Uncategorized October 7, 2022

Fall Real Estate Market Commentary with September 2022 Market Stats Review for Long Beach, California

Hello Everyone! I hope you are having a great start to your autumn.
As the weather cools a bit this month, so does our real estate market. However, there are some interesting observations I wanted to share with you that you may or may not have noticed.

Stats for the city of Long Beach

New listings:

I’m going to share with you some exciting charts, so bring your thinking cap, grab a comfortable chair, and maybe even a pumpkin spice latte, and let’s take a closer look:

New listings in September 2022 in Long Beach are down 35% vs September 2021. Fewer sellers are coming on the market vs last year at this time.

Active Listings:

  https://crmls.stats.10kresearch.com/infoserv/s-v1/agld-WVg

Total active listings in September 2022 in Long Beach are up 0.7% from September 2021 – so virtually unchanged.

Pending Sales:

Pending sales are down a whopping 67% this September vs last September.

Closed Sales:

Closed sales are not down as much in September – just down 22% vs last year – because this is a lagging indicator and indicates the activity from the previous month, which experienced an interest rate dip, which caused some buyer activity which closed in September.

Median Sales Price:

Still up from last year – 4.8% higher than last September. Prices staying firm.

Observations:

Our pending sales in the city of Long Beach in September 2022 were actually lower than in the month of April 2020, when we were mostly locked down right at the beginning of the pandemic.

This is also the case across many markets in North America. In fact, our pending sales in September 2022 are as low as seen in 2008 when there was a global financial crisis! See this graph below which shows the pending sales over the last 10 years:

But, observe – during the 2008 global financial crisis, we observed a totally different scenario. Look at this graph which shows the inventory then vs now:

Can you notice how there was twice as many homes for sale (inventory) in 2008 than there are now on the market?

This points to a major difference in how things are today, vs in 2008.
In 2008 – if you recall – some people who had houses were deciding to mail their keys back to the bank – as in, “Thank you but I don’t want the house anymore – we’re going to cut down our expenses and rent.”
They said that because:

(a)    They might not have had that much down payment on the house (less skin in the game) (almost no equity or negative equity) so saying goodbye to the house might have been hard, but they weren’t saying goodbye to much money
(b)    They could rent a house or apartment around the block for not a lot of money, and could save on expenses.
Is that at all the case now?
No!

First, most homeowners put more money down on their house, and the houses appreciated in value, and are still holding their value. Therefore, they have a lot of equity in the homes. No one (that I know of) is mailing in their keys.

Second, what about renting? It used to be easy to find some place to rent – there were tons of vacancies. It used to be that if you got rid of your house and mortgage, you would lower your expenses renting. Now, rentals are difficult to find, and rental prices are high. There is an inventory shortage there also, even more of one.

In summary, it feels like we have a shortage of housing compared to the population.

And what happens when supply is low, and demand is still present?

Demand for home purchasing has gone down, but eventually, do you think it will rise again? As we see more household formation? People getting married and having children, for example?

What it means for the market and you

What it means is that this interest rate environment and everything else in the environment that is going on has resulted in a unique situation where we have very few real estate transactions at the same time we have low inventory. It’s a unique combination that does not mimic the 2008 recession, which saw a plunging of prices due to an excess of inventory, along with low demand. What we have now is demand that is holding off, which I am thinking will at some point become pent up demand.

When interest rates come down again in the future, or when we get accustomed to the prevailing interest rates, I believe more people will come out and buy homes again. Before that happens, we have a window of opportunity. For sellers, it means you still have firm solid prices. Prices that are good due to limited inventory.

For buyers, it means you have a unique environment where competition is less, and sellers are willing to consider offers with a contingency that the buyer needs to sell a property in order to buy. It means buyers can do an inspection and maybe ask for repairs or credits.
Here are the 3 types of situations that can benefit most from this current window of opportunity:

  1. Sellers who are also buyers – If you have been thinking about selling your place and buying a new one, it was very difficult to do some in the previous market. There was too much competition from buyers who did not have a contingency to sell. Now would be a good time to find sellers who would accept a contingent offer.
  2. Buyers who are paying too much in rent – If your rent goes up every year to skyhigh levels, that money would be better utilized paying your own mortgage, rather than your landlord’s. Even today’s higher rates create a situation that allows you to own your own home, rather than be dependent on the landlord. (2)
  3. Sellers who are moving out of state. Homes in many states other than California have come down in price more so than prices in California, therefore, this could be a good selling in California, buying elsewhere opportunity.
Thank you for reading this very long piece. I’m ready to talk when you are, so call me!

Nancy Deprez

CENTURY 21 Masters
310-739-8272
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