top of page
Search
Writer's pictureRealtyNational

📢 Randy Zimnoch's 2nd Quarter Real Estate 🏠 Market Recap & What's Ahead for Quarter 3

My quick life update before my market update (if you are not interested in my life shenanigans, scroll down to the good stuff below). 


We celebrated our youngest, Ellyava's 1st birthday and the theme was "Berry First Birthday!" ;)

Plus our oldest turned 3 couple weeks later so there was lots to celebrate for our family in May.   

Can't forget about Father's Day and those are extra special now that I have two beautiful girls.


 

Now let's get into some important updates from the last few months.....


If you own a house or a rental or know someone that does: 


NEW INFORMATION:

  • FIXING UP A HOUSE IN CA REQUIRES NEW DISCLOSURES: 

  • Assembly Bill 968 (AB-968), effective July 1, mandates a comprehensive disclosure of repairs and renovations from sellers who flip one-to-four-unit properties within 18 months of buying them.

  • The intent is to protect buyers from undisclosed and unseen property conditions.

  • What the seller needs to adhere to and provide to the buyer going forward:

  • A record of all repairs, major and minor, that cost over $500.

  • A copy of all related permits.

  • If permits are unavailable, the seller must assist the buyer in obtaining them from associated third parties (usually the DOB at City Hall).

  • The name of each contractor associated with each permit and their contact information.

  • Here are the details about the bill in a well laid out blog format: https://www.biggerpockets.com/blog/california-law-changes-disclosures-for-home-flippers 

INFORMATION PREVIOUSLY PROVIDED IN MY REPORTS:

  • NEW RENTAL LAWS: Many new laws went into affect in 2024 that provide tenants more rights so if you own a rental, you must get familiar with all these changes:

  • Highlight of the major changes:

  • New statewide limits on rent increases

  • Stricter regulations around evictions

  • Expanded rent control

  • Caps on security deposits

  • More rights for tenants to fight violations 

  • Attorney website I found that provides lots of details about all the changes:  NEW CA RENTAL LAWS

  • Now, City of San Diego passed new tenant protection laws for 2024 that are even stricter than the California Laws mentioned above so here is a property management website I found that has these changes nicely laid out: NEW CITY OF SAN DIEGO RENTAL LAWS

  • Short Term Rental Laws officially came into Effect on May 1st, 2023 

  • There are still licenses available contrary to what most would expect!

  • To View All STR Regulations for the City of San Diego or to apply for a license, Click Here

  • Have you ever wondered what you might be able to additionally build on your property?

  • Search and discover what is possible on any property. Browse property and permit details. Apply for permits and rebates. Learn if an ADU is possible

  • https://symbium.com/ 

  • Are your electric bills out of control?  If so, consider installing solar panels like many of our clients have.  Reply to this email and I will connect you with my trusted solar contact, Eric Goldstein from Powur.

 

If you are planning on selling or know someone that is thinking about it: 


LOOKING BACK:

  • 2nd quarter was all over the place. Some properties got multiple offers if they were priced right and others sat there for many days, if not months, which is what I anticipated would happen with the rising inventory. 

  • We ended June with 4,761 active properties on the market. In comparison, at the end of March, we were at 3,209.  That's a 48% increase! Hence, why the market became somewhat even, where no one side had the obvious upper hand. 

  • If we compare it to June of 2023, we can see that attached homes had the biggest increase in inventory by 78% versus 28% for detached homes in June of 2024. Sold price compared to list price dropped and our monthly supply almost doubled for attached homes. The median price for both, attached and detached did go up when compared to June of 2023 so that's some good news.


  • Over the last three years, inventory was over 5,000 properties back in middle of 2022 and that year in the 4th quarter, the market took a 10%-15% dip in property values, depending on where the home was located in San Diego County. I don't see anything stopping us from getting to the 5,500 mark and beyond in the 3rd quarter.


To sum it up, 2nd quarter was neither a buyer's or seller's market and it was all about pricing your property under the actual market value so you can get activity and generate offers. In some instances, the sellers were able to negotiate things back up very close to the market value due to this strategy, but the ones that were bullish on their list price experienced extended market time.


LOOKING FORWARD:

  • Active inventory is rising in the first few weeks of July as expected and we anticipate for this to continue as interest rates still remain almost half a percent higher where they were back in February at the lowest point of the year.

  • Pricing your property below market value is now strongly recommended in order to bring attention to your listing because there are much less buyers in the market currently that can afford homes at these still elevated rates and home values.

  • Offering concessions to help buyers buy down their interest rate is strongly recommended as well. 

  • Also, if you have an FHA or VA loan with a low interest rate (2% or 3%), then, those loans are actually assumable by the new buyer, so it's a great way to get more attention to your property, because what buyer wouldn't want a low interest rate in this high interest rate environment that we are in currently.  

  • NOTE:  there are many caveats to this approach, so if you want to discuss this in more detail, reach out to me as I have become an expert in assumptions in the last few months.

  • In conclusion, the market will continue to cool with inventory rising, and the only thing that can bring more buyers into the market is lower interest rate or sellers dropping their list prices.

  • Lastly, many changes are coming to how real estate will be sold going forward as of August, 2024 due to the NAR settlement. Realtors won't be able to advertise that the seller is willing to pay the buyer agent's commission in the MLS.  Now, that doesn't mean that you shouldn't be open to paying for the buyer's agent commission, actually, I would strongly advise to consider it as it will still bring the most qualified buyers to your listing because many buyers won't be able to afford to pay their agent out of their own pocket because it won't be wrapped into their loan in this scenario.

  • The best way to communicate that as the seller that you would be willing to pay the buyer's agent commission is this way: "Seller concession will be considered up to 2.5% of the sales price to cover the buyer's agent commission with an acceptable offer"

  • This would have to be communicated verbally between agents as the offer is being negotiated, and it gives you, the seller, the option to be in full control of how much, if anything, that you want to pay to the buyer's agent.

 

If you are planning on buying or know someone that is:


LOOKING BACK:

  • Buyers gained leverage in the 2nd quarter of 2024 as the market leveled off.

  • Interest rates were hovering around 6.5% for VA and FHA loans throughout the whole quarter, so concessions for buyers from the sellers became very common in order to buy down the rate.

  • Interest rates hit their 2024 peak in April with an FHA interest rate reaching 7% and 7.5% for conventional loan.


If you were a VA or FHA buyer in the 2nd quarter, and you needed concessions of any kind, it was a lot easter to get them. Also, there were more properties hitting the market with assumable loans that have those low interest rates, so that option for buyers became very appealing as well.  Bottom line, despite the higher rates, there were ways for buyers to get into a home with a lower than the standard going market interest rate, plus, buyers had more choices due to the increased supply.


LOOKING FORWARD:

  • The leverage will sway in the buyer's favor, however, for the properties that are priced well under current market value, anticipate more offers and you might have to either increase your purchase price well above list price if you need concessions, or remove the concessions and offer list price or a little bit above only. 

  • It will be more common to see properties sit on the market much, much longer and that doesn't mean there is anything wrong with the home necessarily so don't ignore those properties. 

  • Also, if someone is asking way too much for their home, and it's been on the market for a while, don't hesitate to offer well below list price, as that seller might be ready to finally come back to reality and take your offer.

  • Also, the opportunity to buy with an assumable loan that carries a low interest rate will continue to be an option, as listing agents are proactively marketing those properties with those loans to attract more buyers to those properties.

  • If the assumable loan route really interests you, please reach out to me to talk details as there are many things we would have to go over to see if this route really makes sense for you. 

  • In Conclusion, buyer will be in the driving seat in quarter 3, but we need to get creative to get you, the buyer, a lower interest rate, which is possible for sure!

  • And as always, If you are planning on relocating to another state even though I would be sad to see you leave, let me know and I can help locate a great agent in whatever city that you are planning to move to. I will actually identify a couple great agents there, interview them on your behalf and connect you to that agent once I feel like he or she can serve you as I would here. (Bonus: I would stay involved over-seeing your purchase transaction on top of it for you and consult you along the way. That's if you value my opinion, of course.)  


Have an amazing 3rd quarter! Let me know if you have anything specific that you want to discuss with my team and I.  We are here to help you navigate through it all and yes, I would love it if you can refer me to anyone that is thinking about buying or selling in Southern California.Thank you in advance!


Cheers


p.s. Thank you to our repeat clients, Nadine and Federico Mendoza for this 5 start review! 









Comments


bottom of page