Long Beach

Traditional buyers are still facing challenges as the long beach housing market normalizes. – Long Beach, California

Long Beach, California 2021-12-01 12:00:36 –

A home for sale in the Los Altos district of East Long Beach on Tuesday, November 23, 2021. Photo: Brandon Richardson.

According to Phil Jones, owner and CEO of the Coldwell Bunker Coastal Alliance, the local housing market has “normalized” after more than a year of historic price increases, primarily due to the coronavirus pandemic.

However, there are two major caveats. Historically low inventories and the market being dominated by investors and cash buyers. In summary, even though the market seems to be chilling, these two factors are not good signs for traditional homebuyers.

In terms of inventory, Jones said about 10 years ago, as many as 3,000 homes would be for sale on Long Beach. However, as of the end of October, only single-family homes, town homes and condominiums were on the market from 603 to 410 in October 2020.

Three months ago, 62% of Long Beach’s list received four or more offers, according to Jones, but that number dropped to about 50% as traditional buyers turned to bystanders.

“The buyer feels quite tired. The buyer is exhausted and tired of losing in multiple offer situations,” Jones said, resulting in a more dramatic seasonal slowdown. Said to be the target. “Traditional buyers have been hit. They just can’t compete.”

According to Jones, their competitors are now large ventures such as Blackstone and the now obsolete Jiro Offer, which treats housing as a stock option.

The submarket, which treats single-family real estate as an investment, did not exist before 2012, according to Edward Coleson, a professor at the University of California, Irvine and head of research at the university’s real estate center.

Blackstone, the country’s largest private equity company, acquired a company that owns 17,000 rental homes for $ 6 billion this year. This move happened less than two years after Blackstone sold its stake in Invitation Homes, which owns about 80,000 homes, for $ 1.7 billion.

However, housing as an investment is not always rewarded.

ZillowOffers’ iBuying Gambit has put the company in the red after surpassing traditional buyers in thousands of homes nationwide. In many cases, it was more than could be sold even after the improvements were made.A real estate giant was born as a result of turning so many properties upside down Close the department..

“It’s still a successful market,” Coulson said.

Jones said the local market continues to see a median “unhealthy” rate while well-financed investors are tweaking their homes into profits. Median housing was $ 754,000 as of October, according to data from real estate agent Redfin. This shows an increase of more than 12.5% ​​from 12 months ago.

“Everyone is worried about affordability,” Coulson said. “We always have it because of limited supply and high demand, and there is always a demand for life in California.”

However, there is still room for correction in the market.

From the mid-1990s until the burst of the housing bubble in 2007, the Los Angeles and Orange County housing markets enjoyed a consistent median rise of about 4% each year, according to Coleson. When the market recovered in 2012, price increases returned to the same level. But over the last 12 to 15 months, the national increase has approached 8%, Coulson said.

“People ask me,’Will this continue?’ Of course not,” Coulson said. “There is no way to raise such a price. There is no way to continue. We do not have enough income capacity to do so.”

Some are worried that prices will skyrocket and another bubble is ready for the market to collapse, but Coulson and Jones don’t think so. For one thing, rents haven’t kept up with rising home prices until the Great Recession, but now they do, Coulson said. Second, banks have offered “hard” loans in the past, in contrast to the “healthy” loans currently underpinned by the market, according to Jones.

However, recent market slowdowns have begun to raise mortgage rates, Jones said, adding that no significant rise is expected. Earlier this month, mortgage rates rose from 3.15% last week to 3.22%. Freddie Mac reports that mortgage rates will reach record lows of 2.68% in December 2020.

“But if the rates go up to a point where it has a dramatic impact on activity, they can go down,” Jones said. “But due to lack of inventory, the combination is not a good omen for buyers entering next year.”

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