Pending Home Sales increased by 44.3% in May, registering the highest month-over-month gain in the index since the National Association of Realtors (NAR) started tracking this metric in January 2001. So, what exactly are pending home sales, and why is this rebound so important?
According to NAR, the Pending Home Sales Index (PHS) is:
“A leading indicator of housing activity, measures housing contract activity, and is based on signed real estate contracts for existing single-family homes, condos, and co-ops. Because a home goes under contract a month or two before it is sold, the Pending Home Sales Index generally leads Existing-Home Sales by a month or two.”
In real estate, pending home sales is a key indicator in determining the strength of the housing market. As mentioned before, it measures how many existing homes went into contract in a specific month. When a buyer goes through the steps to purchase a home, the final one is the closing. On average, that happens about two months after the contract is signed, depending on how fast or slow the process takes in each state.
Why is this rebound important?
With the COVID-19 pandemic and a shutdown of the economy, we saw a steep two-month decline in the number of houses that went into contract. In May, however, that number increased dramatically (see graph below):
This jump means buyers are back in the market and purchasing homes right now. Lawrence Yun, Chief Economist at NAR mentioned:
“This has been a spectacular recovery for contract signings and goes to show the resiliency of American consumers and their evergreen desire for homeownership…This bounce back also speaks to how the housing sector could lead the way for a broader economic recovery.”
But in order to continue with this trend, we need more houses for sale on the market. Yun continues to say:
“More listings are continuously appearing as the economy reopens, helping with inventory choices…Still, more home construction is needed to counter the persistent underproduction of homes over the past decade.”
As we move through the year, we’ll see an increase in the number of houses being built. This will help combat a small portion of the inventory deficit. The lack of overall inventory, however, is still a challenge, and it is creating an opportunity for homeowners who are ready to sell. As the graph below shows, during the last 12 months, the supply of homes for sale has been decreasing year-over-year and is not keeping up with the demand from homebuyers.
If you decided not to sell this spring due to the health crisis, maybe it’s time to jump back into the market while buyers are actively looking for homes. Let’s connect today to determine your best move forward.
While many young people have been deeply affected by the pandemic in ways that led them to defer important life decisions, some are leaping forward toward a significant financial milestone: owning a house.
After an initial downturn, home buying has returned to pre-pandemic levels, with people under 35 representing 53% of the primary market, according to early data.
In more than two dozen interviews, first-time homebuyers under 35 cited the following as the factors that propelled them: record-low mortgage rates, a desire for more space during the lockdown, a sense that they had a competitive advantage while the market was quiet, and the freedom, given telecommuting, to move further away from their workplaces.
Here are some of their stories:
John Weeke, 33, product marketing manager, and Zoe Mackey, 33, digital marketer for independent book publisher
Moving From: $3000/mo apartment
1BR in San Francisco’s Castro district
Moving to: $678,000 house
2BR/2BA in Sea Ranch, CA
Why buy now?
Freedom of remote work, city space too small
John Weeke and Zoe Mackey had been saving for a year to buy a weekend cabin. But when the pandemic hit and their jobs went remote, they decided to shift gears and make the cabin their permanent home/work location.
“At least for the foreseeable future, we’re going to be just working from anywhere,” Weeke said. “So we figured, why are we paying super high rent, and postponing our dream of living somewhere out in nature when we don’t have to do this anymore?”
Suddenly, a purchase they thought wouldn’t happen for another three years became an immediate reality. Plus, now that it would be their only home, they could afford a bigger place. They chose a house designed in the Sea Ranch style, characterized by natural wood exteriors, shed roofs and skylights, among other features. This one comes with a deck, a hot tub, and views of a redwood forest.
“It wasn’t an economic decision, it was a life perspective decision,” Weeke said. “We realized that the things that were keeping us here weren’t worth it, and we’re willing to take some risks and move more quickly than we otherwise would feel comfortable moving because we have a new perspective on life.”
Bukola Ogunyemi, 33, social media specialist at World Bank, and Tolu Awodiya, 35, mother
Moving from: $1600/mo apartment
2BR in Lanham, Md.
Moving to: $349,900 house
4BR/3.5BA in Upper Marlboro, Md.
Why buy now?
Late last year, Bukola Ogunyemi was dismayed when his landlord said he was raising his rent by $100, “no previous conversation, no negotiation,” Ogunyemi said. So he and his wife, Tolu Awodiya, decided that they would start looking for a place sometime around August 2020, a few months before their lease was up. But then the pandemic hit, and Ogunyemi sensed an opportunity.
“In March, after the lockdown started, it became obvious that a lot of people wouldn’t be able to buy houses the way they had intended to, because people had started to lose their jobs, and because you couldn’t go out to do house tours,” he said. “And then it occurred to us that it could be a good time to move.”
So they accelerated their timeline. On April 17, they found a house on redfin.com, a real estate brokerage website, and, without setting foot in the place, made an offer on the spot. It was accepted in less than 24 hours. “We didn’t even see the house until maybe a week before closing,” Ogunyemi said.
They were also able to get the seller to cover their closing costs, which would have been “unthinkable pre-Covid,” Ogunyemi said.
The risk paid off.
Ogunyemi, who immigrated to the U.S. from Nigeria two years ago, said, “Buying your own house is what has been branded as the American Dream. You feel like you’re doing something that a lot of people aspire to, but you’re one of the few who’s able to get it done during this difficult time.”
Kimberly Miles, 26, school-based therapist, and Austin Paul, 25, television tech manager
Living at home with their respective parents in Shepherdsville and Mt. Washington, Ky.
Moving to: $179,900 house
3BR/2BA in Mt. Washington, Ky.
Why buy now?
A desire for independence, and for stability during a chaotic time
In a small rural neighborhood in Kentucky, Kimberly Miles had a stressful moment when she was furloughed from her job just days before closing on her dream home.
The closing date had already been pushed back because of the pandemic, and so had her wedding date. “There was a lot of tears and anxiety because one thing was happening after the other,” she said.
Miles and her fiancé, Austin Paul, 25, had been dating for six years while living with their parents. They didn’t want to wait any longer to start their lives together, especially at such a perilous moment. “I wanted to get in the house before we went full quarantine,” she said, adding that she had thought: “As long as we have a house to stay in, we’ll be OK.”
Because they were able to secure a USDA loan — a special mortgage reserved for low to moderate income families in rural areas — they didn’t need to put any money down. And because her name was not on the mortgage, her unemployment did not affect the sale. Miles has since been called back to work, but her fiancé has also been furloughed from his job at a university athletic department. “It’s been rough, but it’s ok,” she said. “The unemployment and the extra $600 a week from the CARES Act has definitely helped.”
Frank Tisellano, 32, product manager in the tech industry, and Casie Tisellano, 32, fitness instructor
2BR apartment in Queens
Moving to: $620,000 house
5BR/2.5BA in Maplewood, N.J.
Why buy now?
Freedom of remote work, city space too small
Before the pandemic, Frank Tisellano and his wife had been planning to buy a home in their neighborhood of Astoria, Queens. But once they spent a few weeks in quarantine with their two young sons, they reconsidered. Instead of a $1 million brownstone in New York City, they bought an American Colonial house in Maplewood, N.J., with twice the square footage and four times the lot size.
“If you think about Covid as house arrest, the jail that we’ve purchased for ourselves is too small, and I want to upgrade to a bigger jail,” Tisellano said before the closing. He was talking by phone while sitting in his car outside a storage unit; he was there to switch out his family’s winter clothes for their summer wardrobe, which they were forced to keep in storage due to inadequate closet space in their 700-square-foot apartment.
A third-generation New Yorker who grew up on Staten Island, Tisellano says he never would have considered moving to the suburbs prior to the pandemic. “Before if we had moved to Jersey I think we would’ve felt like we were resigning ourselves to moving there,” he said. “Now it feels positive. I don’t feel like we’re sacrificing anything.”
Mai Deo, 28, interventional radiology technologist
Basement rental apartment in a townhouse in Falls Church, Va.
Moving to: $395,000 condo
2BR/1BA with a backyard in Shirlington, Va.
Why buy now? Less competition
Mai Deo made an offer on her home in the last week of April. “It was at the height of everything,” she said. “There was lots of uncertainty.” That uncertainty, she thinks, played to her favor. Before the pandemic, the competition for homebuyers in the area was fierce, she said, and included foreign investors making all-cash offers.
In that period after the country shut down, when home sales dropped substantially, the competition was virtually eliminated. “Without the pandemic, I don’t think I would’ve been able to buy my place,” Deo said.
An avid gardener, Deo had to keep her plants in pots at the townhouse she rented, but now that she has bought her first home, she can finally plant a real garden: “I’m a Vietnamese refugee so I’m legit planting roots in America.”
Robby Vielma, 32, medical physicist, and Kristy Vielma, 30, physical therapist
Moving from: $1655/mo apartment
2BR in Naperville, Ill.
Moving to: $400,000 house
4BR/3BA with pool in Naperville
Why buy now?
Right house, right time
A day after their offer on a house was accepted, the governor of Illinois issued a shelter-in-place order, and the elderly owners of the house that Robby and Kristy Vielma were buying got cold feet. But the Vielmas weren’t willing to let this house go. So they negotiated a rent-back agreement with the sellers, which allowed the elderly couple to stay put through July.
A few days after that, Kristy Vielma was furloughed from her job, but that did not deter them either. “Her name was on the mortgage,” said Robby Vielma. “But luckily we were financially conservative. We didn’t want to buy anything at the top of our range.”
They closed on April 24.
“We had been waiting for so long to buy a house,” said Robby Vielma. “We felt ready to make the leap. There’s always going to be a reason to wait.”
City life isn’t what it used to be, space too small
Since the pandemic, Joanna Daloisio and Nathan McCarty have been enjoying their Boulder condo less and less.
“The lifestyle that we love about being downtown, it’s going to take some time for that to come back,” Daloisio said. Two of her favorite restaurants closed for good within the same week, and with all the social distancing measures she has had to adopt, “COVID has diminished the joy” of urban life, she said.
Daloisio used to consider her apartment the perfect size for a couple. “But being in there nearly 24/7 it was a lot,” she said. “Everything felt cramped and messy, and I felt limited. There was hardly even space for me to set up a yoga mat.”
Now they’ll have more than two acres to call their own. Daloisio plans to set up a woodworking table, and McCarty wants to turn the detached garage into an art studio.
“I’m looking forward to building benches for a fire pit, and having space to paint and gardening,” said Daloisio. “I think mountain properties will come more and more in demand. People are gonna want space, they’re gonna want land.”
William Lok, 29, lawyer, and Tiger Yang, 25, student
Moving from: $3500/mo apartment
2BR in a Los Angeles apartment complex
Moving to: $868,888 townhouse
3BR/2.5BA in Torrance, Calif.
Why buy now?
Low-interest rates, freedom of remote work
When William Lok’s parents noticed the very low-interest rates, they advised their son to take advantage of the moment, and buy his first house. “Right now I’m throwing out over $40,000 a year in rent,” Lok said.
He began actively looking for a home in April, after ensuring that his job would be secure despite the economic uncertainty.
He settled on a townhouse in an area he would have never considered before remote work became a normal part of life. “With the pandemic pushing work from home, I was able to buy in a much nicer area,” Lok said. “The commute will add 30 minutes each day I have to go in, but given that I don’t have to go to the office every day, that’s OK.”
That type of demand is not surprising given that the asking price is less than a typical LA condo and it’s located in a walkable, transit-friendly neighborhood with shops and restaurants. What’s more surprising is that when the offers started rolling in, the dwelling had been on the market for all three days in a time period that she says is typically slow for Los Angeles real estate.
“Our open houses over the holidays, when we usually get 10 people, we were having 30 to 40 people.”
Homebuying in Los Angeles in 2020 is off to a busy start. Agents and real estate observers say that in the “lower” end of the market—where homes are priced below $1.5 million—the early action might be indicative of the year ahead.
“It’s tighter in the lower price thresholds for sure,” says Jonathan Miller, whose real estate and appraising firm, Miller Samuel Inc., tracks home prices in Los Angeles. “Unless there’s a change in economic conditions in some material way, it’s hard to make an argument that things are going to change all that much in 2020.”
In a nationwide survey conducted by Zillow, investment strategists and real estate experts predicted that prices will cool off or even fall in some of the West Coast’s priciest markets this year, including Los Angeles, where the median price of a single-family home was $650,000 in November.
But Los Angeles brokers say they expect prices to stabilize or grow at a slower pace than they did in 2018, when price records were notched month after month.
“Even though buyers have more power over transactions than they did two years ago, it didn’t swing 100 percent in their favor,” says Miller.
What is working in their favor? Low-interest rates. What’s not? Low inventory. Plus, “the economy is so robust, there are plenty of buyers,” he says.
That means home shoppers should expect to compete with multiple offers in popular areas like the Westside and in “transforming neighborhoods” in Northeast Los Angeles and South LA, regions where home prices grew the most over the last decade.
“You’re going to see between $799,000 and $1.4 million be the hottest price points,” says Courtney Poulos, owner of ACME Real Estate. “Buyers need to be prepared to make competitive offers.”
That could mean submitting offers for over asking price, but that’s not the only way to get “creative.”
“Perhaps remove loan or appraisal contingencies,” says Poulos. “Don’t expect a perfect house or ask for exorbitant credits on the request for repairs.”
And, if you still keep getting out-bid, look for houses that have been sitting on the market for a long time, a sign that they might be overpriced. Embrace homes that might not be well-staged or stylish and consider doing some work on the property to make it suit your tastes.
“Millennial buyers want to feel that they can just bring their toothbrush… they can’t imagine doing work,” says Pardee. “It would be good to look for places that need work and add value.”
If that’s the case, Poulos says there are financing options to build renovation costs into a home loan. For example, an adjustable-rate mortgage, while not always ideal, will typically have lower monthly costs in the first few years, which could allow buyers to save more money for repairs.
Poulos also encourages buyers, especially those searching for their first homes, to keep in mind that they’ll likely live in the home for at least half a decade.
“Ask yourself: ‘Will this work for me for the next five to seven years?’ It opens up so many possibilities,” she says.
“We kind of followed the typical American dream,” says Paula Henderson, 37. “Got married and decided to start a family, and we wanted a house where a kid could run around and our dog could run around outside.”
It was 2017, and Ms. Henderson, a sales manager for an HR software company, and her husband, Evan Kress, 42, an engineer who builds telescopes for N.A.S.A., were renting in West Los Angeles. They had their hearts set on Culver City, the neighborhood where she works, but they couldn’t find anything in their price range. Then a couple of friends suggested West Adams, just next door.
One of the city’s oldest areas, West Adams was abandoned by its wealthy inhabitants starting in the first half of the 20th century as Los Angeles expanded. Now, said David Raposa, an agent with City Living Realty, because of a combination of factors — including the construction of the Expo rail line, the area’s accessibility to the tech hubs of Silicon Beach and El Segundo, the development of the areas bordering it, and the Opportunity Zone designations announced in 2018 to spur investment in distressed communities — the working-class neighborhood is undergoing a rapid rejuvenation.
“It was mainly just a very quiet, not terribly in-demand, very sedate, working-class residential neighborhood with a lot of longer-term residents,” Mr. Raposa said. “It’s probably only in the last eight years, maybe 10, since the last recovery started again, that we’ve seen a lot of action, with most of the growth concentrated in the last three years.”
A friend of Ms. Henderson had bought a house in West Adams in 2014, but when Ms. Henderson went to visit, she “didn’t get a great feeling about it,” noting that there were a lot of houses that still had bars on windows. “Even a few years ago it wasn’t what it is today.”
But when, after about $50,000 in renovations, that friend sold her house two years later for a $250,000 profit, Ms. Henderson and her husband knew it was time to take a shot in West Adams.
Cafe Club Fais Do Do, a music venue founded by Steven Yablok in an Art Deco-style former bank building, opened in 1990 and has an eclectic line-up of blues, jazz, world, comedy, funk, soul, rock, Brazilian salsa and burlesque.Credit…Beth Coller for The New York Times.
In 2017, they were disappointed when a three-bedroom, two-bath house on the neighborhood’s western edge went to another buyer. But then fate intervened: The deal fell through and the seller came back to them. They paid $745,000.
Now with a 2-year-old daughter and another child on the way, Ms. Henderson is happy with the family’s location — “We can take an Uber for three dollars or walk in and we’re in downtown Culver City” — and flexibility.
“I made the decision to not pay more for a house in a good school district,” she said. Instead, she and her husband can consider private school or, because she works there, Culver City’s well-regarded public schools. Some of their savings will also go toward home improvements, including a new roof, once California’s stay-at-home order is lifted.
Catherine Randall, 31, had been living with roommates since moving to Los Angeles from New York six years ago — first in Laurel Canyon, then in Silver Lake — and wanted her own space. West Adams felt affordable, and it had the diversity she craved. “I wasn’t looking to live somewhere that felt sterile or homogeneous,” she said.
She was tempted to rent one of the accessory dwelling units (known as ADUs) that developers in the neighborhood often add to renovated properties. She looked around, but didn’t love the tight proximity between the main and accessory units she saw: “It still feels like you’re in someone’s hair.”
She finally found a bright one-bedroom with large windows and a balcony in a new building on West Adams Boulevard. The monthly rent is $2,095, plus monthly fees of $50 for her dog, Kirby, and $75 for a parking spot.
Ms. Randall laments the lack of bars and green spaces. For the former, she heads to Culver City, Downtown Los Angeles, or to the East Side to meet friends; for the latter, she drives five minutes south to the 400-acre Kenneth Hahn State Recreation Area for her daily run.
“We’re not there yet,” she said of the neighborhood. “Anything that’s not walking the dog or one of the restaurants nearby, I have to drive to.”
Jazzirelle Hill, 28, a corporate lawyer, and her husband, William Hill, 29, a resident in orthopedic surgery, moved from Washington D.C., when he was about to begin a residency at the Los Angeles County + USC Medical Center, a 600-bed teaching hospital just north of Interstate 10. They bought a renovated midcentury-modern style home in West Adams in July 2019.
With her work in Century City and his in Boyle Heights, on the other side of Downtown, one concern was the commute. “We tried to find something that was as central to both of those locations as possible,” she said. “And we realized how much more you could get being a block south of the 10 versus a block north of the 10,” also known as the Santa Monica Freeway.
They paid $805,000 for a three-bedroom, two-bath home in the northeast corner of the neighborhood. Situated on two lots, there’s plenty of space for their new rescue dogs and a baby, expected in July. “It’s definitely a little oasis,” Mrs. Hill said.
What You’ll Find
Bordered by Culver City to the west, Jefferson Park and Leimert Park to the east, Baldwin Hills to the south and Interstate 10 to the north, the 1.5-square-mile neighborhood is notable for the vibrant commercial districts along West Adams Boulevard and Jefferson Boulevard. Over the past two years, restaurants including Mizlala and coffee shops like Highly Likely have begun to attract people from around the city.
The area is dominated by compact single-family houses, built in the Spanish or Tudor styles that were popular a century ago, with a smattering of multiple-family units. “The homes are smaller versions of what you’d see in Carthay or West Hollywood,” Mr. Raposa said. “With lots from 4,500 to 5,500 square feet, they’re not that big.” Sometimes, newly renovated residences with manicured lawns sit next to older, distressed homes.
Farmdale, a trapezoid of streets on the area’s eastern edge, between Vineyard Avenue and busy Crenshaw Boulevard, is particularly desirable for its large lots, wide streets with single-family homes and walkability. The corridor that hugs La Cienega Boulevard is also popular for its walkability, proximity to Westside Neighborhood Park, Culver City, and Cumulus, a mixed-use development on the corner of La Cienega and Jefferson Boulevards that is slated to bring Whole Foods to the area.
What You’ll Pay
“Prices in West Adams have been on the rise,” said Courtney Poulos, the owner of ACME Real Estate, which just opened an office on Adams Boulevard, citing the area’s affordability and accessibility as major selling points for people priced out of areas where they work or rent. “The entire area is booming, similar to the way that Silver Lake and Echo Park went wild years ago.”
Dominique Madden, who heads ACME’s West Adams location, said the office gets “a lot of people who are renting in Silver Lake, renting in Los Feliz, renting in West Hollywood but are priced out of where they live” when they decide they want to buy.
Matt Kreamer, the data public relations manager at Zillow, said that in 2017, 116 single-family homes and condos sold at a median price of $621,500. The following year, the median price jumped to $715,000 on 111 total sales, then jumped again in 2019 to $790,000 on 121 sales.
About 40 percent of the neighborhood’s housing stock is rental, said Claire Lissone, owner of Real Estate Collective, in West Adams. Of those rentals, nearly half are single-family homes, while the rest are in multiunit buildings. A recently remodeled, 1,300-square-foot house averages around $3,500 to $4,500 a month, she said, while a 700-square-foot one-bedroom rents for about $1,700 to $2,000 a month.
“There is definitely a sense of pride in the neighborhood,” said Mrs. Hill.
Local farmers’ markets and street fairs, including a yearly block party sponsored by Delicious Pizza on West Adams Boulevard, help foster that spirit.
New restaurants, including a reimagined Johnny Pastrami and a branch of the San Francisco-based Thai restaurant Farmhouse Kitchen, are planned for Adams Boulevard. And Sweet Greens and the Real Real, a luxury consignment shop, are both setting up offices in the neighborhood.
“It’s still an area in transition,” said Tia Hughes, an agent with Compass. “It’s not perfect, but you can see that people are investing in the neighborhood and that it’s on its way to becoming a great neighborhood.”
Bee Taqueria, a colorful taco stand from the chef Alex Carrasco, who hails from Mexico City and has worked at Scratch Bar & Kitchen and Osteria Mozza in Los Angeles, showcases a menu of intriguing tacos on handmade blue corn tortillas.Credit…Beth Coller for The New York Times
Los Angeles Unified School District operates two elementary schools (Virginia Road Elementary School and Cienega Elementary, which also serves Baldwin Hills), one middle school (Johnnie Cochran Jr. Middle School) and one high school (Susan Miller Dorsey High School) in West Adams.
During the 2018-19 school year, 28 percent of third-graders at Virginia Road Elementary met or exceeded standards for English and Language Arts (ELA) on California’s Smarter Balanced Assessment test, while 31 percent met or exceeded standards for math, compared with districtwide averages of 43 percent in ELA and 44 percent in math, and statewide averages of 49 percent in ELA and 50 percent in math. Cienega Elementary fared slightly better, with 45 percent meeting or exceeding standards for both ELA and math.
During the 2018-19 school year, 22 percent of eighth-graders at Johnnie Cochran Jr. Middle School met standards for ELA and 12 percent met them for math, compared with districtwide averages of 41 percent in ELA and 29 percent in math, and statewide averages of 49 percent in ELA and 37 percent in math.
High schoolers attend Susan Miller Dorsey High School, where during the 2017-18 school year, 25 percent of students who took the SAT exam met benchmarks for English and 12 percent met benchmarks for math. (For the SATs, the College Board defines students as “college ready” when their test scores meet a benchmark of 480 in English and 530 in math).
West Adams is just below Interstate 10, putting Santa Monica and Los Angeles’s beaches, and Downtown Los Angeles, 30 minutes away. Los Angeles International Airport is 20 minutes away, while Hollywood, Brentwood, and the San Fernando Valley may take up to 45 minutes in traffic. Culver City is less than 10 minutes.
Four stations of Metro Rail’s E (Expo) line serve the area — La Cienega/Jefferson, Expo/LaBrea, Farmdale, and Expo/Crenshaw — offering access both to Santa Monica and Downtown Los Angeles, with a fare of $1.75 each way.
Laura Meyers, director of communications for the West Adams Heritage Association, said that before World War I, the area west of Crenshaw Boulevard was known colloquially as the Cienega District.
Unlike the wealthy West Adams district to the east of Crenshaw Boulevard, the Cienega District was home to cattle ranches, a 20-acre slaughterhouse and Bonita Meadows, a dairy farm, part of which was subdivided for housing by the developer Carlin Greer Smith. He called the area “the West Adams extension district,” and lobbied the city to annex the land, which it did in 1918.
Today, the neighborhood west of Crenshaw is called West Adams, while the old district, which includes the neighborhoods of Mid-City, Leimert Park and Jefferson Park, is known as Historic West Adams.
On Monday, the National Bureau of Economic Research (NBER) announced that the U.S. economy is officially in a recession. This did not come as a surprise to many, as the Bureau defines a recession this way:
“A recession is a significant decline in economic activity spread across the economy, normally visible in production, employment, and other indicators. A recession begins when the economy reaches a peak of economic activity and ends when the economy reaches its trough. Between trough and peak, the economy is in an expansion.”
Everyone realizes that the pandemic shut down the country earlier this year, causing a “significant decline in economic activity.”
Though not surprising, headlines announcing the country is in a recession will cause consumers to remember the devastating impact the last recession had on the housing market just over a decade ago.
The real estate market, however, is in a totally different position than it was then. As Mark Fleming, Chief Economist at First American, explained:
“Many still bear scars from the Great Recession and may expect the housing market to follow a similar trajectory in response to the coronavirus outbreak. But, there are distinct differences that indicate the housing market may follow a much different path. While housing led the recession in 2008-2009, this time it may be poised to bring us out of it.”
Four major differences in today’s real estate market are:
We must also realize that a recession does not mean a housing crash will follow. In three of the four previous recessions prior to 2008, home values increased. In the other one, home prices depreciated by only 1.9%.
Yes, we are now officially in a recession. However, unlike 2008, this time the housing industry is in much better shape to weather the storm.
As the health crisis started making its way throughout our country earlier this spring, sellers have been cautious about putting their homes on the market. This hesitation stemmed primarily from fear of the spread of the coronavirus, and understandably so. This abundant caution has greatly impacted the number of homes for sale and slowed the pace of a typically busy spring real estate season. Mark Fleming, Chief Economist at First Americannotes:
“As more homeowners are reluctant to list their homes for sale amid the pandemic, the supply of homes available to potential home buyers continues to dwindle.”
With many states beginning a phased approach to reopening, virtual best practices and health and safety guidelines for the industry are in place to increase the comfort level of buyers and sellers. What we see today, though, is that sellers are still making a very calculated return to the market. In their latest Weekly Housing Trends Report, realtor.com indicates:
“New listings: On the slow path to recovery. Nationwide the size of declines held mostly steady this week, dropping 23 percent over last year, a slight increase over last week but still an improvement over the 30 percent declines in the first half of May.”
Although we’re starting to inch our way toward more homes for sale throughout the country, the number of homes on the market is still well below the demand from buyers. In the same report, Javier Vivas, Director of Economic Research for realtor.com shares:
“Sellers have yet to come back in full force, limiting the availability of homes for sale. Total active listings are declining from a year ago at a faster rate than observed in previous weeks, and this trend could worsen as buyers regain confidence and come back to the market before sellers.”
Lawrence Yun, Chief Economist at the National Association of Realtors (NAR) seems to agree:
“In the coming months, buying activity will rise as states reopen and more consumers feel comfortable about homebuying in the midst of the social distancing measures.”
What we can see today is that homebuyers are more confident than the sellers, and they’re ready to make up for lost time from the traditional spring market. Summer is gearing up to be the 2020 buying season, so including your house in the mix maybe your best opportunity to sell yet. Interest in your house may be higher than you think with so few sellers on the market today. As Vivas says:
“More properties will have to enter the market in June to bring the number of options for buyers back to normal levels for this time of the year, nationwide and in all large markets.”
If you’re ready to sell your house this summer, let’s connect today. Buyers are interested and they may be looking for a house just like yours.
More than ever, our homes have become an integral part of our lives. Today they are much more than the houses we live in. They’re evolving into our workplaces, schools for our children, and safe havens that provide shelter, stability, and protection for our families through the evolving health crisis. Today, 65.3% of Americans are able to call their homes their own, a rate that has risen to its highest point in 8 years.
June is National Homeownership Month, and it’s a great time to reflect on the benefits of owning your own home. Below are some highlights and quotes recently shared by the National Association of Realtors (NAR). From non-financial to financial, and even including how owning a home benefits your local economy, these items may give you a reason to think homeownership stretches well beyond a sound dollars and cents investment alone.
Owning a home brings families a sense of happiness, satisfaction, and pride.
Pride of Ownership: It feels good to have a place that’s truly your own, especially since you can customize it to your liking. “The personal satisfaction and sense of accomplishment achieved through homeownership can enhance psychological health, happiness and well-being for homeowners and those around them.”
Property Maintenance and Improvement: Your home is your stake in the community, and a way to give back by driving value into your neighborhood.
Civic Participation: Homeownership creates stability, a sense of community, and increases civic engagement. It’s a way to add to the strength of your local area.
Buying a home is also an investment in your family’s financial future.
Net Worth: Homeownership builds your family’s net worth. “The median family net worth for all homeowners ($231,400) increased by nearly 15% since 2013, while net worth ($5,000) actually declined by approximately 9% since 2013 for renter families.”
Financial Security: Equity, appreciation, and predictable monthly housing expenses are huge financial benefits of homeownership. Homeownership is truly the best way to improve your long-term net worth.
Homeownership is even a local economic driver.
Housing-Related Spending: An economic force throughout our nation, housing-related expenses accounted for more than one-sixth of the country’s economic activity over the past three decades.
GDP Growth: Homeownership also helps drive GDP growth as the country aims to make an economic rebound. “Every 10% increase in total housing market wealth would translate to approximately $147 billion in additional consumer spending, or 0.8% of GDP, as well as billions of dollars in new federal tax revenue.”
Entrepreneurship: Homeownership is even a form of forced savings that provides entrepreneurial opportunities as well. “Owning a home enables new entrepreneurs to obtain access to credit to start or expand a business and generate new jobs by using their home as collateral for small business loans.”
The benefits of homeownership are vast and go well beyond the surface level. Homeownership is truly a way to build financial freedom, find greater satisfaction and happiness, and make a substantial impact on your local economy. If owning a home is part of your dream, let’s connect today so you can begin the homebuying process.
A cliff-top Malibu, Calif., mansion with a funicular leading down to the ocean is coming on the market for $125 million.
The property is owned by Diana Jenkins, a Bosnia-born entrepreneur, and philanthropist. Ms. Jenkins, the founder of the health drinks company Neuro Drinks, was previously married to the British financier Roger Jenkins.
A Funicular of One’s Own
The Malibu property also has a beach cabana, recording studio, and dance studio.
Located on Malibu’s Paradise Cove, the house was previously owned by media mogul Barry Diller and by the late country singer Kenny Rogers. Mr. Rogers, who owned the house in the 1980s, installed the funicular only to be slapped with a $2 million fine from local authorities, according to his wife, Wanda Rogers.
“Kenny had no idea he was going to get in so much trouble,” Ms. Rogers said when reached by phone.
Sitting on nearly 3 acres, the five-bedroom main house is located on a single level with vaulted ceilings, herringbone floors, and floor-to-ceiling windows that open onto the gardens, according to the listing agent, Chris Cortazzo of Compass. At the entryway, a wall of frosted privacy glass turns transparent at the touch of a button, revealing an office and study, a large patio and lawn, and views of the ocean. The property also has a dance studio and a recording studio. Ms. Jenkins said Neuro Drinks was developed in the kitchen and inspired by her healthy Malibu lifestyle.
The grounds also include a three-bedroom guesthouse, a swimming pool, a waterfall and koi pond, a sports court, and a guardhouse. Residents and guests can use the funicular—a type of cable railroad—or adjacent steps to access the property’s large oceanfront cabana, which has retractable ceilings, a wet bar, a built-in barbecue, and fire pit.
Ms. Jenkins said she first saw the home in the mid-2000s while tagging along on a house-hunting trip with her friend, the songwriter and rapper Kid Rock. Along with Mr. Cortazzo, they were shopping for a home for the musician but found one for her instead. The purchase price was $21 million.
At the time, Ms. Jenkins was living in London and had no intention of moving to California, she said.
“I was just spending the day with them with zero intention to buy,” she said. “But the gates opened and my heart just dropped. It was all I wanted. I went back to London and I couldn’t stop thinking about it.”
She ultimately relocated to California, enrolling her two children in a local school.
Mr. Jenkins, a former executive at Barclays, was recently acquitted in a high-profile fraud trial in the United Kingdom related to payments made by Barclays to Qatar during the credit crisis.
Ms. Jenkins said for years she has wanted to move back to Bosnia, to live near her parents in Sarajevo and potentially run for elected office, but her love of the Malibu house has kept her in California.
“This house has been holding me back,” she said. “I should have gone back a while ago.” The coronavirus pandemic, coupled with her daughter’s recent graduation from high school, gave her the push she needed to put the property on the market, she said.
The property is sandwiched between mansions owned by television producer Mark Burnett and WhatsApp co-founder Jan Koum. Mr. Koum bought his house from NBCUniversal Vice Chairman Ron Meyer for $100 million last year, according to people familiar with the deal.
Mr. Cortazzo said he’s seeing an uptick in interest in pricey Malibu properties from wealthy house-hunters in cities like New York, San Francisco, and Chicago. Amid the pandemic, “they’re trying to place themselves here for the summer,” he said.