Long Beach

Home prices and asking rents continue to rise amid tight inventories • Long Beach Business Journal – Long Beach, California

Long Beach, California 2022-05-03 12:00:20 –

From single-family homes to apartments, high demand and low inventories keep selling prices and rents rising, according to local real estate experts, but rising interest rates should calm the market.

“Interest rates have risen significantly,” said Phil Mazzocco, Long Beach’s operating principle for First Team Realty, saying that properties for sale in the city are still receiving multiple offers, though not as much as last month. ..

Mazzocco said he was looking at about 10 instead of receiving 30 offers for a reasonably priced property.

“They are still out of the shelves, but there are stalls that have a few days on the market,” Mazokko added. He said reasonably priced properties sell in about 15 days on average, rather than the 7 to 10 days on the market.

But overpriced homes tend to be sluggish in the market, Mazokko said.

“It may be a kiss of death,” Mazokko said. “High prices are a big mistake.”

Last year’s 30-year fixed mortgage average interest rate was less than 3%, Data from Freddie Mac Show.. However, according to Forbes, interest rates this year have risen to about 5.5% as of April 26.

Interest rates have historically remained low, despite the sharp rise, Mazokko said. According to Freddie Mac, from 1973 to the early 2000s, the average rate ranged from 6.5% to 16.63%.

Mazokko added that at this point the interest rates that cool the market are sound and the recent trajectory is unsustainable.

“Buyers have to do really irresponsible things to get into the house — get rid of the contingencies and sometimes inspect them,” Mazokko said. “Historically, we never advise our clients to do so.”

As the market normalizes, buyer agents will have more leverage and will be able to negotiate more responsible transactions, Mazokko said.

Data from the US Census Bureau and the US Department of Housing and Urban Development show that the median home prices have skyrocketed nationwide since the pandemic. In early 2020, the average selling price of homes in the United States was $ 329,000. By the end of 2021, that number had skyrocketed to over $ 408,000.

according to Report According to the Inspection Support Network, more than 27.5% of home sales in the Los Angeles metropolitan area accounted for more than $ 1 million, the third highest in the nation’s major metropolitan areas.

In March of this year, median housing in Los Angeles County was $ 875,000, up nearly 13% from the same period last year. According to Redfin..

Edward Coulson, director of the University of California, Irvine Real Estate Center, said: “House prices are still rising, but they are a little flat.”

The continued rate of sales and other indicators, according to Coulson, shows no sign that the market is collapsing.

With the right prices, Mazokko said all types of homes, from fixer uppers to luxury homes, are doing well. But homes under $ 1 million are the most popular, he said.

According to Mazokko, buyers are a mix of first-timers and upgrades to larger homes. Despite national reports, he said Long Beach does not consider real estate acquired by companies as an investment.

“We are very isolated from everything,” says Mazzocco, saying Long Beach continues to be a more affordable residential paradise compared to many other LA and Orange County cities. I did.

“Companies are certainly more powerful in the market than they used to be,” says Coulson. “But it doesn’t have an overwhelming presence yet.”

housing complex

The housing complex market is about the same, with high demand and limited supply, said Robert Stepp, Stepp’s commercial principal. Similar to the single-family home market, rising interest rates in 2022 slowed the rate of housing sales.

However, prices are still strong, and Stepp says both selling prices and rents. Over the last 12 months, recruitment rents have risen 6.5%, “a significant recovery from just 1.5% rent increases over the last 12 months.”

According to Stepp, the passage of Act of Parliament 1482 in January 2020 will allow rent to rise by 5% plus the consumer price index. He said recent inflation has contributed to higher growth.

The supply of rental units at Long Beach has fallen far behind demand and will continue to push prices up, Step said. Soaring house prices have forced many seeking purchases to stay in the rental market, he added. As a result, Stepp said vacancy rates at Long Beach have fallen by 1.5% over the past 12 months to a minimum of 3%.

And the city’s rental landscape is unlikely to change anytime soon.

“Long Beach has maintained a strong construction pipeline since 2016, but most new rental inventories are high-end 4-star and 5-star products that are in low demand,” Stepp said.

According to Travistra Week, Step Commercial Senior Investment Associate, high-end luxury units have a vacancy rate of approximately 8.3%. On the other hand, the vacancy rate of low-income to medium-income units is about 2.4%, indicating a shortage of affordable units.

Despite reports of population decline across the region, the development of apartments is due to “high construction costs, NIMBY sentiment and annoying permit restrictions, neither of which is likely to disappear soon”. Traweek added that it is in short supply compared to demand.

“California will continue to experience housing shortages unless legislators promise to address housing shortages in a meaningful way.”

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