How Has the Southern California Market changed in a Year?

The latest statistics are in for the Southern California market.

Here’s what we’ve been keeping an eye on.

Today I’ve got the latest numbers from our Southern California real estate market and I want to bring
that data to you. Our market is defined from Monterrey Park and Pasadena to the west, Rancho
Cucamonga to Eastvale on the east, and along the 60 and 210 freeways.

In summary, our real estate market is very healthy. Here are a few reasons why. For starters, our
unit sales have decreased by 4.75% in 2018 from what we saw from January to July in 2017. In
addition to that, the average price has increased by 6.43% from last year.

Last year in July, the average home sold for $633,000. Today, the average home is selling for
$665,000. That’s an 8.1% price increase in the summer market alone. This is partially a result
of increased demand. The average days on market has played a big role as well. We saw it drop
from 26 days last year to 18 days this year.

Another thing I wanted to bring up is our inventory levels. Our inventory is a measure of how long it
would take to sell all the homes on the market if no new homes were listed. This year, our inventory
has dropped from 2.87 months to 2.8 months.

That’s my real estate report in a nutshell. If you have any questions for me or want to know more
about the numbers for rental properties or the numbers in your specific area, I’d be happy to assist
you. I look forward to hearing from you soon.

How Accessory Dwelling Units Help Resolve Our Housing Shortage

Today I’d like to cover a few key points that California homeowners should know about accessory dwelling units.

Accessory dwelling units (or ADUs) are creating a lot of buzz in the market lately.

They even have the blessing of the state legislature in the form of Assembly Bill 2299 and Senate
Bill 1069, which Governor Jerry Brown signed into law in 2017. This legislation has unified all disparate
municipal codes in terms of the legality of ADUs.

The purpose behind these bills is to address housing availability. As you likely know, California is
seeing a housing shortage of more than half a million units. Accessory dwelling units help to
resolve issues related to this shortage. Elderly people who have an in-home healthcare worker,
for example, are just one demographic that benefit from the pieces of legislation I mentioned earlier.

Also, land is expensive. This makes accessory dwelling units an attractive option, since they are built
onto an existing structure or property. In turn, this eliminates additional expenses such as those related
to utilities or sewer connections.

Land is expensive, which makes accessory dwelling units an attractive option.

There are three types of accessory dwelling units: detached, attached, and those that
repurpose an existing structure—in other words, an existing home can be remodeled so that certain
rooms become classified as their own unit. This last type of ADU is particularly interesting because it is something the city of Chino has allowed homeowners here to pursue long before recent statewide
legislation came into play.

But how large can ADUs be built? Well, according to state law, an ADU may be no larger than 1,200
square feet. And ADUs attached to an existing structure may not exceed 50% of the total building.

There are a number of options for adding an ADU to your property. Adding an ADU above your
garage, for example, is another route homeowners may take. And parking restrictions will not apply to
these properties, as on-site parking is not required so long as the property is within a half-mile radius
of public transportation.

Of course, before you settle on any of these options, it’s important to determine whether adding an
ADU will be legal for your specific property. Zoning requirements stipulate that the current
residence on the property must be a single-family home.

If you have any other questions or would like to learn more about ADUs, feel free to give me a call
or send me an email. I look forward to hearing from you soon.

A Look at Our Market From Last Year to Now

What is going on in our local Southern California real estate market? Let’s go over the numbers and how things compare to what we saw last year.

Today I’ve got a market update from the first half of 2017 regarding some of our local areas. 

To give you an idea of what’s been going on, I’ll be comparing what we’ve seen this year with what things looked like in 2016. The first piece of good news is that more homes have sold this year than last year and 2015 both. 

We’ve also seen a healthy increase in home values, as well as a decrease in the number of days homes are typically spending on the market. 

But, let’s take a look at some more specific numbers so that we can get a better idea of how things have changed. In 2015, the average sales price was roughly $413,000. That number increased in 2016 to $442,000, and this year, prices have risen again. As of June of 2017, the average sales price was $472,000. This is a roughly $30,000 increase each year.

Appreciation between 2015 and 2016 was approximately 7%, and from 2016 to 2017 it was 6.75%. So how does this affect your investment? Most people using a conventional loan will put down approximately 20%, and those going the route of an FHA loan will put down about 3.5%. In today’s market, that down payment can relate to a lot of leverage in relation to appreciation. If we consider a down payment of 3.5% in relation to a 7% increase in terms of appreciation, the result is a 210% increase on your investment. 

For an investor who usually puts 25% down payment, it is a 1 to 4 leverage. Because of inflation and appreciation rates, an ideal investment will see as much as a 33% return. 

So, what numbers are important to know for specific markets in our area? Starting to the east, the city of Rancho Cucamonga has experienced a hefty appreciation of 8.4% compared to last year. Another notable statistic is that the average number of days on market has decreased from 54 in 2016 to 29 this year. The number of homes sold, though, has increased. In 2016, 1,271 homes sold compared to the 1,331 this year. 

It’s a good time to purchase and a great time to sell.

In Chino Hills, home appreciation is at 6.4% average between this year and last. Days on market have dropped in that area, as well. This is a pattern we’re largely seeing across the board. Chino Hills homes have gone from spending an average of 58 days on market in 2016 to an average of 43 days in 2017. The number of homes sold has increased, as well. 671 homes sold between January and June of 2016, whereas 750 homes sold in 2017 between those same months. 

When we look at the more mature city of Alhambra, this pattern continues. Like other nearby areas, this city is seeing an increase in value. There, the appreciation between 2016 and 2017 has been 6.4%. As is the case elsewhere, the number of homes sold also increased in the last year—going from 316 to 331 homes. Also, again, days on market have gone down. Last year, the average was 48 days. This year, that number is 44 days. 

So, what do all of these numbers mean for you? If you are looking to sell, you have a great opportunity now to do so. If you price it correctly, your home should move fairly quickly off the market. Buyers, too, can take advantage of the market. However, buyers will need to act quickly and be ready to make decisions. Additionally, mortgage rates are still at all-time lows. 

It’s a good time to purchase and a great time to sell.

If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.

Are We Really Headed for Another Market Crash?

Though many are worried about another potential market crash happening in 2017, the numbers say otherwise.

Is our market headed for another crash in 2017? There are six different factors we must look at along with the statistics they reveal to answer that question:

1. Number of months of unsold inventory
2. The number of trustee sales
3. The amount of new home construction
4. The sales of existing homes
5. The unemployment rate
6. Affordability of homes

What do the numbers tells us about these different factors? How do they compare with the last downturns our market experienced in 1989 and 2008 and the years that led up to them?

Let’s start with affordability. Affordability is based on the standard 20% down payment at the median home price, which is $435,000 here in California. At the time of the 1989 crash, our affordability index was at 17%. In 2006, it was at 11%. Right now, our affordability index sits at at 30%.

As far as the number of months of unsold inventory goes—or however many months it takes to sell a home—for the last two years we’ve been hovering around two months. In 2015, the average days on market was 61 days. In 2016, it was 58 days. At the beginning of this year, we had 1.5 months of unsold inventory. From 1989 to 1991, the number of months of unsold inventory jumped from 5 months to 13 months. From 2005 to 2008, it jumped from 2.5 months to nine months. As you can see, in contrast to these last two eras, our inventory is decreasing—not increasing. 

The number of trustee sales has to increase drastically to produce a downturn. From 1989 to 1992, there was a 400% increase in the number of trustee sales. From 2006 to 2008, there was a 1,600% increase. From 2015 to 2016, the number of trustee sales decreased 20%.

New home construction is always a good barometer for our market. We need new home construction—not excessively, but intuitively. This is because it creates more jobs and helps drive our economy. From 1989 to 1991, the number of new home construction units decreased from 161,000 to 77,000. From 2005 to 2008, the number of units decreased from 155,000 to 33,000. Right now, we have roughly 50,000 units being built in California. The number of permit pullouts for new build construction has remained steady at around 40,000 the last few years, which is the lowest it’s been the last 40 years. 

What about the sales of existing homes? Is that number declining or not? In 2015 and 2016, our sales of existing homes stayed flat. Prices have increased somewhat, but the number of sales has stayed flat. From 1989 to 1991, the number of homes sold in California decreased from 423,000 to 330,000. From 2005 to 2007, it decreased from 610,000 to 350,000. For the last five or six years, we’ve been hovering around 400,000 units being sold. 

Lastly, let’s examine the unemployment rate. From 1989 to 1991, the unemployment rate rose from 5% to 8.4%. In 2006, it jumped from 4.9% to 9.3%. Right now, our unemployment rate is 4.8%

"You will not see a market crash in 2017 or 2018."

Based on these factors and the statistics they reveal, you will not see a market crash in 2017 or 2018. You might see an adjustment, but nothing crazy. You can expect a 4% price appreciation, and we’re still in a good market for rentals because the homeownership rate will definitely not increase. Right now we’re at 63%, and we’re predicted to drop another few percentage points in the next 10 years. 

If you have any questions about our market, please don’t hesitate to call me. I’d love to have a conversation with you!

What Will The New Year Bring?

There are many great San Gabriel Valley area homes for sale. Click here to perform a full home search, or if you're thinking of selling your home, click here for a FREE Home Price Evaluation so you know what buyers will pay for your home in today's market. You may also call me at (626) 643-7090 for a FREE home buying or selling consultation to answer any of your real estate questions.

Welcome back to our blog, and welcome to 2015! Today I have a lot of information to share with you, including formulas and trends that will set up the pace for how the market will do in 2015. Let's get right to it.

The first is collateral underwriting, which will be implemented by both Fannie Mae and Freddie Mac on January 26, 2015. This will include implementing an automated underwriting system, where appraisals will be fed through a pipeline to determine a rate based on 20 other comparable homes, instead of the typical 3. This will make the job of the appraiser much harder, because he will have 20 comparable homes to drive down rates and will make it harder for them to give higher rates.

The second change we are keeping an eye on is the re-gutting of the quality index. We predict an increase of 12% lesser quality quality loans in 2015, which will cause Freddie and Fannie to be cutting down a little bit on their control.

The 3rd thing we are keeping an eye on is a 12% increase in delinquency filing we saw in December compared to November. This will translate to additional foreclosures and short sales, but probably not until April or May.

Finally, we are keeping a close eye on mortgage interest rates this year. We've seen exceptionally low rates in 2015, but definitely expect rates to rise in the next year due to the Fed's decreased spending. We will be sure to keep you updated on the changes we see in the next year.

So there you have it, a quick market update on what we expect in the coming year. If you have any questions for us at all, feel free to send a quick email or give us a call. We wish you a happy, prosperous, and healthy 2015!