Is The Convenience Worth the Cost? IBuyers Have Contracts, Too

iBuyers v. traditional buyer offer

The iBuyers have been a  certain presence on the market for a while.  Often they are bulk buyers or investors looking for profit and will offer to pay cash for your home, sight unseen.  They may be able to close in days, and maybe for some reason a seller would wish to consider such an offer under certain circumstances.  These buyers claim to speed up and simplify the transaction while removing hassle and inconvenience for sellers and buyers.  But despite iBuyers' claims to revolutionize the real estate transaction, some agents are not finding their transactions with iBuyers to be quick or seamless  ("Selling to an Algorithm", REALTOR Magazine, Sept.Oct 2018).  Typically, the inspection is held after the acceptance of the offer.  In one instance, a team of five Opendoor contractors "went through the house with a magnifying glass".  When all was said and done the requested repairs came to about $16,000 on a $300,000 home, this was for replacement of tubs and toilets, retiling of showers, all at the seller's expense.  The sellers relied upon their agent for help, but still made less than if working with a traditional buyer.

The story above is one example, but both the story and the graphic illustrate that their is a price for "convenience".  And would it work if, for example, you have a lien on your property to pay back at close, or heirs to consider for whom you would want to get your highest and best price? 

Realtors are bound by the Code of Ethics set forth by the largest trade organization in the country: the National Association of Realtors, which means they are governed in such matters by their local Board. Realtor contracts and transactional forms are carefully set up and reviewed to comply with all professional standard and state and federal laws.  The investment company or investor buyer may not have any such professional trade affiliation, use their own contracts, and any potential legal recourse must be taken directly to the courts.  It pays to know the features and clauses of the investor company's contract, and a seller would be wise to take the contract to an attorney for review before signing.  If a seller is truly interested in seeing what such companies offer, obtaining multiple offers before signing anything is possible, if only to use for comparison purposes.  Be aware that their motto is true to the concept of buy low, sell high--their goal is to slip the property and make money from it.

There's no harm in checking out an iBuyer offer, but there are also concessions and fees for such a buyer, and perhaps a much lower net at close. The iBuyer company may claim to not charge a commission, but the seller should ask about all other fees and costs, including their terms about any repairs requested before the close of escrow--don't be surprised if the seller is asked to pay, so check the contract before signing.

If you are thinking of selling and you would like to see a further explanation and comparison scenario for your property, please let me know for a no obligation valuation and comparison of estimates.

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

Owning vs. Renting - What Is the Comparison?

House, Owning vs Renting, April 2020
Click to enlarge

It's worth a look to find out what the difference is between renting and owning.
Let's say you're currently paying $2500/month in rent and you're thinking how nice it would be to own instead.  Based on a single family home price of $500,000 (it could be less if you're looking at condos, but remember to include HOA fees), and a down payment of 10% ($50,000), you could come out ahead in the local market after 4 years.  This is assuming a loan at around 3.63%, hazard insurance, home maintenance at .5% ($2500 annually), annual home appreciation of 2.5%, annual rent appreciation of 2.5%, and a gross household income of between $77,000-$165,000 where your tax savings might be about 22%.

Condo, Owning vs Renting, April 2020

The second graphic is for a condo at $400,000, monthly HOA dues of $275, gross household income up to $77,000, and a loan down payment of 5% ($20,000) and home maintenance cost of about .1% annually (that depends on numerous factors not included here).  A condo purchase like this one has an earlier date for breaking even, but notice the differences in equity.


These are samples of course, but based on standard Los Angeles County property tax rate of 1.25% (increases over time), and an HOA dues level which could be higher or lower depending on luxury vs basic HOA, and other factors. It's not guaranteed that the home growth rate will continue at it's present rate.  It's intended to be an example so that a prospective buyer might think about his/her capability to buy.

Many people prefer to rent, but many people have incomes and savings which could allow them to buy and obtain home equity benefits and tax savings.

If you have a sample scenario you want to try, just contact me!

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

Pandemic: Local Housing Market Trends for March 2020

The single family home market in Long Beach, Lakewood, Huntington Beach and Cerritos, for March 2020 show average home price increases in all cities except Cerritos, which is down 6%. See the panel at the right of this blog for those graphs.

There is no question that the virus pandemic is currently influencing the markets.  Before mid-March, the average daily closed sales in 6 Southern California counties were  higher than at the end of March which shows a downward curve. Los Angeles County, for example, averaged 82 closings a day dropped to 67 average daily closings by the end of March.  The average daily new listings in Los Angeles County dropped from 135 to 98. Similar drops in new listings are in Orange, Riverside, San Bernardino, San Diego and Ventura.  It so far doesn't mean that sales have stopped, or completely will, but the trend is obvious at this point. On average, counties are down about 25% overall in listings.
So what is the hope here? Mortgage interest rates are low, and are set to stay that way for indefinite time this year.  Prior to the mid-March slowdown, California February sales volume was the highest in two years. Small business and unemployment assistance, and direct payments, were a start to fiscal stimulus.  In spite the media attention to what the pandemic will do to our world in the future, look at past events with SARS, MERS and Fukushima, and how the market recovered:

If current measures of social distancing are adhered to, and if the needed medical resources are obtained, the current projection is a decline by June 1.  But will we meet that?  Everything depends on how people follow the rules!!

If you have questions about how to sell your home in the current market, just contact me.  Necessary contract requirements such as physical inspections, appraisals, buyer inspection, etc., can be carried out within guidelines unless there is some stricter local level operating.  Virtual open houses minimize contact to keep to the absolute essential visit to a property.  For more on this, please contact me.  Email, phone, or text.

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

What Is Happening With Buying, Selling and Closing in California??

UPDATE: real estate is now classified as an essential business. Stay tuned for further information about what this means for you.

If the pandemic was happening before the widespread use of the internet, a lot  of our current options would not be available.  So much of our business can be handled without being physically present, that we can get all transaction documents signed, all escrow documents signed, without having to leave our computers.  Listings may be uploaded, viewed and closed virtually.

One could theoretically forego all physical contact and buy the property, and in fact, some buyers have bought this way.  What is changed, however, is, if strictly following California Association of Realtor guidance, is currently there is no in-person showing of properties, no in-person listing appointments, no property inspections, no in-person open houses--but there are virtual open houses.  Well, what if it's a vacant property, and there's no one to be in immediate contact with?  Maybe then?  Best get legal consultation, but be assured, if your property has to go on "hold" status for a while in the MLS because buyers don't want to come over and see it, and right now many do not, and you're not getting any offers (digitally of course), the MLS will not count those days on "hold" status, so when it does go back to "active", that time on hold will not be included.

So, right now, Realtors in California do have to comply with the "Safer at Home" California prohibitions.  California Association of Realtors is currently, however, attempting to get the Governor to make real estate one of the essential businesses.  Because after all, some people are already in escrow, and have to move out and away for the new owners.

But if you are thinking of selling, and have more questions about how to handle a "virtual" situation, I can definitely help.  Yes, the County Recorder Office is closed, however, the title company I most prefer to work with is issuing gap title coverage so that a property can still close, and be covered.  Escrow companies are not receiving in-person visits, but their officers are still in the office working, handling phone calls, and issuing documents.  Are you not computer savvy?  You can still get your docs sent to you for execution and physically sending back, but if you can handle digital signatures (not difficult at all) then all real estate transaction documents on the Realtor's end, and all escrow documents can be handled via computer.  This has been the trend for several years now, in fact.

It's a good time to buy, in Long Beach there's 1.6 months of inventory, that means the available properties to buy are low and you could have competition, but on the other hand interest rates are extremely low!!!! so you save money on the monthly payment. And, it's a good time to sell, because there only 1.6 months of inventory in Long Beach.

So contact me to find out your options right now--the crunch won't last forever.



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

How Is Local Long Beach Market Being Impacted?

Here is just a quick synopsis to show the Long Beach market curve for single family houses, which is not different from surrounding cities.  Fewer new listings are coming on the market as the industry deals with the orders put in place by the California governor.  One bright spot is that California Association of Realtors and National Association of Realtors are appealing to state and federal governments to recognize the real estate profession as an "essential business".  Many occupations are related to the closing of a residential transaction, not the least of which is the need for properties to be available for buyers who need a place to live! If the industry is placed in this category, it will help significantly with buyers and sellers who are otherwise capable of dealing with the health situations. Having people see a property, one or two people at a time, certainly has far less exposure than going to the grocery store!

In February, the single family active listings was 271.
The current number of single family active listings is 186.

February single family pending sales: 144
Current number pending sales:  116

February total closed sales:  250
Current total sales closed 3/1/-3/24:  116

So the current corona virus situation will impact us for a while, and there may be quite a pent up demand when business gets back to normal, or almost normal.  Based on the curve of activity in China, and now New York, the next 60 days or so may be the biggest down swing in the California market before it gets better, but of course the future is not known at this point.


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

Ongoing Pandemic Situation May Have Some Stabilization?

As the pandemic flows through countries causing devastation, global data as of today also indicates over 72,000 have recovered from the corona virus, see  Arcgis link below.

As a followup to yesterday's post about the market, and some corona virus impacts, here is another segment of that same prediction, from California Association of Realtors:

Situation in China Beginning to Stabilize—Hope for Foreign Demand: The number of new Coronavirus cases has begun to fall in China and although the toll has been devastating, there are rising hopes that they may be getting the outbreak under control at last. This will take time to materialize in the housing market, and as we noted last week, international demand has fallen to cycle-lows in California, but this should help prevent a larger decline in demand from foreign buyers.

For those interested in the global picture, follow this link to the Arcgis global database, where on a postive note, the total global recovered case numbers are also shown in the far right column.      https://www.arcgis.com/apps/opsdashboard/index.html#/bda7594740fd40299423467b48e9ecf6 

And, if you are interested in finding out how to place your home on the market at this time, I can go over the details of the current market issues with you. 

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

What Are the Upcoming Market Impacts for Real Estate?; and Long Beach Sales Stats

The California housing forecast for 2020 from the California Association of Realtors may be revised downward, but this greatly depends on the length and quality of the viral outbreak.  On the one hand we have GDP growth impact, but then we have very low mortgage interest rates which can offset a slower economy.  California could still achieve a healthy housing market for 2020.

The number of reported new corona virus cases in China has begun to fall.  This stabilization there will take time to trickle across the globe.  A March 6-9 email survey of  California Realtors shows varying attitudes:  36% believed there would be no impact on home sales or time on market; 25% of Realtors said clients put home purchase or sale on hold; 33% of Realtors had clients asking market questions related to corona virus. Other areas some Realtors felt would be impacted  were prices, closing, and supply.

Turbulent financial markets actually make real estate relatively more attractive.

If consumers maintain their confidence, economic growth will continue.  There have been so many re-finances from consumers taking advantage of low rates, that the mortgage industry is swamped!  Some have even started to raise their rates online in reaction to all the re-fi's.  However, don't think it's not a great time to make a home puchase and profit by the low rates, because it is!

The other fact is that since 2012, the housing inventory has not risen to the level prior to 2012, this is one of the things that has kept housing prices higher in California.  So low interest rates at this time actually offset that fact, and make monthly mortgages more attractive due to rates.

Long Beach February Market for Single Family Homes:  Inventory at 1.6 months supply (extremely low number of homes on the market); average sales price $759,000; number of houses on the market is 276; average days on market is 32. 

Sellers, this is your time to sell!!!

If you have more specific question in regard to viewing property, or listing yours, please contact me via phone or email at any time!



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

Takeaways From the PWR 2020 Economic Summit

About 1,000,000 people have left California since 2010

• Pacific West Association of REALTORS held its meeting in  Garden Grove today on current real estate topics state wide and locally:  
• There are two Proposition 13s coming up:  One is a new proposition on the March 3rd ballot dealing with a bond for school construction debt; the other is the well-known Proposition 13 issue from 1978 appearing on the November ballot and dealing with the Split Roll Tax Initiative where commercial properties, not residential properties, would be restructured for their property taxes if voted in, with the objective of commercial properties paying higher tax than currently (did you know that over time residential properties have been increasing thereby carrying a tax burden not enjoyed by commercial properties).  Don't confuse the two.
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• Proposition 5 will hopefully obtain enough signatures to be back on the  November ballot, and partially rewritten from its last ballot appearance when it was defeated.
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• The State is in the longest post recovery period from a recession ever, over 10 years!
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• The U.S. unemployment rate is down to 3.5%, the lowest rate ever; while the overall California unemployment rate is at 3.9%, but this varies by county.
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• The corona virus effect is global, and is affecting the supply chain around the world, for instance, Toyota in China is just one of many places currently unable to produce for the world market. The next 6 months may see continuing impact, globally and locally, even affecting prospective foreign buyers here.
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• The California population was 20 million in 1970, it's now double that at 40 million people.
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• The housing market typically slows before major elections, there is no correlation to political parties.
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• Housing prices are most often referred to when dealing with "up" or "down" trends, yet the  annual number of residential transactions hasn't changed for the last 10 years!
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• From 2003 to the present, home prices have increased by 53%!
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• Where are sales headed?  Perhaps with higher prices, but not with more inventory.  Inventory has been constrained at the same level since 2012.  May now be the new normal at 2-3 months of inventory.
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• Statewide, the average time on market is 28 days; in the ultrahigh luxury market, the average time on market is 39 days.

•  Many college age young adults want to be able to buy their own home.
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• Buyers want a "Pinterest" home, their expectations are high.
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• The Los Angeles County median home price is $641,000; the Orange County median home price is $840,000, with the lowest inventory in 15 years.
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• Where is the fastest rising price increase?  City of Norwalk.
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• It's predicted that by 2025, California will be a majority renter state.
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• California property owners need to change their image of what increased density might look like in their neighborhood--developers too.  New multifamily housing does not have to have the "cell block" look, there are more elegant designs which could blend well into single family home areas.

REALTORS are represented in 90% of sales, a figure that hasn't changed in 30 years.

Thanks to Leslie Appleton -Young, California Association of REALTORS Chief Economist.

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

2020 Cost vs. Value Report for Los Angeles Area--Or How Much Do You Recoup?

Kitchen remodel

This annual report by Remodeling Magazine (Remodeling 2019 Cost vs. Value Report”, www.costvsvalue.com) comes out on a regional basis. In case you could be a first time seller, it's important to remember that what a project costs is not usually how much it's valued in the market.  The local market sales prices of similar projects determines value, or what the consumer is willing to pay for all the seller's hard work.  This projection fluctuates in these annual reports--starting in 2008 up to the present, the cost recoup percentages range between 61%-72%.  The final overall figure for 2020 for the L.A. area is 63% for a project that cost about $65,000. This is explained as a result of a "shaky decline over the last six years in the cost recouped for these remodeling projects" due to consistently rising project costs.

Another variation from year to year is what type of project brings the best return.  On the national level, several years ago it was new garage doors, for 2020 manufactured stone veneer brought in the highest recoup at 96%, with garage doors still high at 94%.   The lowest is upscale rendition of a master suite addition (once a very popular project) at 52%. Kitchen remodel is more profitable at the "minor remodel" level. Vinyl window replacement is almost at the upper 25% in replacement value.

For the Southern California/L.A. area, the highest individual project returns are minor kitchen remodel at 105% return ($26,000 cost); steel entry door replacement at 106% ($2000 cost); garage door replacement at 123% ($3800 cost); manufactured stone veneer at 130%; vinyl window replacement at 102% ($19,000 cost).  Roofing replacement for asphalt shingle of $30,000 cost was recouped at 92%. But a metal roof replacement only received 79% of a $48,000 cost, which in a high fire zone might be more highly valued.  The West Coast, interestingly, received the highest return on manufactured stone veneer (new item in this year's report) out of all the regions.   Interestingly, bath projects ranked lower than the minor kitchen projects (does everyone already have a new bathroom?), in the Pacific Region.  For definition of major and minor projects, just take a look the report at the link below.

For selling in the near term, just think of how to give your home exterior and interior appeal and how these projects might help you do that.

For the entire report, go to the 2020 report.

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

2019 End of Year Single Family Home Activity for Los Angeles and Orange Counties

Los Angeles County 2019 Review for SFR

The thing to remember about statistics showing data drawn from December to December (as these diagrams show) is that the market is usually slower, lower, etc., at the end of the year compared to the middle of the year, so comparisons from December to the following August could show a little differently.

Sales volume is up in Los Angeles County, while the number of active listings is down, but the median and average home prices continue up--meaning that there's decreasing inventory with sales prices driven upward.

Closed Volume
  $7,812,678,480 | +27.4%;
Average Price
  $1,004,807 | +9.4%;
Active Listings:
  7,787 | -35.1%; (13,579 in June)

  

Orange County 2019 Review for SFR

In the meantime, in Orange County, sales volume is also up percentage wise, but the total dollar amount is approximately half of Los Angeles County (OC is about one-third the population of LA County).  The average single family home price compare in both counties.


Closed Volume
  $3,307,614,666 | +36.5%
Average Price
  $1,092,343 | +1.9%
Active Listings
  2,963 | -34.6%  (5,846 in June) 

Take note:  In both counties, months supply of inventory dropped over 35%, to less than 2 months, and at the peak in May, inventory supply was not over 4 months supply.  In both counties, houses sold within 2% of the original asking price, so overall housing market prices are holding steadily.

For an evaluation of your home, condo, or residential unit property, please contact me by phone, email or text for for information on your property.

Data provided by InfoSparks, CRMLS.

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