is important, and if it's difficult, i.e., due to lack of  recent sales or listings, to find them meeting all the selection criteria, the appraiser has to justify a different selection in written remarks.

Living areas don't include, for example, a guest house, patio room or the garage.  And, a long held belief is that in order to a bedroom to be qualified as such, it must have a closet -- but that's not true according to the International Residential Code. To qualify, a bedroom must be over 70 sq ft, have a minimum 7 ft of wall length, at least 2 methods of egress including doors and windows to the outside, and have at least 7 ft ceiling height in at least one-half of the room. It doesn't have to have a closet.

Sellers, the more information you can share about the property, the more your Realtor can assist the appraiser, because not all information is readily available on the MLS listing. Provide your agent with a list of improvements: what, when, cost, and any permits for additions which you physically possess or obtain online, the name and phone number of any HOA property manager, HOA information on dues and amenities.  Your agent will be able to provide area comparables and copies of any multiple offers, plus a copy of your contract with the buyer.

This post if about the general basics of appraisals, there can be other factors to consider, such as a fastward moving up or down market.

If you would like more information about pricing your property and get the opinion of a real estate professional who's been licensed since 1994, please contact me via phone, text, or email!

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

It's the Time of Year For Termites in Southern California

 Graphic of ant and termite

Termites often swarm at this time of year, which will expose properties to the damage they can cause.

It's not surprising in my experience to find that an owner may have owned a property for years, but has not done a termite inspection since it was purchased, let alone any repairs. Keeping up with pest control on an annual basis, or biannual basis, can save money.  Tenting or even local wood repair alone may cost thousands, what used to be a $2000 tenting/repair cost a few years ago is now $4000.  So try to avoid this major cost (whether you're selling or not) by taking care of moisture issues and soil contact issues:

1. Eliminate or reduce moisture in and around the home, which termites need to thrive.
   
2. Repair leaking faucets, water pipes, and exterior AC units.
   
3. Repair fascia, soffits, and rotted roof shingles.
   
4. Replace weather-stripping and loose mortar around the basement foundation and windows.
5. Divert water away from the house through properly functioning downspouts, gutters, and splash blocks.
6. Routinely inspect the foundation of a home for signs of mud tubes (used by termites to reach a food source), uneven or bubbling paint, and wood that sounds hollow when tapped.
7. Monitor all exterior areas of wood, including windows, doorframes, and skirting boards for any noticeable changes.
8. Maintain an 18-inch gap between the soil and any wood portions of your home.
9. Consider scheduling a professional inspection annually. Wood-boring insect damage is not covered by homeowners insurance policies. 
10. Store firewood at least 20 feet away from the house. *
    

There are different kinds of termites, and vary according to region.  In Southern California subterranean and drywood termites are often seen, but dampness draws in termites also.  Amazingly, termites may not just work on wood, I once saw a house in Long Beach with concrete slab foundation for an added family room that was literally crumbled underneath the carpeting from termite damage after it was pulled back, and walking over the carpeting caused a scrunchy sound.

And, if you're thinking of selling, termite damage repairs are considered negotiable in the standard CAR contracts, but most buyers will ask for the seller to cover the cost.  If termite repairs are stated in the purchase contract (and they aren't always), lenders will want to see termite clearance in order to make a loan, and if buyers are footing the bill, the lender has to know that amount and approve it before final loan funding. 

Termite damage is most often seen in houses, but condos are not automatically exempt -- especially if there is dampness and/or trees nearby and a way to termite to enter the interior. If your home is near a park or school where grass/landscaping is watered frequently, then those features may draw termites to your property.

If you are considering making a change of residence with your house, condo or residential units, please contact me for more information on selling.  Getting the right price is very important, but also knowing the terms smooths the way for a successful closing!

*Information courtesy of BPG Inspections

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