What About the Overall U.S. Housing Shortage?

It should not be news that housing inventory is in a crunch, both locally and nationally.  In Long Beach, for example, the average price of a house is up 16% compared to one year ago, but the number of new listings is down by 13%, and the inventory overall is down 20%.  It's a similar story elsewhere, although the figures may vary somewhat, but the profile is generally the same: less inventory.  And the reason for this is, there is an actual housing shortage, both of new units needed to be built and for existing properties that are not on the market because they were bought up by investors a few years ago and continue to be held as rentals.

"What is needed is for homebuilders to boost construction and/or for investors who bought for the purpose of renting to unload those rental properties onto the market soon. There is no indication of the second occurring because of nice rental income flows. The only way to bring additional supply, therefore, is for homebuilders to get really busy." --  Lawrence Yun, National Association of REALTORS

To make up for the shortfall, there needs to be 1.7 million new housing units constructed per year, and even at that rate, it's projected it will take about 4 years of catchup to meet the national need.
There are 300,000 to 400,000 uninhabitable homes demolished every year, and this fact along with the approximately 1.2 million households formed every year, new home construction should be about 1.5 million units per year.  But the housing crash in years subsequent to 2006 saw only about 870,000 new units constructed every year, and available unit numbers have yet to catch up.  See the full article on Forbes site.

One solution is SB 1069 in California which which makes accessory ("granny") units easier and less expensive to build throughout the state, and gives legal guidelines to what otherwise might be illegal dwellings.  Interested parties should check also with their local municipal and county laws for further guidance on such units.

October/November Prices in Long Beach, Lakewood, Cerritos, Seal Beach

Happy December in Long Beach

In Los Angeles County, the median priced home in October, 2016 was $570,000 , up from $510,000 in October, 2015.

The current median single family home price is $513,520 for all of California, an increase of 7.3% statewide since the previous October. 

In the chart are median prices (the midpoint of all sales above and below that price) for Long Beach, Lakewood , Cerritos and Seal Beach single family homes from January 1, 2015 through December 13, 2016.  Seal Beach has decreased by 1.5% in that time; Cerritos has increased by 5%;  Lakewood has increased over 9% overall; Long Beach has increased 11%.


Current average price for a single family home - Long Beach $673,500; Cerritos - $706,453; Lakewood $5554,872; Seal Beach $951,544.
Average 2-bedroom condominium prices for all four cities range from $328,000 (Cerritos) to $391,000 (Long Beach). 

See the July post for prices

Key 2016 Remodeling Trends for the Los Angeles/Orange Counties Area--What is Cost vs. Value?

  The annual report is out on home remodel cost vs. value, conducted by Remodeling Magazine.  This is a valuable survey every year because the statistics vary according to the market and according to the region.  Return on projects were somewhat higher in the boom years, over 60%, and then fell under the 60% mark when the market declined.

Projects also vary in perceived value-- topping the list for 2016 was entry door replacement, especially into fiberglass doors.  Second story additions, master suites and kitchen remodels all increased this year in value, according to the real estate professionals in this survey.

Fiberglass insulation projects have been added for the first time to this report, a project not measured on an annual basis, but on a return extending over many years.  This project is estimated to give more than 100% return.

"In contrast, the five projects with the worst returns all scored cost-value ratios between 56.2% and 57.7%. From the bottom up, they are: midrange bathroom addition, upscale bathroom addition, upscale master suite, upscale bathroom remodel, and composite deck addition,"  according to the Remodeling 2016 Cost vs. Value Report (www.costvsvalue.com)  So not all upscale projects give the best return, and for some reason, neither do composite deck additions in this report.  Having seen enough termite damaged wood decks, composite decks would seen to be a great improvement in Southern California, but in this report, wood decks fare more favorably.

Replacements projects netted a few percentage points higher in return, 61%, compared to remodel projects which came out around 57%.

See the complete report online at Remodeling.
A free downloadable pdf report is also available online.

Where Is The Lowest Homeownership Rate in the Nation?

According to the U.S. Census Bureau, the lowest homeownership rate in the nation is right here in Southern California:  Los Angeles and Orange Counties.  In the second quarter of 2016, this region had 46.5% of residents living in a home they owned.  That's down from 49% and 48% from prior quarters.

According to First Tuesday Journal, the peak rate of 60.7% was reached in 2006, and the current 46.5% is well below California's historical average of about 55% homeownership rate--although bear in mind the low point was at 43.4% in 1940.  Today's California home prices have exceeded average incomes, and even though mortgage rates are still historically low at today's 4%, future rise in mortgage rates will help that rate continue to languish.

Mortgage rates which have operated in cyclical fashion according to the Fed's decisions about the national economy, plus the lingering effects of past bankruptcies and foreclosures on displaced homeowners, and the return of California's employment levels all have an effect on housing in this state.  An ongoing debate remains about whether young adults of the "millennial" generation are motivated to become homeowners, or not.  

One misperception among many hopeful buyers is that a 20% down payment must be obtained in order to buy -- that's false -- along with a lack of knowledge about financing options in general; another issue for many younger adults is the lack of savings combined with a higher rate of personal spending which prevents some from saving enough for a low-down-payment loan, such as a 3.5% FHA loan, and necessary closing costs.  Keeping credit scores in good shape, and understanding debt effects (i.e., keep debt on credit cards low, low, low), may do a lot to help offset impacts from necessary debt. 

For more information on facts of buying, please contact me!

Get the View on Some California Laws Coming Into Play for 2017 (or late 2016)

• Death of Occupant in a Property - there is already a law concerning this disclosure, but a new law effective September 25, 2016 clarifies it further by stating that the owner, his/her agent, or the buyer's agent,  is not required to disclose the death of an occupant of real property prior to three years before the offer to purchase or rent.  Also, no disclosure is required when an occupant was living with or died from AIDS-related complications.  
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• Effective November 27, 2016, FHA’s minimum owner-occupancy ratio for condo associations is reduced from the current 50 percent to 35 percent. FHA is ordered to streamline the entire recertification process for condo associations and make compliance “substantially less burdensome.”  Many condo owners and their Boards of Directors have not been aware that an FHA approval does not last indefinitely, and several years ago, required renewal every two years.  FHA has been criticized for certain requirements, because of many associations slipping out of certification seemingly unnoticed.  This cuts out a lot of selling opportunity for buyers and sellers of condos.  FHA is also required to make the recertification process "less burdensome" in order to attract more associations into the process.  Overall, this is good news.
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• Effective January 1, 2018, water submeters must be installed on all new multifamily units and mixed residential/commercial multifamily units, so a tenant may know how their water usage amount. This law does not apply to existing multifamily units.
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• Effective January 1, 2017, participation in a PACE (Property Assessed Clean Energy) lien program requires disclosures showing, among other things, that the property owner may not be able to sell or refinance without first paying off the PACE obligation.  There is also a 3-day right of rescission.  So know before you enroll in a PACE or HERO program which places a lien on your property.
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• However, FHA permits properties with a Property Assessed Clean Energy (PACE) obligation to be eligible for FHA-insured mortgage financing, whether for new purchases or refinancing, under certain circumstances. If the PACE lien is to remain, then property sales contract must include all terms and conditions of the PACE obligation by closing. Effective September 17, 2016.

For more information on other laws not mentioned here, or for additional information, please contact me and I will be happy to give to you.

California State and Regional Home Sales in August 2016

The August median home price for a California single family home was up to $526,000 in August, an increase from $498,000 in August 2015.

For the Southern California Region, the median home price was $496,000, an increase of over 6 percent from the same time last year.

The median single family home sales price in Long Beach was $546,750 (per CRMLS data), an increase from $537,000 last year.  The Long Beach months supply of inventory increased about 7% from last year to about 3 months of inventory.

As discussed at yesterday's Economics Panel the the California Association of Realtors Expo being held in Long Beach, 3 months of inventory appears to be the "new normal" (compared to 6 months in past years).  This ongoing level of inventory involves numerous factors, one of which is that owners are staying in their homes about 13 years (compared to 5-7 years in the past).

New California Law on Low-Flow Toilets for 2017

As of January 1, 2017, water-conserving plumbing fixtures for single family homes built before 1994 will be required for California homes.

So as a Realtor, one thing I want to say right away is that it is not the agent's responsibility to disclose this at time of sale, but it is the seller/owner's responsibility to disclose if such fixtures have been installed.  And, it is not a point-of-sale requirement, but it is a requirement by virtue of owning a single family home as of January 1, 2017.

So what must be replaced?

1) A toilet manufactured to use more than 1.6 gallons per flush;
2) Any urinal manufactured to use more than one gallon of water per flush;
3) A showerhead manufactured to use more than one gallon of water per flush;
4) An interior faucet that emits more than 2.2 gallons of water per minute.

That State of California would like property owners to also know that putting brick in the toilet tank does not comply with the new law, even if it saves the appropriate amount of water. (Sorry!)

While the new law does not create a point-of-sale requirement, there may be local ordinances which do have their own laws which do create point-of-sale requirements, so it all depends on where you live, i.e., San Diego.

For properties which are not in compliance at the time of sale, the seller is required to disclose in writing to the buyer the new legal requirement, the presence of noncompliant plumbing fixtures on the property, and affirm to the buyer that it is the seller's (not the agent's) responsbility to disclose.  Of course, new updated transaction forms are planned by the California Association of Realtors to include this information.

At this point, the law addresses only single family homes, and there is no mention of condominiums or other unit-type properties.
For a more complete printout on this law, please feel free to contact me!

July 2016 Average Sold Prices in Cerritos, Long Beach, Lakewood and Seal Beach

In Los Angeles County, the median priced home in July, 2016 was $580,000, up from $529,000 in June, 2015, and current single family home price is $509,830 for all of California.

In the first chart are median prices for Cerritos, Long Beach, Lakewood , and Seal Beach single family homes for the past 3 years through September 7, 2016.  Seal Beach has increased 7.9% in that time; Cerritos has decreased 1.8%;  Lakewood has increased 5% overall; Long Beach has increased .3%.
Current median price - Long Beach $548,500; Cerritos - $690,000; Lakewood $525,000; Seal Beach $1,132,500.
Average median condominium prices for all four cities range from $553,500 (Cerritos) to $245,000 (Lakewood).  The average condo price range is virtually the same across the four cities.


For a chart of the average single family home in all four cities, please note the difference in the second chart, where overall prices change upward:

Beautiful Sea Ridge Home in Signal Hill - Fantastic Views!

This desirable highly sought-after home is still on the market at $1,248,000.

It is located in the beautiful Signal Hill development of Skyline Estates. Situated on a unique promontory in the highly coveted “Sea Ridge” with sweeping and explosive views from Palos Verdes to the Pacific Ocean to Newport Beach. The views from this home are unparalleled. The three-level floor plan features a formal dining room, formal living room, spectacular ‘Chef’s’ kitchen with GE Monogram appliances, double ovens, center island and breakfast bar that opens up into the family room with expansive windows offering impressive views of downtown Long Beach. 

View towards San Pedro

Three bedrooms are located on the first floor with one being a second master en-suite. The spacious master retreat features lounge, massive walk-in closet. master bath with dual vanities and spectacular tub featuring city views. Wonderful backyard with fireplace and BBQ is perfect for entertaining year round.

Excellent location close to the community walking trails, and pool. Just minutes to Belmont Shore, Downtown Long Beach and freeway access.
Association dues include community pool and paved road.
Information per MLS#PW16136930 on 8/29/2016.
Lic# 01188996
NOTE:  OFF MARKET

View of downtown Long Beach

See the video and/or find out more about this home, please contact me at 562-896-2609.






Listing posted by permission of listing agent Boardwalk Properties.

Brexit May Hurt and Help the Economy

Brexit -- the exit of Britain from the European Union via the U.K. June 23rd vote -- brought a sharp reaction in global markets. The drop in the Euro and the British pound, to the U.S. dollar rate, is good news for U.S. travelers going there. But Britons will now need to pay more for U.S. exports, and it may mean fewer goods sold by American to the U.K. in the future. But the U.K. only accounted for less than 4 percent of American exports in 2015, so the effect on the American economy is not likely to be direct.

There are other impacts though, as Brexit further delays any increase in Fed rate hikes, the rate hike that has been so long predicted to be coming. While this can be seen as great news by buyers and homeowners wanting to refinance, it also decelerates U.S. economic growth. On the other hand, Treasury yields on the 10-year note went down, followed by mortgage rates. Mortgage rates may well stay at 2012 levels.


--from California Association of Realtors Market Snapshot