California Property Market and Home Prices: Why We Can’t Believe Real Estate Agents

REAL ESTATE NEWS

This Just In — Just got a market prediction from a helpful real estate professional who has supplied useful information to the L.A. Loft Blog over the years. Let’s take a look at what they say, and what points they got wrong: #realestate #market #homeprice

The macroeconomic data is encouraging, as businesses report stronger results and increased optimism. The labor markets continue to heal as well, albeit at a slower pace. Buyers remain enthusiastic, and low rates, which are expected to persist over the near term, are at the root of that trend. There are, however, some signs of a recovery that is gradually subsiding to a more muted pace after an initial resurgence.

Expect More Home Sales and High Prices in 2021: The California Association of Realtors expects sales to continue to improve for the remainder of 2020, and to increase modestly again next year. Buyer demand remains robust, and that has already pushed California’s median price above $700,000. Inventory, however, is expected to remain a challenge that will keep sales growth in the single digits next year.

Fewer Mortgages Now in Forbearance: After more than 4 million households applied for forbearance here in California during the virus panic, those numbers have gradually begun to improve with about 1 million fewer households skipping payments.

More Encouraging Macro Data Last Week: Business optimism increased, inflation eased (so the Fed will be encouraged to continue to accommodate), and interest rates are back to all-time low levels of just 2.87% last week, according to Freddie Mac. Unsurprisingly, buyer demand remains robust in this low-rate environment and California’s weekly showings index is currently 182.3% ahead of the same point in 2019, and mortgage purchase applications were up 24.2% on an annual basis last week.

Weekly Market Data Slowing: After remaining unseasonably strong through September, closed transactions finally began to dip last week. We saw a 18.7% drop here in Southern California. New listings and pending sales were also trending down last week. We typically see a big decline in the fall months, so this is not unexpected.

Serious Delinquencies Rising in California: Despite the relative strength of housing and the recent improvements in forbearance numbers, the number of serious delinquencies and potential foreclosures in California remains a risk over the medium term. According to recent data from the Mortgage Bankers Association, 6.83% of California’s residential mortgages were delinquent by 30 days or more. Foreclosure starts remain minimal due to current moratoria, and many of these homeowners may get current, sell their homes, or otherwise avoid foreclosure. The numbers translate into more than 350,000 homeowners behind on payments here in California.

These numbers are fairly accurate for the suburbs at the moment, but they are not helpful for ailing Downtown Los Angeles, which has seen a significant drop in home values over the last two years. Most suburban single family homes are doing well, but Irvine, along with other areas affected by the pullback of capital from China, have dropped in price for the last two years.

Real estate agents and politicians usually paint overly rosy pictures of their own terms, accomplishments and local real estate market prospects. Zillow says that the typical home in the US is expected to appreciate about 7% in the next year, but homes in these cities are largely expected to appreciate at a lower rate, according to Business Insider. The urban real estate market continues to plummet. As the Loft Blog correctly warned at the beginning of the month, October proved to be a crashy month for the stock market and urban real estate. For DTLA, this decline shall likely continue for at least another year or two. If the public and their elected politicians continue to make bad economic decisions based on fear, panic and hysteria, the U.S. could see long-term stagnation like Europe, and possibly a lost decade, just like Japan already experienced.

The most common fraud perpetuated by real estate agents is overstatement of expected selling price. We’ve seen a recent increase in this behavior, and we expect to see further jumps in fraud and deceit as the economy encounters growing troubles.

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Copyright © This free information provided courtesy L.A. Loft Blog with information provided by Corey Chambers, Realty Source Inc, BRE 01889449, MPR Funding Inc NMLS 2000513. We are not associated with the seller, homeowner’s association or developer. For more information, contact 213-880-9910 or visit LAcondoInfo.com Licensed in California. All information provided is deemed reliable but is not guaranteed and should be independently verified. Properties subject to prior sale or rental. This is not a solicitation if buyer or seller is already under contract with another broker.