The Market & Industry: Unseasonably Strong Market Persists

The housing market continues to be a bright spot in the U.S. economy with housing starts up and home sales growing both in California and across the country. California’s market has remained unseasonably strong, with pending sales data indicating double-digit sales gains will continue into November. September also saw California reach another all-time high for median home prices, and recent analysis from Renofi projects the average California home price could top $1 million by 2030.Cities with the highest housing prices, like those in the Bay Area, are seeing the largest exodus as residents leave for areas with lower costs of living. And smaller cities, like Santa Barbara, are seeing the biggest inflows of new residents. Similarly while foreign buyer activity has fallen in the pricier metros, it’s thriving in “Zoom cities” — popular vacation spots where now-remote employees have set up shop — like Lake Tahoe and Sonoma.Buyer demand has remained strong, with more young Americans entering the market. But inventory has stayed tight as financial anxiety and uncertainty about the future has kept sellers from listing their homes; a survey from Zillow found nearly 40 percent of potential sellers think they’ll get a higher price on their home if they wait to list. Meanwhile, builders say key supply shortages are affecting their timelines, and they are hiking premiums to reflect higher lumber costs.Source: Inman News, C.A.R. Research & Economics, REALTOR® Magazine, NBC Bay Area, CNBC, Zillow Research

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There’s a Pandemic, but Southern California Home Prices are at Record Levels

In the middle of a global pandemic, Southern California home prices keep setting records.

The six-county region’s median price reached $600,000 in August, up 12.1% from a year earlier, according to data released Wednesday by DQNews.

That was the largest percentage increase since 2014 and the third consecutive month during which prices set a new all-time high. Sales rose 2.4% from a year earlier.

“We have had houses with 40 to 50 offers,” said Syd Leibovitch, president of Rodeo Realty, which has offices throughout the Los Angeles area. “It’s just bizarre.”

Although the price leaps may seem unlikely amid double-digit unemployment, analysts say the trend reflects the uneven effect of the coronavirus and its economic fallout.

Compared with low-wage workers, people who tend to have the financial ability to buy homes have been far less likely to lose their jobs, and in some ways, their ability to purchase a house has only expanded.

Interest rates have plunged, with the average rate on a 30-year fixed-rate mortgage now below 3%. And many typical entertainment and recreational activities are still closed or operating at reduced capacity, leading some households to save more at the very time they realize they could use much more space.

“Where are you going to take your Zoom calls where you don’t interfere with one another?” said Kevin Tidwell, an agent with Rodeo Realty.

Tidwell said the desire for larger homes with bigger backyards is causing people to increasingly come to the San Fernando Valley from central L.A and for those already in the Valley to trade up in size.

The desire for more space, coupled with historically low borrowing costs, has helped boost sales and prices across the country. But part of the sharp double-digit increase in the median is simply its definition.

The median is the point at which half the homes sold for more and half for less and thus reflects not only actual increases in value but also the types of homes selling at any given moment.

Jordan Levine, deputy chief economist at the California Assn. of Realtors, said a desire for larger homes could, in and of itself, push up the median. But more important is the uneven effects of the economic downturn.

Though many low-wage workers probably couldn’t have bought a home before the crisis, Levine said the country’s economic pain has been felt on a sliding scale, with middle-income households hit less than low-income households, but harder than the wealthy, factors that are causing a shift toward the luxury segment of the market.

For example, homes that sold for $1 million or more accounted for 22% of all homes sold in California last month, up from 16% in August 2019, the trade group’s data show. The share of homes that sold for less than $500,000 fell to 38% of all sales in August, down from 46% a year earlier.

“People who are shopping down at the bottom end of the market are more likely to have suffered job loss or had a family member lose income that precludes buying a home,” he said. “It’s hard for me to break down what percent of that double-digit price growth [in the median] is due to the change in the mix, but part of it is definitely that.

“That being said, we are also seeing real honest-to-goodness price growth.”

Real estate agents say they see it in the increasing number of bidding wars on individual homes, as more people enter the market but find few options available.

Economists say too little home building is a driving factor behind California’s long-running inventory shortages.

Selma Hepp, deputy chief economist at CoreLogic, said the coronavirus is making the problem worse: Millennials are increasingly entering their prime home-buying years, but baby boomers who own large swaths of the housing stock are at heightened risk for complications from COVID-19.

“They don’t want to be moving right now,” she said of the older generation.

In Los Angeles and Orange counties, there were 19% fewer homes for sale in August than a year earlier, according to Zillow. Larger declines were seen in the Inland Empire, as well as in San Diego and Ventura counties.

“We have no inventory,” said Heidi Ludwig, a Redfin real estate agent who specializes in the South Bay.

How long the upswing will continue is unclear. Part of the increase in sales and prices reflects pent-up demand from the spring, when stay-at-home orders and fears of the virus all but froze the market during what is typically its busiest season.

If the economy takes a turn for the worse, the housing market could also trend downward. For now, prices are shooting up across the region.

  • In Los Angeles County, the median home price rose 12.2% from a year earlier to $692,750 in August, while sales fell 3.8% from a year earlier.
  • In Orange County, the median home price rose 11.6% to $800,000, while sales climbed 10.9%.
  • In Riverside County, the median home price rose 13.1% to $441,000, while sales edged up 0.6%.
  • In San Bernardino County, the median home price rose 9.8% to $380,000, while sales climbed 2.8%.
  • In San Diego County, the median home price rose 9.4% to $640,000, while sales climbed 7.2%.
  • In Ventura County, the median home price rose 8.1% to $647,250, while sales climbed 7%.

Antonio Herrera, 28, is among those trying to break into homeownership. He and his partner are looking for homes in the $500,000 range in South Los Angeles but so far have had trouble closing a deal.

“I expected homes to maybe sell slightly over [asking],” he said, “but we are seeing houses go up $50,000 to $100,000.”

Source: Los Angeles Times

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Pandemic May Lead to Foreclosure Crisis, CoreLogic Says

If you are in this situation, contact us -we can help.

Millions of American families could lose their homes amid COVID-19 pandemic, report says

A surge in the share of mortgages 90 days or more overdue in June is a signal the U.S. could be heading toward a foreclosure crisis, according to a CoreLogic report on Wednesday.

The share of loans with payments 90 days to 119 days late quadrupled between May and June, rising to 2.3%, the highest level in more than 21 years, said Frank Nothaft, CoreLogic’s chief economist.

Measuring all loans 90 days or more overdue, including loans already in foreclosure – a gauge known as the serious delinquency rate – the share was the highest since 2015, the report said.

“If there are new government programs, maybe that alleviates some of the risks, but given what we know today, we could be looking at a serious delinquency rate that is four times higher at the end of 2021 as it was before the start of the pandemic,” Nothaft said in an interview.

A rate that high could result in a foreclosure crisis, the report said.

“Not only could millions of families potentially lose their home, through a short sale or foreclosure, but this also could create downward pressure on home prices – and consequently home equity – as distressed sales are pushed back into the for-sale market,” the report said.

Mortgage delinquencies have soared in recent months as Americans who lost income because of the pandemic sought forbearance agreements that allow them to suspend their home-loan payments without penalties. While they have permission to miss their payments, the mortgage industry still counts the loans as delinquent.

The CARES Act passed by Congress at the end of May gave homeowners with a government-backed loan the right to up to 12 months of forbearance. Currently, about 3.6 million Americans are in forbearance, according to the Mortgage Bankers Association.

The House of Representatives passed the Heroes Act in May with additional support for homeowners and renters, but the Senate left for its summer vacation last month without addressing it.

This week, Senate Leader Mitch McConnell (R-KY) proposed a “skinny bill” with a fraction of the funding in the Heroes Act and a provision Democrats have said is a non-starter: Blanket protection for businesses and medical professionals from being sued for pandemic-related issues.

The main factor that could push the housing market over the edge, even as it struggles with a shortage of available properties, is the labor market weakness, according to the CoreLogic report.

While the unemployment rate fell to 8.4% in June, a government report showed on Friday, the economy has gained back fewer than half the jobs lost since the beginning of the pandemic.

“Sustained unemployment has pushed many homeowners further down the delinquency funnel,” the report said. “With unemployment projected to remain elevated through the remainder of 2020, we may see further impact on late-stage delinquencies and, eventually, foreclosure.”

Almost 10 million American families lost their homes to foreclosure in the U.S. between 2006 and 2014 in a tally that counts forced evictions as well as short sales in which lenders agree to let homeowners sell properties at a loss.

The foreclosure crisis uprooted families, created trauma – especially for children who didn’t understand why they had lost their homes – and destroyed neighborhoods that became dominated with vacant houses.

Source: HousingWire – September 9, 2020

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Thinking of Selling? Here are 3 Renovations that will NOT Increase Your Value

It’s one thing to make renovations to a home with the goal of making it more enjoyable or comfortable for you and your family and quite another to make these renovations solely to boost the home’s value. It’s the latter we want to take a look at today.

In fact, these three renovations are only “goofs” if you made them thinking you’ll get your money back when you sell the home.

  1. Converting the Garage

A small home with a growing family bulges at the seams and, rather than sell the home, many homeowners turn the garage into a bedroom. Big mistake, says

George Holmes of Eagle Appraisal in Las Vegas; your home’s value will take a hit.

In fact, he says that a tract home may lose up to $10,000 in value, but cautions that “it’s not cut and dry, however.”

Garages are a hot button for buyers, not only as a car’s refuge from the elements, but for storage as well. In fact, 86 percent of home buyers surveyed for Remodeling magazine’s Cost vs. Value report said that they want a garage for the storage space.

  • Swimming Pool

Install a swimming pool because you want one, not because you think it will increase your home’s value, because it won’t. The tens of thousands of dollars it takes to install the pool, unless you live in an area where pools are in demand (Phoenix and Las Vegas, for instance), won’t be returned when you sell the home.

If you live in Maine, swimming pools aren’t as in demand as they are in areas with year-round swimming weather. In regions with short summers, a pool represents nothing more than a maintenance headache to homebuyers.

  • Bedroom Conversion

If you must convert a bedroom into a home office or a workout room or anything else, make sure that you can undo the conversion before putting the home on the market. A permanently converted bedroom will decrease your home’s value.

After all, three-bedroom homes typically cost more than homes with only two bedrooms so the appraiser will knock down the value of your home accordingly.

When considering which renovation or repair projects will add value to the home, put your money into upgrades to the home’s major systems (if needed) or into updating the kitchen and/or bathrooms.

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Weekly Mortgage Refinances Fall as Interest Rates Suddenly Turn Higher

A sudden turnaround from record low interest rates last week caused a pullback in mortgage refinance demand. That pulled total mortgage application volume down 3.3% from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) increased rather abruptly to 3.13% from 3.06%,. Points including the origination fee rose to 0.36 from 0.33 for loans with a 20% down payment.
“Positive economic data reported last week on retail sales, as well as a large U.S. Treasury auction, drove mortgage rates to their highest level in two weeks,” said Joel Kan, an MBA economist.
The rise in rates caused refinance demand to drop 5% for the week but was 38% higher than a year ago. That annual gain continues to shrink. Last month, refinance demand was more than 100% higher than a year ago.
The difference now is that interest rates are narrowing the gap to where they were a year ago. While they were a full percentage point lower annually last month, they are now 77 basis points lower, making fewer borrowers able to benefit from a refinance.
Mortgage applications to purchase a home increased just 1% for the week but were a remarkable 27% higher compared with a year ago. This marks three straight months of annual gains for purchase applications.
Demand for housing continues to swell, held back only by the severe shortage of homes for sale. Homebuilders are ramping up production, and mortgage applications for newly built homes are surging even higher.
“The housing market remains a bright spot in the current economic recovery, and these results, combined with July data on housing starts and homebuilder optimism, suggest that housing supply could be increasing to better meet the strong demand for buying a home,” Kan said.
Mortgage rates pulled back slightly to start this week. The increase last week was due partially to an increase in lender fees levied by Fannie Mae and Freddie Mac. As lenders settle into that new normal, they are falling back in line with Treasury yields.
Source: CNBC

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More Housing Trouble Coming Soon!

The Judicial Council of California voted last Thursday to end its statewide moratorium on foreclosures and evictions on September 1. This move gives lawmakers a couple more weeks to figure how to prevent a massive wave of evictions from sweeping across the state. Beginning on September 2, the courts will once again be able to process evictions, although local laws could still prevent delinquent tenants from being displaced. More than 1,600 Californians have already been evicted during the pandemic in spite of the moratorium, and that number is likely a significant undercount. The problem is not limited to California: Nearly one-third of all American renters had unpaid housing bills at the start of August.

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How the Pandemic is Changing Homebuyer Preferences

Are you needing to sell quickly due to your circumstances changing from the COVID-19 pandemic?

In 2018, 619,000 Californians migrated to more business-friendly and less-taxed states, such as Nevada and Arizona.

With adversity, comes changes in consumer preferences and behavior. The COVID-19 pandemic may just cause the next Great Migration.

The pandemic-related uncertainty has incentivized many Americans to want to “. . . permanently relocate to more sparsely populated areas,” according to Redfin.com’s Dana Anderson.

“Overall, searches for homes in small towns are surging on the Redfin.com website,” she explains.

“Pageviews of homes in towns with fewer than 50,000 residents were up 87% year over year in May, more than triple the 22% year-over-year increase in page views of homes in cities with more than 1 million residents.”

The ability and acceptance of working from home and new technology to make that easier has changed many home shopping wish lists on which “a quicker commute” once ranked high.

As long as there is decent internet service, small towns and suburbia offer far more security to the new migrators.

Residents of San Francisco, Seattle and the District of Columbia lead the way, with many expressing interest in homes in Montana and rural areas of Oregon and Colorado along with Nevada and Arizona.

If you need to move quickly…contact us today – we can help!

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Sell Your Southern California House Fast

We make it easy for you to skip costly repairs, avoid endless showings, get cash for your home quickly, and sell in as little as 7 days and move whenever it is best for you.

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How Does Our Buying Process Work?

At Today Homes Buyers, we are completely transparent about our process and how we work. We offer many solutions to allow you to sell your home fast! We customize our offers to meet your needs, whether your home needs repairs, is in foreclosure, going through probate, or you have to sell fast due to job transfer, going through a divorce, have bad tenants, or any situation where you need to sell your Southern California house fast. Feel free to reach out to us with any questions you have about selling your house in Los Angeles, Riverside, San Bernardino, or Orange Counties.

Call or Text Us Today! (909) 833-9344.

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