What Do the Latest Stats From September Tell Us?

Here’s what you need to know about our market as we head into the holidays.

We now have the complete market report for September 2020, so let’s compare it to September of last year

for a clearer picture of real estate’s remarkable comeback:

- Home prices increased 15.2% year over year (note: average yearly appreciation is only about 5% to 6%)
- The median price for a single-family home in Southern California increased from $570,000 last year to
$656,000 this year 

Of course, most of you are only concerned with the communities that fall within the following perimeter: the

710 freeway as the western limit (Pasadena down toward Montebello and Monterey Park); the 210 freeway

as the northern limit; the 60 as the southern limit; and the 15 as the eastern limit (Rancho Cucamonga,

Ontario, and a small portion of East Bay). The good news is that the market within that boundary is

doing quite well—better, in fact, than Southern California as a whole. Here at the important takeaways

from the September report:

-Home prices in this market have increased 16.4% year over year

-The median price increased from $660,000 last year to $769,000 this year 

-There were 2,212 listings taken this year compared to 2,032 last year

-1,751 closings closed this year versus 1,480 last year 

-The total number of units sold increased 18.5% year over year

Due to a variety of compounding factors, our market is very strong. As you may recall from my April, May,

and June market reports, I expected the market to fly back up after its hard COVID-induced nosedive.

Sure enough, thanks to historically low interest rates (now sitting anywhere between 2.5% 2.75% for

qualified buyers) the market stabilized and has been soaring smoothly ever since. We lost about three

months’ worth of business earlier this year, but a phenomenal summer and an unusually busy fall have

helped real estate rebalance nicely. 

I can’t stress enough how impactful these low rates have been; just a 1% dip in the average rate represents

a huge leap upward on the affordability index, meaning buyers can get more home for their money despite

rising prices. 

I hope you found this market update insightful. If you have questions about any particular statistic or real

estate in general, please feel free to call or email me. I’d love to be your trusted real estate resource. As

always, stay safe, and stay tuned!

Q: What’s the New Construction Market Doing?

Here’s everything you need to know about new construction right now. 

With interest rates historically low, buyer demand remains high in our market. Furthering this demand is the fact that more buyers than ever before have the freedom to work remotely, which means that they don’t have to settle for a cramped apartment in the city—they can use their increased purchasing power to move wherever. Resale inventory is still scarce, so all of this demand has begun spilling over into the new construction market. 

From Riverside County all the way down to Temecula, we’re seeing a lot of new construction homes. Recently, I joined clients of mine to go look at some new construction homes, and this outing gave me a pretty good idea of what’s been happening in this sector of the market as of late. 

For example, in Bellflower, you can get a 1,500-sq ft. home that costs you roughly $600,000 or more. If you were to move over to Murrieta, Menifee, or Lake Elsinore, you’d find some 2,500-sq ft. homes with four bedrooms, three bathrooms, and a three-car garage for less than $500,000. 

Just like the resale market, the new construction market is incredibly hot. As a result, some of the attractive and wide-ranging incentives that builders regularly advertised have virtually disappeared; the buyers are out in force, so there’s no need to lure them in with special deals. (First responders, however, are still able to receive a few thousand dollars’ worth of incentives). 

  If you’re willing to be patient and make peace with little to no buyer incentives, the price for a new construction home is great.

Instead of building lots as they go, builders today are finishing lots and laying roads ahead of time because they know there will be scores of people lining up to buy space in whatever new community they create. That said, the homes themselves are still customizable—just like in a fine restaurant, you’re not being served pre-cooked and reheated meals. 

Builders are still providing the lender incentive, which is roughly 3% of the purchase price.

That’s great, but consider that you could get a loan for a resale home at 2.25% or 2.375% and use

equity to make any upgrades you want down the road. I have plenty of experience negotiating with

builders, so I’m ready to help protect your interests throughout the new-build process, but it’s

important that you as a homebuyer weigh all your options carefully. 

Another factor to keep in mind is time; if you buy a new construction home, you’ll have to wait six

to nine months before moving in because there’s simply no existing homes for you at the moment.

However, if you’re willing to be patient and make peace with little to no buyer incentives, the price

for a new construction home is great. If you’re seeking a more affordable home, move into Inland

Park, where you’ll find those 2,500 sq ft. homes are starting as low as $480,000. 

If you’d like to know more about which areas are prime hunting grounds for new build buyers or

how to negotiate with the builder in a market like this, don’t hesitate to call, text, or email me. I’m

always happy to be a resource for you. 

Q: What’s Your Real Estate Investment Journey?

If you’re thinking about investing in real estate, think about ADUs, too.

I’ve been building wealth through real estate for years, and today I’m going to share my journey  with you. 

Cited below for your convenience are timestamps that will direct you to various points in the video. Feel free to watch it in its entirety, or use these timestamps to browse specific points at your leisure:

0:55- Why my property’s location doesn’t allow me to take full advantage of the ADU laws

2:00- How our tight market factors into investors’ plans

3:30- The different costs investors should take into account when calculating their cap rate

4:45- Why building an ADU or two can significantly increase your profit margins and cash flow

7:30- What your investment could look like 10 years down the road

8:15- Wrapping things up

If you have any questions for me about investing in real estate, ADUs, cash flow, or anything else, don’t hesitate to reach out via phone or email. I look forward to hearing from you soon.