Rents, Home Appreciation & Market Direction for So. Cal: May 1, 2020

Real Estate Agent with First American Team Realty, Inc BRE# 01048604
By Glenn Gaspar w/First American Team Realty
As a real estate professional I, Glenn Gaspar, take great pride in sharing with my readers' insights into the real estate market.  I will not sugar coat what I say nor will I mislead you just to place a commission check in my bank account.  In real estate, buying, selling, or investing should be done with having market intelligence and using the correct strategy.  Unfortunately, way too many real estate agents are completely disconnected from what is happening in the market place. 

So enough said, here is some information as to what has happened so far by the end of April and regarding how the market ended in Q4, 2019 for the Los Angeles and Orange County, California area.

Month of April - Market Insight :
The California real estate market as a whole has slowed down due to the restrictions placed by our state and local governments due to COVID-19 but in truth, our real estate market has been slowing down over the past year though some good news.  As of today, May 1st, data is sharing with us that there has been an increase of home searches by buyers.

Traditionally at this time of the year, our Spring market would have kicked into gear though this is not the case.  Presently, listings are staying on the market for much longer and according to Zillow, new listings have declined.  Here is a breakdown as to the markets that have been hit the hardest in California relating to new listings: San Francisco by 38%, Los Angeles by 19%, San Diego by 10%, Riverside by 9%, and San Jose by 6%.

Some more good news...Those U.S. markets on the West Coast that were hit the earliest by COVID-19, such as in the State of Washington, have seen an uptick in listings so far this month, April, though listing volumes are still down significantly.  It still may take several months before our inventory on new listings returns to normal levels.
Should mortgage interests begin an upward movement, this will place pressure on home sellers to reduce their price to help buyers qualify to buy their homes.  On the other hand, should mortgage rates remain status quo...listing prices on homes will remain fairly flat.
The Rental Market.
Landlords are beginning to see a slowdown on rent hikes.  Here are the top 10 cities in our region with the biggest decline in rent hikes:
1) Burbank
2) Pomona
3) W Hollywood
4) Huntington Beach
5) Rowland Heights
6) Los Angeles
7) Indio
8) Mission Viejo
9) Thousand Oaks
10) Pasadena
By the way, if you wish to rent in Santa Monica they had the highest rent increase in Southern California.

The Direction of your local Real Estate Market:
Over the past four (4) quarters, our market has been slowing down but as a whole, LA County is holding steady and still in the "Wealth Building" phase, meaning you can still make money by holding on to your property but your window on maximizing a profit is closing down so you need to keep a close eye on this.  At the end of 2019, the average appreciation rate for the county was 7.9% but please note that each zip code experienced a very different gain.  

Here is a list of the best appreciating zip codes in LA County for Q4 2019:
1) Koreatown/Wilshire/Mid-Wilshire (90005): 31.5%;
2) Santa Monica (90405): 23.3%;
3) Los Angeles (90007): 22.7%;  
4) Bel Air (90077): 19.1%;
5) Los Angeles (90037): 17.2%;
6) Inglewood (90302): 16.5%;
7) Inglewood (90301): 16.2%;
8) Long Beach (90806): 15.3%;
9) Long Beach (90813): 14.6%;
10) East Los Angeles (90063): 14.5%

The Los Angeles County zip codes that did not do so well were:
1) Manhattan Beach (90266): -9.6%;
2) West Los Angeles (90025): -5.2%;
3) La Canada Flintridge (91011): -4.2%
4) Palos Verdes Peninsula (90274): -.04%
5) El Segundo (90245): -0.3%
(Footnote: The Malibu area had a -11.4% rate)

This graph displays how LA County has performed over the past 20 years.  The data figures are adjusted for inflation to provide a truer picture of actual appreciation.  The "Blue" colored line represents the appreciation for LA County as of December 31, 2019.  The "Green" shaded area of the graph is the "Wealth Building" phase of this particular market and as you can see, we are still in this phase:  
Orange County, on the other hand, is no longer in the "Wealth Building" phase.  Even though Orange County as a whole appreciated by 6% in Q4 2019, it is a market where one must tread carefully when buying a home.  If you are looking to sell, wait until we obtain the data for 2020 Q1 for there was a slight uptick in the market.   
Here is the list of the best appreciating zip codes in the OC for Q4 2019:  
1) Newport Beach (92660): 21.0%
2) Garden Grove (92844): 10.5%
3) Irvine (92604): 10.5%
4) Huntington Beach (92648): 9.8%
5) Huntington Beach (92647): 9.0%
6) Santa Ana (92707): 8.9%
7) Anaheim (92801): 8.6%
8) Trabuco Canyon (92679): 8.6%
9) Garden Grove (92840): 8.6%
10) Garden Grove (92843): 7.9%
The Orange County zip codes that did not do so well were:  
1) Irvine (92606): -1.4%
2) Midway City (92655): -1.3%
The same applies here as mentioned above for the LA County graph but for Orange County, as you can see, the "Blue" colored line has hit zero indicating it is exiting the "Wealth Building" phase.
So what to think here?  As Ken Wade would say..." every market is unique."  Whether it is within Los Angeles County, California, or in the U.S.  There will be markets that will begin sliding downward, some that will flat line and some that will appreciate.  There is always an emerging market somewhere and if you are not in one, just utilize the correct buying or selling strategy so as not to get burned. By understanding where your local market is in the cycle, this will help you minimize mistakes.  With the proper data, one can react to the market at least 8 months before everyone else begins to finally see the writing on the wall.

If you have any questions or wish to obtain some advice.  Feel free to call me at (714) 612-0995 so that we can chat. No strings attached.

Thank you for your time and be safe.

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