Timely Real Estate News……………………………………..1 May 2019
Home prices fall for first time in 7 years
The handwriting was on the wall. With lower sales volumes being recorded through the first three months of 2019, it comes as no surprise that home prices were next in line to tumble. And they have. Southern California median home prices dipped slightly in March from a year earlier, the first annual decrease since 2012. It is a sign of a downshift from the once-sizzling regional housing market.
The 0.1% drop, reported last week by CoreLogic, means prices for the six-county Southern California region were essentially flat year-over-year. But given a pullback in previous months, prices are $18,500 off their June 2018 peak, and that raises the possibility of a sustained decline in months ahead.
The median price for new and resale houses and condos — the point where half the homes sold for more and half for less — was $518,500 in March, $500 less than a year ago and off the all-time high of $537,000 reached in June of last year.
The dip from March 2018 doesn’t mean values declined across the board. In fact, when broken down by county, the median price only dropped in Orange County, while remaining areas — including Los Angeles County — still posted a slight or modest increase compared to a year earlier.
Sales, however, also continued their declines across the board and have now dropped in each county for at least eight consecutive months. Sales for the region fell 14.1% in March.
This retrenchment in Southern California reflects a market that was bloated and full of very optimistic sellers who felt they could cash in on the previous recent years of high prices. Buyers weren’t forthcoming — they have not left the market but have become more cautious and discerning. At my most recent sales meeting, I heard the largest announcement of new listings that I have heard in a while. Inventory has definitely picked up.
Balancing act — buyer struggles in a stronger economy
The recent report from the Commerce Department that the economy outperformed predictions, coming in at 3.2% GDP growth for the first quarter of this year, could provide some optimism for the coming year. According to economists, the benefactors of a rising GDP are rising employment and the housing market. So, what is really happening now?
We have seen on the Westside, sales (units and volumes) and prices are now dropping below recent high-performance years, post 2009. But as we know, the Westside is a high-end market, but there are bright spots elsewhere in LA County. Richard Green, director of the USC Lusk Center for Real Estate, said the shift toward lower-priced homes indicates the softening is focused on the top of the market — a dynamic that recent tax changes may be contributing to.
In L.A. County, the softening could also stem from people leaving the area, or refusing to move here given high costs. According to the latest census estimates, L.A. County’s population declined by 13,000 in the year ended July 2018. That is significant — a trend we have not seen in recent memory. “It appears we may have hit an inflection point,” in terms of population growth,” Green said.
Regional trends, of course, can mask hot markets, particularly less expensive neighborhoods where higher-income individuals are moving because they’ve been priced out elsewhere. I’m seeing strong buying trends in Culver City, Palms, Mar Vista and South East Los Angeles and lower priced homes in Westwood and Century City.
Ah, ha! Good news in new housing
There is good news also. For example, nationally sales of new U.S. single-family homes climbed 4.5% in March, reaching a 16-month high, as falling mortgage rates and prices and stronger wage gains bolstered demand. This was a major factor in the GDP 3.2% increase according to economists.
New homes were sold at a seasonally adjusted annual rate of 692,000 last month, up from 662,000 in February and 3% above the total a year ago, the Commerce Department said last Tuesday.
Nationally, the median sales price of a new home was $302,700, down 9.7 percent from a year ago and the lowest level since February 2017. Obviously, these are NOT the median sales prices in Los Angeles County where the MSP is over $615,000.
“This trend supports the fact that lower mortgage rates have started to entice buyers this spring and foreshadows a potential strengthening of pending and existing homes sales in the months to come.” says Danielle Hale, chief economist of realtor.com.
The 30-year fixed mortgage rate was at 4.17% last week, down from 4.94% in November. And average annual wage gains have topped 3% in recent months, according to the Labor Department.
There were 344,000 new homes on the market last month. At March’s sales pace it would take 6.0 months to clear the supply of houses on the market, down from 6.1 months in February.
Home ownership dips for first time in two years
Rising home prices and an uncertain economy may have spooked some Americans in the first quarter of the year. For the first time in more than two years, the U.S. homeownership rate fell, dropping to 64.2% in the first quarter of 2019 from 64.8% in the fourth quarter of 2018, according to newly released data from the Census Bureau.
The homeownership rate has been on an upswing since the start of 2017 and nearing its historic average of about 65 percent, The Wall Street Journal reports. The latest quarter’s dip has captured headlines.
Higher home prices and lower housing inventories may have attributed to the slight dip in owner occupied households, economists say. Younger buyers have been driving the bulk of the rise in the homeownership rate for the last few years, but they posted some of the most significant drops in the first quarter. The homeownership rate of households headed by those under 35 years old dropped from 36.5% to 35.4% in the fourth quarter.
“The homeownership rate is volatile, and it would take several straight quarters of decline to indicate owning a home is once again in decline in the U.S.,” The Wall Street Journal reports. “While the homeownership rate fell over the quarter, it was virtually unchanged from a year earlier.”
Would you pay $4 to drive the Westside?
That is the question on the table. The Southern California Assn. of Governments (SCAG) recently completed a study that revealed how charging drivers $4 to enter a 4.3-square-mile area of the Westside, including part of the Wilshire corridor, could reduce traffic delays by 24% during peak periods. The area they are talking about is right where I drive along with many others every day (West Los Angeles and Santa Monica just west of the 405 and north of the 10 freeway). Charging drivers, a fee to reduce traffic jams has worked in London, Milan and Stockholm, and the idea is gaining ground in New York.
But in Southern California, elected officials have approached the question of congestion pricing with trepidation, saying that such a dramatic shift in a driving-dependent region would require detailed study of its impacts. The study also revealed that such a drop-in driving would correspond with a 9% increase in transit ridership, a 7% increase in biking and a 7% increase in walking inside the zone, indicating that the region doesn’t need sky-high tolls to reduce traffic congestion.
The SCAG study assumed tolls would be assessed through the Fastrak transponders already in use across California, including on the 110 and 10 freeway toll lanes. License plate readers could be installed.
Do I think this is going to ever become a reality? My gut tells me, “no” – the residents and businesses could potentially be the most affected and would most likely not favor the idea if it ever came to a vote. A side note: The study also stated that of all the areas in Southern California that would be rated as “most in need” of congestion relief — the Westside is ranked #1! Like they are telling us something we don’t already know.
Also, I am sure that you have heard about the various plans being floated by LA Metro to deal with the traffic and congestion between the valley and the Westside with the ultimate goal of LAX. These ideas include various modes of transportation. The money is there to make this happen, just what to do is not yet decided. I am sure it will be bit before any decisions have been made.
Air quality challenges in Southern California
The Southern California Assn. of The South Coast Air Quality has given a ‘warning ‘about the extreme impact of smog in Southern California — now focused in the Coachella Valley, and in doing so, sending out the message that climate change may be the culprit.
Air quality officials will miss a 2019 federal deadline to clean smog in the Coachella Valley, saying the challenges of “hotter summer weather and the threat of climate change” are hampering efforts to slash health-damaging ozone.
The South Coast Air Quality Management District, which covers Southern California’s four counties — said last week that because of an increase in smog over the last two years it would seek to downgrade the area’s ozone pollution rating from “severe” to “extreme” — the worst federal classification. The change, if approved by the U.S. Environmental Protection Agency, would give the agency five more years to cut Coachella Valley ozone levels below 80 parts per billion.
Cleaning Southern California’s air to federal health standards will require sweeping emissions cuts and billions in spending to switch to lower-polluting vehicles and equipment over the next several years.
The South Coast Air Basin, a region of 17 million people across Los Angeles, Orange, Riverside and San Bernardino counties, has long suffered the nation’s worst ozone pollution. The point is: We’re all in this together, and implementing solutions continue to be of the highest priority.
Snifflers and Sneezers beware…it’s allergy time
It’s pollen time and every spring, the snifflers and sneezers are at again. But it’s not only Spring that affects them, it can last all year long. And what most people don’t know — your home can be a breeding ground for some nasty allergy attacks.
Two thirds of people with allergies suffer them year-round, said allergist James Sublett, M.D., co-founder of Family Allergy & Asthma in Louisville, Ky. And the leading cause of those year-round allergies are dust mites, animals and cockroaches, he said, all of which make their homes inside of ours.
Outdoor allergens will make it into our homes through normal ventilation, Sublett said. “And of course, it gets tracked in, too.”
If you can’t escape allergens, it’s time to go on the attack. Here are Sublet’s tips on allergy-proofing each room of your home.
The bedroom — Your bedroom deserves the most attention since you lie and breathe there for eight or so hours a night. Dust mites live primarily in bedding, so buy a set of high-quality, mite-proof encasements for your pillows and mattress. They should be tightly woven with zippers that seal completely.Wash all your bedding weekly in any temperature of water to kill any mites. If you’re allergic to pollen, it’s a good idea to shower at night before bed. And consider keeping your room a pet-free zone, as a Golden Retriever can track in allergens on a high pollen day.
The living room — Your living room, and any space you spend much time in, should have “smooth surfaces as much as possible,” Sublett said. Smooth, clear surfaces wipe down easily, such as a hardwood floor or a plastic chair. Window blinds are perhaps preferable to drapes for the same reason, he said. Avoid rugs or carpeting whenever possible.
The kitchen — Your biggest enemy in the kitchen is mold. Periodically clean any spots where leaks or spills might occur, including under the sink and your refrigerator’s drain pan
The bathroom — Using a ventilation fan when you shower helps cut back on your home’s humidity, which should stay under 50% to ensure dust mites lack the moisture to thrive, Sublett said. A humidistat will help you measure it. Avoid humidifiers or vaporizers in the home, too.
The laundry room — Don’t leave out piles of damp clothing and towels, Sublett said, which become a welcome mat for dust mites and mold. Ensure your clothes dryer vents to the outside of your home, too, doing away with excess moisture.
This is a battle we all have to fight, not only for ourselves today, but for all of our future generations.
Ok, so last time I talked about having closed my last escrow and the need to fill up that proverbial pipe line again. It has happened and I am working with both buyers and sellers all of whom understand the changes in the market, from both perspectives and want to take advantage of the changes. We have a few people circling around my leases on Folkstone and Brookshire, but both are still available.
Two of my three mentees are in escrow with their second transactions, which means they will be graduating out of the mentoring program. I will have to wait until we hire more qualified new licenses to get in gear again in the mentor program.
On a personal front, my darling Mom will be 97 in May, and the family is planning a birthday celebration, including a Mariachi concert & BBQ at my house. Family is flying in from Montreal, Oregon and Vancouver BC. It will be great fun.
Please do not hesitate to give me a call for assistance with any and all of your real estate needs. Please check out my web site firstname.lastname@example.org or go to the app store to download my personal app
Happy Mother’s Day!!!!