The closed sales in March held up ok, in spite of the covid-19.
It was announced on March 11th that Tom Hanks and Rudy Gobart tested positive, and the night that the NBA suspended the season. It was then that the coronavirus escalated to another level of concern, and any buyer who was already in escrow might have cancelled.
But the Dow had been dropping since middle of February, yet there were 77 of the 203 closings that went pending after February 20th (red line).
The first three years below had one extra business day:
NSDCC February Sales & Pricing
# of Sales
Buyers will be willing to endure if they find the right house, at the right price – and feel like they were treated with respect along the way. So far there have been 22 new pendings since April 1st.
The number of new escrows in the six-county region in the 30 days ended March 19 was 16,619 — down 766 or 4% in four weeks, said ReportsOnHousing. Author Steve Thomas follows homebuying trends found in the home-selling listing services for Los Angeles, Orange, Riverside, San Bernardino, San Diego and Ventura counties.
Let’s put this sales drop into perspective. Remember, this is prime homebuying season. My trusty spreadsheet tells me in the same period in the previous five years, new escrows averaged an increase of 904 or 5%. So this was quite a reversal in fortunes for local real estate.
“Stunning but not unexpected,” says Thomas.
Numerous factors have hit the market. House hunters and owners alike have lost job security. Lenders that should have been offering cheaper mortgages balked at lower rates due to market fluctuations and a rush of business. Fears of spreading disease scared many sellers and buyers from the very hands-on homebuying process.
And this recent sales drop came before new state government mandates to limit business interactions. That forced the California Association of Realtors on Friday to tell its members to stop all face-to-face home selling.
Thomas says he expects the majority of sales in progress to close but he expects few new deals to be made and that many listings will end. “Not much you can do until we get some certainty,” he says.
Coronavirus stomped out what appeared was a solid start to the selling season: Even the depressed March 19 escrows count was up 6.5% above the year-ago level. But four weeks earlier, escrows were rising at an 18% annual pace.
ReportsOnHousing found Southern California’s supply of existing homes to buy was steady as of March 19: 29,941 homes officially listed in the region, up 282 or 1% in four weeks. That’s on par with 250 listings added on average since 2013.
Here’s how the existing-home trends run in the region’s counties …
Los Angeles County:5,006 in escrow, down 381 or -7% in four weeks; 8,650 listings, up 2 in this period.
Orange County:2,398 in escrow, down 185 or -7% in four weeks; 4,159 listings, down 2.
Riverside County:2,983 in escrow, down 157 or -5% in four weeks; 6,793 listings, up 31.
San Bernardino County:2,313 in escrow, down 109 or -5% in four weeks; 4,406 listings, up 10.
San Diego County: 3,138 in escrow, down 115 or -4% in four weeks; 4,808 listings, up 220.
Ventura County:781 in escrow, up 181 or 30% in four weeks; 1,125 listings, up 21.
More evidence of the local listing count plunging….and seller price expectations rising!
The top 20 toughest housing markets includes a diverse geographic mix of larger established metros and up-and-comers where housing is still relatively affordable. They are concentrated in three regions of the country — eight metros from the West, six from the Midwest and six from the Northeast. None of the markets are located in the South, which dominates the list of top 20 easiest markets to find a home.
California led the national list of toughest housing markets, with six of the top 20 toughest markets coming from the state. Ohio followed with three markets — Columbus, Cincinnati and Akron — making the top 20 toughest markets list.
The scarcity of homes is reflected in the market prices, and the trend in most of the toughest markets is toward even fewer homes for sale. The average median listing price for the top 20 toughest markets was $480,830 in January, 40 percent higher than the average median price of the top 100 largest markets. In addition, 17 of the top 20 toughest markets began 2020 with double-digit annual declines in available inventory, with a handful of markets seeing more than a 30 percent drop, including San Jose, San Francisco, Seattle, Salt Lake City and San Diego.
Our January sales count of detached-homes between La Jolla and Carlsbad was impressive, and comparable to the good old days!
NSDCC January Sales & Listings
# of Sales
# of New Jan. Listings
In spite of all-time record pricing, the number of January listings really dried up, compared to previous Januarys – and 40% of last month’s listings are already pending or sold. How you feel about the inventory shortage depends somewhat on your price range too – here is the recent history:
NSDCC Number of January Listings by Price Range
$1M – $2M
$2M – $3M
For those hoping to buy a house priced under a million, the dwindling number of listings is daunting. But the inventory over $1,000,000 has been relatively stable – no big surge there.
The SP:LP ratio has been very consistent for those selling a home under $2,000,000 – you can expect to get pretty close to your asking price. Above $2,000,000 is a different story.
Mortgage rates had averaged 3.99% in 2017. You can see how the lower-end buyers became less concerned about getting a discount as rates started rising in early 2018 (they reached 4.59% in May, 2018):
This is another place that listing agents manipulate the data. When marking their listings as sold, many will lower the list price to match the sales price in order to make it look like they sell their listings for ask.
This is a price survey that ranks the over/under for each metro to the 2.8% value growth expected nationwide. I’ll take the over for San Diego!
The Zillow Home Price Expectations Survey sponsored by Zillow and conducted quarterly by Pulsenomics LLC, asks more than 100 economists, investment strategists and real estate experts for their predictions about the U.S. housing market. The Q4 survey also asked panelists to rate their 2020 expectations for home value growth compared to the nation in 25 large markets.
On average, panelists said they expected U.S. home values to grow by 2.8% in 2020. The share of panelists saying they expected a market to outperform that average was weighed against the share saying they expected it to underperform to create a net score.
Of the 14 markets with positive scores, 11 come from Texas or elsewhere in the Southeast or Southwest. The exceptions are Denver, Minneapolis and Portland. Seattle was the most polarizing market, with an even 40% of panelists each expecting it to overperform and underperform.
Of the 10 markets that earned negative scores, meaning more panelists expected them to underperform than overperform, six were in California. A group of expensive markets in the state — San Francisco, San Jose and Los Angeles — are expected to perform the worst. Cincinnati and Sacramento round out the bottom five.
“Having subjected buyers to a crucible of fierce competition for multiple years, many West Coast markets hit an affordability ceiling that set off declining home values in the most expensive of these,” said Skylar Olsen, Zillow’s director of economic research. “Indeed, this price correction — a clap back from having appreciated with too much exuberance in the recent past — pushes many previously hot markets to the bottom of our experts’ list. At the top of the list are metros still providing relative affordability and thriving, amenity-rich communities that appeal to younger adults willing to make a move. These features, plus the ability to grow and add housing in the future, are attractive propositions for employers and employees alike.”
Many panelists expect home values in San Jose and San Francisco to continue falling in 2020, and some expect more markets in California to join them. Sixteen panelists out of the 42 that selected at least one metro said home values will fall in Los Angeles, and twelve said the same about San Diego and Riverside.
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