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Fierce Competition Continues in CA Housing Market

The California housing market is red hot as the year comes to an end. The state has already recovered all the sales it lost in the first half of the year as insatiable housing demand in recent months has propelled sales to levels not seen in the past 15 years. Sales of existing single-family homes surpassed the 500,000 benchmark for the first time since January 2009, while year-to-date sales through November exceeded last year’s level for the first time since March and recorded an increase of 1.3 percent from 2019.

On the supply side, levels of for-sale properties remained extremely low, with active listings declining 18 percent in November 2020 from the prior month and 46.6 percent from a year ago. The unsold inventory index, in fact, reached the lowest level in over 16 years. The surge in Coronavirus cases since late October likely played a role in the bigger than-normal drop in active listings this year as many homeowners have been reluctant to put their house up on the market because of public health concerns.

As the imbalance between supply and demand continued to get worse, the California market has become ever more competitive. Properties have been flying off the shelf with a listing in November staying on the market typically for nine days before escrow opened, the shortest time-on-market since 2013. Homes for sale also received multiple offers more frequently, and the average number of offers per sale transaction reached their highest levels since 2013.According to the 2020 Annual Housing Market Survey released by the California Association of REALTORS® (C.A.R.),nearly two-thirds (59.2 percent) of homes sold in 2020 received multiple offers at an average of 4.8 offers per home. In2019, less than half (47.7 percent) of homes sold received multiple offers with an average of 3.9 offers on each property.

Fierce market competition appeared in the form of bidding war as well, as many properties were sold above asking price this year with their share to total sales up nearly 10 percent from 2019. Results from C.A.R.’s 2020 Annual Housing Market Survey show that over a third (35.5 percent) of home buyers paid more than what home sellers asked for this year, compared to a quarter (26.7 percent) in 2019. This year’s level, in fact, was the highest in seven years and was 16 percent higher than the long-run average.

The sales-price-to-list-price ratio in California also set a new record high. The ratio is calculated by dividing the final sales price of a property by its last list price and is expressed as a percentage. A sales-price-to-list-ratio with 100percent or above implies that the property sold for more than the list price, and a ratio below 100 percent indicates that the property was sold below the asking price. In November 2020, this indicator that reflects the negotiation power of buyers and sellers was at 100.5 percent and was the highest ever recorded in the past 30 years.

In a normal year, housing demand typically subsides and the market usually cools down during the holiday season.While the market is currently experiencing some seasonal slowdown, record low rates continue to keep buying interest above last year’s level and higher than the norm. With costs of borrowing expected to stay near historic lows and housing supply not likely to improve much in the next few months, the California market will likely remain heated and very competitive for the first half of 2021.

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Fall is the new spring in real estate

Fall is the new spring in real estate Record-low mortgage rates, skyrocketing buyer demand, and shrinking inventory have pushed the housing market’s busy season forward through at least the end of the year.

Record-low mortgage interest rates, the increased need for more spacious, multifunctional homes during the coronavirus pandemic, and timelines that no longer necessarily revolve around the start of the school year have fueled homebuyer demand so much that fall is looking more like a new spring in the housing market this year.

“This spring was like no other,” Brian Rubenstein, senior director of mortgage at online lender Ally Home, told Inman in a phone interview. “The pandemic and the market dislocations were quite unprecedented.”

Due to the pandemic, the Federal Reserve has kept interest rates low in an effort to shore up a faltering economy, and rates for 30-year fixed-rate mortgages have been hovering around 3 percent. This week, National Association of Realtors Chief Economist Lawrence Yun declared that 2020’s housing market was outperforming 2019’s housing market and predicted that this year’s home sales would end up higher than the 5.34 million homes sold in 2019. Rubenstein doesn’t expect rates to rise and that means that the market will likely see what he called an “extended spring cycle.”

“We’ve begun to see a steady increase in people hitting the market, inventory remains lower than usual, but at the same time, with demand being so high, we’re seeing the average home price jump dramatically.

“For the first time we’re also seeing the new entrants into the market — first time homebuyers — not really being scared off by that. They’re really looking to settle in and really begin their home purchase journey, given everything that’s happened in the current landscape.”

Ally saw a delay in the spring market that lasted about two months. Whereas the market typically starts heating up in March as homebuyers figure out where they want to be for the following school year, this year it wasn’t until May that mortgage application volume started picking up, according to Rubenstein.

“Our app volume’s up close to 160 percent of where it was year over year. The purchase market has begun to pick up steam as the refi wave continues to dwindle a little bit,” he said.

Although Ally declined to share raw numbers, the company said the share of first-time homebuyers in July and August had grown to 60 percent of purchase volume, up from 42 percent of purchase volume in July and August 2019 — a 43 percent year-over-year increase.
“I would expect us to continue to see a steady pick up in purchase volume through the remainder of this year and … [stay] buoyed by the spring market next year,” Rubenstein said.

While there is usually a dip in mortgage volume around the holidays, whether there is one this year is up in the air, in part because people are less likely to travel extensively until there’s a vaccine, according to Rubenstein.

“If folks are not open to traveling during the holiday season, it could present an opportunity for us to continue the continued climb in the mortgage space,” he said.

Additionally, companies that are currently having their employees telecommute could decide to extend that arrangement, allowing people to ditch their previous commutes and “re-tether” themselves to an area that’s more important to them because it’s closer to relatives or a particular school, according to Rubenstein.

“It could help perpetuate … the late spring market through the fall, through the winter, into the following spring,” he said.Because school is unlikely to be solely in-person, that could encourage families to move around more as well.

“If the caregiver or parent is remote, and the child is either remote, or there are going to be multiple options in the future for children to facilitate learning, whether it’s through virtual or e-learning, that provides a lot more flexibility optionality for folks when they’re making home purchase decisions,” Rubenstein said.

“People are going to be thinking about that probably in a different way, given the landscape of the environment. I think that could help further stimulate this market that we’re seeing now and continue on at least through some point next year.”

Real estate data firm CoreLogic saw home prices rise 5.5 percent year over year in July — the highest rate since 2018. Real estate brokerage Redfin saw home prices rise even more in the markets it operates in — 8.2 percent — canceling out a 6.9 percent increase in buyer purchasing power due to low mortgage rates. The firm attributed the price increases to a combination of low inventory and high buyer demand.

Instead of experiencing their usual fall decline, home prices will at least hold at their current “record high levels” for the next quarter, according to Mike Simonsen, CEO of housing market analytics firm Altos Research. Simonsen hosted a webinar Thursday titled “The Key Data to Watch Right Now in Real Estate.”

“Normally where we are in late summer is the high and we’re starting to reduce prices before the end of the year. We don’t want to be stuck with a home in November that’s been on the market since July, so they get cut,” he said.

“[This year] our whole seasonal reset is way lower than a normal year. Twenty-five [or] 26 percent instead of 36 [or] 37 percent of homes are taking price reductions. That’s because there’s demand in the market. That’s homes getting listed and sold quickly. That’s multiple offers, and that says that the homes that are listed now in the prices that we’ve got now hold up for transactions that happen later in September, in October, November.”

That demand is being met with shrinking inventory. Altos predicts the number of single-family homes for sale will continue to drop through the end of the year.

“We had just a couple of weeks in March of climbing inventory in 2020, and then the rest of the year when normally we’d have all this inventory increasing, inventory dropped rapidly every week from April all the way through,” Simonsen said.

“It’ll be flat for a couple of weeks here in September and then you can expect the majority to pull back. The second week of January is when we get our inventory turn. It starts the new listings for the springtime. We may be at 378,000 homes for sale for the whole country. It’s insanely low. That would be half of what a normal January would start at and like a third of what a healthy market would be.”

Altos expects that some homes will come on the market as the first six months of mortgage forbearance end for some homeowners at the end of September. At that point, some will decide to sell their homes, but most will re-extend their forbearance period so that it ends in March, which may mean new inventory in April, according to Simonsen. Still others who are currently in forbearance but not responding to their lenders may go into foreclosure on January 1 as the current foreclosure moratorium ends, or may decide to sell to avoid foreclosure, he added.

“Because prices are high, equity is at record levels, homes are moving fast, it seems unlikely that we’re going to get a wave of foreclosures, but more likely that we might have folks that say, ‘Well, I’m going to take my cash now,’” Simonsen said.

“For Realtors that communication of the opportunity to walk away with your cash pretty quickly because demand is high is a listing opportunity to take advantage of.”

In response to a post on Inman’s Coast to Coast Facebook page, real estate pros mostly expected the fall market to be as busy as their spring normally would be.

“The [Washington D.C.-Maryland-Virginia area] has been extremely busy,” wrote Don McGlynn, associate broker at Compass. “Low inventory is resulting in a price squeeze. Things would have to change drastically for that to slow down in the fall.”

“We are still seeing low inventory and multiple offers on many homes,” he added. “30 years in the business and I have never seen this before.” But, he added, “[R]eal estate is cyclical. I think when the pandemic is over we will see more homes coming on the market. It should lead to a more balanced market.”

Some agents and brokers anticipate staying busy, but predict low inventory will stymie sales.

“In the Chicagoland market as long as people don’t have to commute to an office to work in, we will continue to see homes selling in specific price points where home buyers can have the separate living spaces to accommodate the household needs for working and education as well as greater outdoor space,” wrote Andrea Geller, a broker at Berkshire Hathaway HomeServices Chicago.

“For the most part I haven’t had a lull and still continue to get new opportunities with new and past clients, which is giving me a good pipeline of business,” she added. “One of many [factors] choking up listings and some buys are the courts are so behind that sales that are a result of things like divorces or estate issues are on hold until the right to sell them is there.”

Glenn Phillips, CEO of Lake Homes Realty which operates in 30 states, anticipates “above-average buyer demand continuing, and the deal flow continuing to be limited by low inventory through the [f]all.”

But he predicts the repercussions of the pandemic to hit next year. “After the stimulus money runs out (sooner or later, even if there is another round), this tempo may change as the economic scars from the pandemic will become more obvious to the markets and the economy. The election outcomes will also influence the tempo of the market next year,” he wrote.

Source: Andrea V. Brambila of Inman.com

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These are the outdoor projects that will improve the value of your home

‘Curb appeal has never been as important as it is today,’ landscape designer and HGTV personality Carson Arthur told Inman.

With coronavirus lockdowns still in full swing, no part of the home is proving to be as valuable as the backyard and front yard. Those who have a garden or a tree-lined patio can spend time in nature while still socially isolated.

Many homeowners are using newfound free time to start outdoor home projects — from work in the garden to adding a new patio for outdoor dinners.

Stuck in lockdown and looking to start an outdoor project of your own? We asked some landscape design experts about how outdoor quarantine projects can increase the value of you or your client’s home:

1. What you see is what you get

These days, buyers are all about curb appeal — what it looks like, what kind of decor it has and the type of lifestyle it sells, Carson Arthur, a landscape designer who regularly appears on HGTV shows, told Inman. Making the front of a property more lavish could be as simple as giving the front door a fresh coat of paint or installing a planter.

“Curb appeal has never been as important as it is today, with many online experts stating that the first impression your home makes to a potential buyer can be worth between 8 and 10 percent of your home’s overall value,” Arthur said.

2. Outdoor eating for the win

A stylish outdoor patio, rooftop or balcony has always added sparkle to a property — anyone who visits immediately thinks of the evenings they will get to spend there with family or friends. But given how much time we’ve had to spend inside this spring, many buyers may start to see a patio or grill area as an especially valuable home feature to have during tough times.

“We recommend keeping your dining table close to your grill or an indoor kitchen, so its easy to transfer dishes and food back and forth,” Amber Freda, a New York-based landscape and garden design expert told Inman. “Think about how many [seats] you will need ahead of time and plan accordingly.”

3. Don’t forget the garden and plants

When talking of increased home value, minds tend to jump immediately to fancy decks, pools and expensive renovations. But a vegetable planter or a garden full of flowers are easier to start and will automatically make a home look cared-for and stylish, Freda says.

“Plantings will instantly transform a home and increase the value,” she said. “You can also add an irrigation or landscape lighting system, mulch the soil for a more finished look, and add built-in features like fencing, a patio, a pergola, or an outdoor kitchen.”

4. Do some updates

New lights, a varnished and freshly-scrubbed deck or something as classic as a fresh coat of paint — these may not sound like exciting renovations but, when done, they make an enormous difference in whether a house looks luxurious or drab.

“This is a great time to save money and spend time outdoors by tending to your own maintenance, plantings, and built-in items,” Freda said. “There are so many great how-to articles, courses, and YouTube videos that can teach people how to do these things, and you may even find it so enjoyable that you want to keep doing it just for fun.”

5. In some cases, hold off

Current limitations on business and calling in contractors may make certain renovations impossible. Complex outdoor projects, such as installing a pool or doing a full-on roof replacement, should not be started without professional contractors. Use quarantine time to research and create plans for future updates instead.

“Redoing a project is never a fun thing and even worse if an improperly built deck or patio hurts the value of your home,” Arthur said.

Source: Veronika Bondarenko – Inman

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This Is How the Coronavirus Crisis Is Ravaging the U.S. Housing Market

The coronavirus crisis has ravaged not only the nation’s economy, driving down the stock market and pushing roughly 16 million people into unemployment, but its psyche as well. And the housing market has not escaped unscathed.

With more Americans out of work and worried about the security of their jobs in addition to their health, home buyer interest has fallen sharply, according to 90% of Realtors® surveyed in the National Association of Realtors® Flash Survey: Economic Pulse. About 6,000 real estate professionals participated in the survey, which was conducted from April 5 to April 6. Roughly 45% of respondents said buyer interest had plunged by more than half. Just 2% said they had seen an increase in eager buyers.

“The housing market is going to be stalled for the spring,” says Jessica Lautz, NAR’s vice president of research. “Buyers and sellers are not necessarily buying and purchasing right now unless they have to. They’re delaying the process for a couple of months.”

More than half of Realtors, 59%, said buyers are delaying their home-buying searches for at least a few months. And 13% said they’re seeing buyers postpone their searches and sellers hold off on listing their properties indefinitely.

“The sellers and buyers in the market today are extremely serious because they do need to make that transaction happen,” says Lautz.

They’re the ones that have to move due to a new job or other extenuating circumstances. Those who can wait out the pandemic are doing just that. But even those who do go through with their sales are experiencing delays. That’s to be expected, with most folks working from home and taking social distancing precautions.

Nearly a third of Realtors reported delays in obtaining financing were holding up transactions. Other culprits were home appraisals and inspections, final walk-throughs, in-person signature requirements, and title searches.

But real estate professionals expect that buyers will come off of the sidelines once the coronavirus is under control. Those trapped in their too-small apartments and starter homes will likely hit the market along with others who had been planning to buy until the virus temporarily derailed them.
“Realtors do expect there will be a rebound,” says Lautz. “We’re going to see demand coming out of this.”
Sellers are pulling their homes off the market

It’s not just buyers who are getting cold feet. Many sellers don’t want strangers, who could be COVID-19 carriers, in
their homes. They also don’t want to be moving house in the middle of a public health crisis.

About 80% of Realtors reported seeing fewer homes for sale – 14% said the number of listings fell by more than half.

“It’s only going to further reduce the limited inventory that was already available,” says Lautz. And instead of prices
going down, a severe housing shortage could “increase home prices.”

Those intrepid enough to continue to list their properties are taking more health precautions. Nearly three-quarters
have stopped holding open houses. That’s not surprising, as many states, cities, and multiple listing services have
prohibited them in light of the crisis. Almost half are requiring prospective buyers entering their homes to wash their
hands and use hand sanitizer. More than a third are insisting that buyers touring their abodes wear gloves.

“If they’re leaving their home on the market, they’re taking precautions,” says Lautz. “People are [opening] the windows
and cleaning the home before and after someone comes through.”

Home prices aren’t expected to plunge

Despite buyers’ hopes and dreams, most sellers aren’t reducing prices like they did around the Great Recession. While
roughly 63% of Realtors said buyers are expecting home prices to drop, just 27% of Realtors reported that their clients
cut prices.

“Because inventory has been tight for such a long period of time, we’re not expecting home prices to decline on a
nationwide scale,” says Lautz. “It’s not the same pattern [of an oversupply of homes for sale and a dearth of buyers]
that we did see before” when the housing market crashed more than a decade ago.

Renters are struggling during this crisis

Renters are also having trouble making their monthly housing payments, with many tenants losing jobs, hours, and income
as businesses shutter across the nation.

Around two-thirds of property managers and nearly half of individual landlords are encountering tenants who are having
difficulty paying their rents. About 46% of property managers and 27% of individual landlords were able to offer
accommodations to renters.

Only about 7% of property managers and 5% of individual landlords terminated leases as a result.

Source: Clare Trapasso – Realtor.com

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