Current State of the Real Estate Market in Long Beach

Conditions for property sales have largely returned to normal, meaning there are very few distressed properties or "special condition" issues on the market.

Out of a total of 401 active listings for single family homes and condominiums in currently on the Long Beach market, as listed in the Realtor multiple listing service, there are:

• 381 standard sales
• 4 foreclosures
• 4 notices of default
• 8 real estate owned, including HUD
• 6 short sales
• 4 probate sales
• 2 requiring third party approval 

In other words, the market from 5-7 years ago which featured a minimum of 35%-50% distressed listings in many areas, both in California and across the country, has improved to a market of majority regular sales.

In the last 90 days (4th quarter of 2016), 562 single family homes sold in Long Beach as "regular" sale, at an average price of $652,936 (ranging from $199,000 to $3,790,000).

In the prior 90 days (3rd quarter of 2016), the MLS reports 563 Long Beach single family homes sold at an average price of $664,070 (ranging from $200,000 to $4,750,000).  So in Long Beach, the overall pricing has been fairly stable for a house for about the last 6 months, based on data from the MLS. As it has for multiple years now, inventory remains in the 2-3 months level, which is what creates more competition among the active buyers and a decentivized seller market which ends up staying put, not finding what they would move on to.

What will happen in 2017 in the bigger picture?  The median California house price is predicted to rise a little over 4%, housing affordability still going down, but sales volume is expected to rise over 2016. There are lots of market variables: global market changes (Brexit); increasing conventional interest rates for some (so far VA and FHA rates are still lower), but interest rates are still very low compared to earlier market cycles; foreclosed houses bought up and turned into rentals; the fact that California is delayed in construction of new units and will probably not catch up for years with the population growth; and also, affordability challenges for first-time and lower income buyers, a very big issue; plus, the baby boomers staying in place, and not moving like their parents did, which means fewer listings on the market (just one of the reasons for depressed inventory).

One thing helping buyers are down payment assistance programs, CalHFA being one, another are two-income families with documented income, and a third is the persistance to become a homeowner.

Please contact me for information about selling, I am also able to search out information in more distant markets which may help a seller in their decision to relocate.

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!