HOUSING APPEARS POISED FOR STRONG 2021, REST OF REAL ESTATE A MIXED BAG

 Wow, what amazing finish to one of our most difficult years ever, in terms of worry and hardship; but those who had the nerves to pursue housing were rewarded on both the seller and buyer side. The result were some staggering rebound sales numbers, the second half of 2020, (to be given in the next section), that have set the stage for an equally strong 2021. According to DataQuick/CoreLogic, the first half of 2020 plunged on average 24% in 6 So Cal counties and climbed 51%, the second half which is the greatest turnaround in 33 years. Historically, second half rebounds are a precursor for a strong year following— so far that appears to be the case. According to Jonathan Lasner’s Bubble watch algorithm, a scale of 1-5, 5 being huge bubble, we are currently at a 1. Good news for sellers, but better for buyers afraid of buying at the top of an over inflated market. These types of rebounds generally have a beneficial advantage for purchasing power, the beginning of 2021 giving buyers 2% greater buying power. 

(This according to projections by UCLA’s Allen Matkins/Anderson economists.). On the commercial side, office space is holding even, retail has slipped significantly, and the true bright spots are multiple family units and industrial. Particularly warehouse and manufacturing or assembly and distribution as Californian’s change how they pandemic shop, reflecting a massive shift to online. 

WHAT WERE THE ACTUAL NUMBERS?

Unbelievable numbers! Total number of sales for December, the last complete month numbers available, was 3,611, which is an increase of 17.7% over December 2019. (All numbers reflect year over year for the same month.). Single-family resale reported 2,254, up just over 30 %. Condos came in at 1,021, a very big number for condos, up 26%. New homes, always lagging had 336 sales, the only figure in negative territory, it represented a 36% drop. Resale median price rose 12.5% to $890,000; Condos also increased 3.7% to $544,000; New homes barely noticeable at 1.4% rise to $882,000; Finally the overall median price for all homes was $795,000 up 8.2%. Average monthly payment was virtually unchanged, but it did go down slightly from $3,485 to $3,445.

DON’T EXPECT BIG FORECLOSURE MARKET ANY TIME SOON

The top five cities in OC for notices of default, hardly constitute a worrisome scenario. Number one had an NOD ratio of 1 in 1,261 homes; number 5 was 1 in 5,273. With forbearances still active and COVID relief packages still being actively sought by Congress, most lenders may be reticent to file NOD’s unless a last resort. Realtors are here to help you navigate during this extraordinary time. 

STATE’S OWNERSHIP RATE HITS AN 8-YEAR HIGH...OR...SOUTHERN CALIFORNIA SALES PLUMMET TO 11-YEAR LOW

Are you an optimist or pessimist or realist? How you view things may decide which headline you believe is the most telling of things to come for the SoCal real estate marketplace. CoreLogic released final figures for January and that figure was 12,665 homes and condos changed hands in January 2019 — a 17.1% decline from January a year ago. These figures for Southern California from Ventura down to San Diego. However, 2018 ended with more SoCal citizens owning and living in their own homes than in the past 8 years. Low interest rates compensated for rising prices in the very best of ways, before last year saw rates rise rapidly and often, ending the year with rate hikes left buyers cold. However, if you only read the papers, you are under the impression, no doubt, that rates haven’t budged, because local columnist have been remiss to report that rates have dropped over a point. YES!! INTEREST RATES ARE BACK IN THE 4’S!! (Remember, this column never reports active rates because they can change without notice. This meant to be informational only.) In fact, 56% are owning their abodes here in the sunshine state. Yes, we are still behind many other states in that statistic. However, if you take similar metropolis areas and compare population dense areas, it will be about the same. Shame on newspapers not letting the public know that a little affordability came back with rates dropping. Many economists predict that rates will move little this first six months of2019.

WHAT ARE THE EXACT NUMBERS?

or Orange County, home sales were down 20.3% compared with the same time a year ago. For the month of January, the total number of sales was 1,778; with new homes comprising just 191 of that number, condos had 474 and resale houses totaled 1,113. For the primary ingredient of our market, the resale single-family saw prices rise just 1.5% but volume drop 14.6%. Condos fell in price 7.4% and volume 22.5%. New homes rose in price because of higher priced development releases 19%, but fell in volume, reflecting affordability issues, 39.2%. Median home payments rose to $3,503 from $3,142 a year ago. But that is median, not average. There is a house payment possibility for every buyer. Don’t be dissuaded, try to buy.

THREE GREAT TIPS FOR THOSE TRYING TO BUY

1) Automate your savings for your down payment. Don’t ask yourself every month if you want to save or how much can you put in, as something will always pull at you. Have it go to savings straight from your check. 2) build your credit history and keep it clean. Have several credit cards, use them, and pay them off every month. Stay in control and don’t get into debt. 3) Practice living on a budget. Give up lunches out and Starbucks, even if you can afford it right now. Practice living the way you would have to if you owned your dream starter or move up home. Take that money and add it to savings or for upgrades to your next home.

MILLENNIALS MAY BE TEMPTED TO RENT, BUT ACCORDING TO MILLIONAIRE DAVID BACH — DON’T...

Millionaire David Bach has a message for Millennials, don’t wait to buy. It is nearly impossible to build retirement and personal wealth without home ownership. For example, if one rents a 2 bedroom apartment for the approximate average rate of $1,800 — after 3 years a total of $64,800 will have been spent. Assuming rents aren’t risen until year 4, which is unlikely, but to be generous, let’s say at year 4 it rises to $2,000 a month, after 3 years, the Millennial has just spent another $72,000. But you spend the same or more on a house payment right? Maybe. But you also have a tax deduction, equity buildup and appreciation. When you rent, you make other people wealthy. Food for thought. See you next month.