We are in the midst of an affordable housing crisis where The Crown on Kings Road in West Hollywood is asking over $2,500 for a 400-square-foot studio apartment and most people can’t afford it.
It’s not ok for a city to have an entry-level rental that so many people just can’t afford. Something has to change.
So how do we provide more affordable housing? (And I’m not talking about the 20% of “affordable housing units” that developers have to set aside for low-income people in a building with 10 or more units.) The best way to increase housing that is more “affordable” for all is to simply build as many small units as possible — units on the free market that are not priced so high.
Homebuying in Los Angeles in 2020 is off to a busy start. Agents and real estate observers say that in the “lower” end of the market—where homes are priced below $1.5 million—the early action might be indicative of the year ahead.
“It’s tighter in the lower price thresholds for sure,” says Jonathan Miller, whose real estate and appraising firm, Miller Samuel Inc., tracks home prices in Los Angeles. “Unless there’s a change in economic conditions in some material way, it’s hard to make an argument that things are going to change all that much in 2020.”
In a nationwide survey investment strategists and real estate experts predicted that prices will cool off or even fall in some of the West Coast’s priciest markets this year, including Los Angeles, where the median price of a single-family home was $650,000 in November.
But Los Angeles brokers say they expect prices to stabilize or grow at a slower pace than they did in 2018, when price records were notched month after month. Even though buyers have more power over transactions than they did two years ago, it didn’t swing 100 percent in their favor.
What is working in their favor? Low interest rates. What’s not? Low inventory. Plus, the economy is so robust, there are plenty of buyers.
That means home shoppers should expect to compete with multiple offers in popular areas like the Westside and in “transforming neighborhoods” in Northeast Los Angeles and South LA, regions where home prices grew the most over the last decade.
You’re going to see between $799,000 and $1.4 million be the hottest price points. Buyers need to be prepared to make competitive offers, that could mean submitting offers for over asking price. But that’s not the only way to get creative, perhaps remove loan or appraisal contingencies also don’t expect a perfect house or ask for exorbitant credits on the request for repairs.
And, if you still keep getting out-bid, look for houses that have been sitting on the market for a long time, a sign that they might be overpriced. Embrace homes that might not be well-staged or stylish and consider doing some work on the property to make it suit your tastes.
Millennial buyers want to feel that they can just bring their toothbrush... they can’t imagine doing work. It would be good to look for places that need work and add value. If that’s the case, there are financing options to build renovation costs into a home loan. For example, an adjustable-rate mortgage, while not always ideal, will typically have lower monthly costs in the first few years, which could allow buyers to save more money for repairs.
Also, if you’re a first-time buyer keep in mind that you’ll likely live in the home for at least half a decade. Ask yourself will this work for me for the next five to seven years? It opens up so many possibilities.
Economic uncertainty and affordability issues to subdue California home sales
LOS ANGELES – Low mortgage interest rates will support California’s housing market in 2020 but economic uncertainty and affordability issues will mute sales growth, according to a housing and economic forecast released today by the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.). (Scroll down the page and look for yellow banner.)
C.A.R.’s “2020 California Housing Market Forecast” sees a small uptick in existing single-family home sales of 0.8 percent next year to reach 393,500 units, up from the projected 2019 sales figure of 390,200. The 2019 figure is 3.1 percent lower compared with the pace of 402,800 homes sold in 2018.
According to the Freddie Mac's latest Primary Mortgage Market Survey, the U.S. 30-year fixed-rate mortgage (FRM) averaged 3.66 percent.
"The housing market continues to steadily gain momentum with rising homebuyer demand and increased construction due to the strong job market, ebullient market sentiment and low mortgage rates," said Sam Khater, Freddie Mac's Chief Economist. "Residential real estate accounts for one-sixth of the economy, and the improving real estate market will support economic growth heading into next year."
Freddie Mac News Facts
While low mortgage rates have made it cheaper to buy a home, finding the right property remains a challenge for home buyers, realtor.com® writes in its October 2019 housing report. Would-be buyers are finding that a worsening inventory shortage is heating up competition in the housing market this fall.
“Owning a home continues to be a priority for buyers as we head into the cooler months of the year,” says George Ratiu, realtor.com®’s senior economist. “Driven by the tailwind of sub-4% mortgage rates, the steady demand for housing is drying marketing inventory at an accelerating pace. With dwindling supply, prices maintain their upward pressure, [exacerbating] affordability challenges for first-time buyers.”
City officials are looking to help the scores of Angelenos who make too much money to qualify for affordable housing but are still paying too much for their living quarters.
The Los Angeles City Council voted unanimously Tuesday to have city staffers figure out what percentage of Angelenos fall into this category and use that number to find out how much existing housing is within their financial reach.
“Right now, the largest share of Angelenos are getting the smallest share of new housing,” says Councilmember David Ryu, who introduced the motion asking the city to look into this housing gap. “We need to flip that math.”
Mortgage rates dropped to their lowest level since October 2016 due to weaker economic data over the past week.
The 30-year fixed-rate mortgage averaged 3.49% during the week ending Sept. 5, down 9 basis points from the previous week, Freddie Mac reported Thursday.
Rates for 30-year home loans have only increased nine times so far this year — otherwise, they have dropped or remained flat from week to week.
The 15-year fixed-rate mortgage moved down 6 basis points to an average of 3.00%, according to Freddie Mac. The 5/1 adjustable-rate mortgage averaged 3.30%, falling 1 basis point.
The 2008 financial crisis brought the global economy to its knees and sent American home prices into freefall. For anyone who managed to hang on to their job, savings, and credit score, the aftermath of the crisis was a prime opportunity to buy a house at a bargain price.
The Great Recession is the only economic downturn millennials have lived through as adults, so, naturally, they might think that the next recession—which more and more economists believe will hit by 2021—will present a chance for many millennials to finally join the ranks of homeownership.
It doesn’t bring me joy to report that this is unlikely to be the case.
The last recession was an anomaly in more ways than one, and its effect on the housing market is the biggest outlier relative to other recessions. The 2008 recession didn’t cause the housing market to go into freefall. The housing market going into freefall caused the recession.
Home prices in LA County surged to $635,000 in July, shattering an all-time record for the second month in a row.
The county’s median sale price rose 2.8 percent since June and a full 5 percent since July 2018, a new report from real estate data tracker CoreLogic shows. That was the largest yearly gain since November.
CoreLogic analyst Andrew LePage says in a report that the bump in prices may be due in part to falling mortgage interest rates, which have reduced monthly costs for homebuyers who aren’t making all-cash purchases.
Across all of Southern California, sale prices rose 2 percent year over year. But LePage points out that average mortgage payments dropped 7 percent in the same time period due to declining interest rates.
In Los Angeles, home price increases continue to be accompanied by sluggish sales. Last month, 6,965 homes sold countywide—exactly one fewer than in July 2018, despite the fact that this year the month had one additional business day for sales to process.
Across all of Southern California, sales during the month were 2.9 percent below average (excluding the bubble years leading up to the 2008 Great Recession).
In LA County, median sale prices eclipsed the $600,000 mark for the first time in May 2018. LePage says that how high home values grow will probably be determined by a combination of “mortgage rates, buyer confidence, job and income growth, and inventory levels.”
Though many economists expected mortgage interest rates to climb in 2019, they’ve instead dropped, creating a lending environment favorable to buyers—but also encouraging price growth. LA’s median sale price in July was a full $17,000 higher than a month before.
Photo Credit: abc7
Builders in Los Angeles County are reported to be on track to completing nearly 10,000 new homes before the end of the year. The 9,400 units of housing on the way in the second half of 2019 is higher than the number of units constructed in all of 2018—or 2017.
Most economists agree that building new housing is a key part of addressing steep rental prices and home costs throughout the state. Gov. Gavin Newsom pledged last year to oversee construction of 3.5 million new homes by 2025. If distributed according to population, that would leave LA County responsible for contributing nearly 900,000 residences to that total.
Since homeowners and renters require employment to make housing payments (with rare exception), the jobs recovery is key to the housing recovery. Over 4.5 million people are employed in Los Angeles County as of March 2019. This is 222,200 more jobs than at the 2007 peak.
Los Angeles’ jobs recovery rate has slightly trailed the statewide employment recovery in recent years and has begun to slow. From March 2018 to March 2019, the number of jobs grew by a meager 1.3%. This is roughly the same level of job growth experienced statewide.
No, The Fed Didn't Cut Mortgage Rates last week!
Mortgage rates were mostly unchanged, which will come as a surprise to scores of consumers who mistakenly believe the Fed's 0.25% rate cut equates to a 0.25% drop in rates. The Fed does not set mortgage rates!
Actually, to be fair, the Fed Funds Rate (that thing everyone was talking about last week) is in fact the basis for Home Equity Lines of Credit (HELOCs) in many cases, but that's it as far as the mortgage world is concerned. The most common mortgages are determined by other parts of the financial market.
WASHINGTON—Sales of previously owned homes rose in May, a sign that falling mortgage rates could be nudging the housing market toward a modest spring performance after a sluggish start to this prime selling season.
Sales rose 2.5% in May from the prior month to a seasonally adjusted annual rate of 5.34 million, the National Association of Realtors said Friday.
The spring is crucial to the housing market because roughly 40% of the year’s sales take place in March through June. May was the first month this spring when sales rose from the prior month, but compared with a year earlier sales in May still declined 1.1%
With some of the nation’s highest median home prices—and more than a few of its priciest individual homes—Los Angeles property owners collectively possess a massive pool of real estate equity worth an astonishing $760 billion.
That’s according to a new report from real estate analyst Black Knight. The study shows that Los Angeles leads the nation in “tappable equity,” that is, the value of homes that owners can access by selling or refinancing.
According to the California Association of Realtors, California home sales bounced back in February 2019, after hitting the lowest sales level in more than 10 years the previous month. February's annual sales level was the highest in six months, and the monthly growth in sales was the highest since January 2011.
Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 399,080 units in February, according to information collected by C.A.R.
The statewide annualized sales figure represents what would be the total number of homes sold during 2019 if sales maintained the February pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.
Despite a real estate slowdown gripping the nation, this year's housing market is expected to be busier than economists originally predicted late last year. That means more home sales are on the way.
The anticipated activity is due to lower mortgage rates, which make homes more affordable for buyers. The economists expected rates to climb to 5.5% in 2019, but instead they have hovered around 4%. (They were 4.17% on 30-year, fixed-rate mortgages as of April 18, according to Freddie Mac data.) Economists say rates are now likely to rise a little to 4.5%, still well below what buyers were dreading.
However, it'll be nothing like the feeding frenzy of recent years.
As I always mention in my seminars, what's happening in your local real estate market is based on location (including the micro concerning neighborhoods) and price point/TIERS. Although this graph could be considered "old" since it only goes up to Jan 2019, it is still a good indication of the market overall and where it may be headed.
**Price Index: Percentage number that shows the extent to which a price (or a 'basket' of prices) has changed over a period (month, quarter, year) as compared with the price(s) in a certain year (base year) taken as a standard. See also consumer price index.
** Source: businessdictionary.com
After years of steady escalation, home prices in Los Angeles County are tapering off. *
Real estate data finds that the county’s median home price was $579,500 in January, down slightly from December’s median price of $581,500.
That’s a 2.6 percent increase over the same time last year. By comparison, prices shot up nearly 8 percent between January 2017 and January 2018.
This year's spring home-buying season is when the frenzy typically kicks off for the year, appears to be off to a slow start—particularly in and around some of the nation's most expensive, coastal cities.
That's because for the fifth month in a row, the number of homes on the market surged 6% in February compared with the same time the year before, until last year the nation had seen several years of housing shortages.
It suggested that the housing market is starting on a cooler footing this spring than last spring. That's partly a result of the long-term housing shortage that pushed prices up so high, fewer people were able to actually buy a home.
The big, pricey, tech-fueled cities on the West Coast saw the greatest influx of homes on the market. The nation's most expensive market, Silicon Valley's San Jose, CA, experienced a 125% jump in the metro area in February compared with a year earlier. (The metropolitan area includes the main city and the surrounding suburbs.) The median home price in the metro is a whopping $1,079,800—and that's down 10% from the previous year!
Have you heard the new term? Everybody is talking about it because it’s the latest way to get a huge tax break.
Opportunity Zones were created in the Tax Cuts and Jobs Act of 2017 (aka the Trump tax bill). If you invest in opportunity zones for a certain period of time you will not have to pay capital gains, or at least a reduced amount.
First you need to invest your money into qualified opportunity zone funds. From there the money is used to purchase investment property in a qualified opportunity zone. Where are the zones you ask? Throughout Los Angeles across multiple locations which allows you to invest locally and get the tax savings.
Crissi Avila will teach you how to buy smart. We’ll look at location, development, and turnover so you can spot opportunities long before most even start considering them.