My quick life update before my market update (if you are not interested in my life shenanigans, scroll down to the good stuff below).Â
My parents and one of my nieces from NJ came to visit us. My 3 year old, Adylina, started a new school and I had the pleasure to have my kids see me speak for the first time, so, of course, I brought them up on stage! :)
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:Â
NEW INFORMATION
Insurance is the BIG issue in CA. There is hope that a huge reform will take place early in 2025.
ABC10 has it very well documented in terms of how we got here, what's being proposed to mitigate risk, and how to bring back sustainable insurance strategy in the near future in this newly released Special Investigation: ABC10 Report
INFORMATION PREVIOUSLY PROVIDED IN MY REPORTS:
Fixing up a House in CA requires New Disclosures:Â
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.
Here are the details about the bill in a well laid out blog format:Â https://www.biggerpockets.com/blog/california-law-changes-disclosures-for-home-flippersÂ
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:
Attorney website I found that provides lots of details about all the changes:Â 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, 2023Â
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
OTHER USEFUL RESOURCES:
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
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:Â
LOOKING BACK:
3rd quarter brought back some hope in terms of interest rates, which did result in more demand from buyers temporarily as they were trying to take advantage of the lower rates, so this was good for some sellers, not all, because the luxury market was sluggish even with the lower rates.
We ended September with 5,292 active properties on the market. For comparison, we were are 4,761 active properties on the market at end of June and at 3,209 at the end of March. That's a 11% increase from June to end of September! Â
The gap between New Listings and New Pending Sales has been growing for the last two quarters, hence, why the inventory continues to trend up. The last time we experienced a similar gap was back in May-Nov of 2022. (see image below)
If we compare data to September of 2023, we can see that attached homes had the biggest increase in inventory by 71% versus 37% for detached homes in September of 2024. The median price for attached homes was still up 5.79% compared to last year at end of the 3rd quarter but detached homes median price value did dip by 2.12%.
To sum it up, 3rd quarter started more as a buyer's market, then with rates dropping, it evened itself out a bit in general, with some properties even receiving multiple offers, but it was all due to listing your property right and not over the market value.
LOOKING FORWARD:
Here is what I stated in the last report:
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.
Well, we got very close to the 5,500 mark, ending the 3rd quarter at 5,292 as mentioned above. So with rates going back up over the last few weeks, I do anticipate a dip in values in the 4th quarter. It might not be the 10%-15% like two years ago, but somewhere around 5% to 8% is my prediction. What saved us was the dip in rates back in September.Â
We only have 2 months left in the year and the market usually becomes very sluggish around this time of the year anyway due to the holidays, so if you want to list your home, do it now and if you don't get any favorable offers, then, I suggest you pull it off the market mid-December, right before Christmas and re-list in the second week of January, which is usually when the market starts picking up a bit again. You don't want to keep racking up "days on market" during the holidays as that only works against you as the seller from a buyer's perception stand point.
BELOW STRATEGIES I RECOMMENDED IN MY LAST REPORT APPLY FOR THIS QUARTER:
Pricing your property below market value is still 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 elevated rates and home values.
Offering concessions to help buyers buy down their interest rate is strongly recommended as well.Â
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. Â
NOTE:Â 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 in the 4th quarter, but I also don't anticipate the inventory to climb too much because a lot of people hold off from listing their homes in the 4th quarter. I don't anticipate the rates dipping again, which would be the only thing that would potentially get more buyers off the fence like it did back in September.
Lastly, the NAR settlement changes have been in full swing and the impact is not as bad as some were anticipating. The sky did not fall! Realtors are not able to advertise that the seller is willing to pay the buyer agent's commission in the MLS so it had to be communicated agent to agent on the phone. Most sellers were open to paying for the buyer's agent commission, which I strongly advised my clients to consider it as well. It was bringing the most qualified buyers to the listings because some buyers were not able to afford to pay their agent out of their own pocket as an additional closing cost.
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 is open to paying a fair buyer's agent commission with acceptable offer terms and price"Â
This has 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.
Data is showing us that most sellers were paying 2% to 2.5% to the buyer's agents in Southern California.
If you are planning on buying or know someone that is:
LOOKING BACK:
Buyers still had leverage overall in the 3rd quarter of 2024 as the market stayed level.
Interest rates dropped by almost 1% in September, which created a great opportunity. The last time rates were that low was back in February of 2023. Some buyers did take advantage of it and had plenty of inventory to pick from since inventory has been rising steadily over the last year.
The buyer activity definitely picked up in September, and, in some instances, buyers were competing against multiple offers, which led to properties selling a bit over list price.
If you were a VA or FHA buyer in the 3rd quarter, and you needed concessions of any kind, it was still easy to get them in the first two months of the quarter, but in September, concessions were harder to come by.Â
Properties hitting the market promoting the low interest rate assumable loan did reverse course, so that option for VA and FHA buyers was not as common. Â
If you want to learn more about VA and FHA assumable loans with 3% or even lower interest rates, watch the training and Q&A that I did with a good friend, Craig O'Boyle from Assumption Solutions:  https://www.youtube.com/@Assumable-SalesÂ
LOOKING FORWARD:
The leverage will be in the buyer's favor as we get into the last two months of the year.
This is a perfect opportunity for buyers to ask for credits, concessions etc, and most sellers that have to sell this year will be open to giving in to your requests because the overall buyer demand will diminish due to the holidays.
Also, buyers will have a lot more choices since inventory continued to increase for the last 6 months.
It will still be very common to see properties sit on the market much, much longer and over-priced and that doesn't mean there is anything wrong with the home necessarily so don't ignore those properties.Â
For example, we just got a client into a property at $1.1million even though it was way over priced and listed for months at $1.3 million. Â
Also, the opportunity to buy with an assumable loan that carries a low interest rate will be back as an option, and listing agents will be proactively marketing 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.Â
In Conclusion, buyers will be in the driving seat in quarter 4, but we need to get creative to get you, the buyer, a lower interest rate, which is possible for sure! 4th quarter historically is the BEST time to buy because you have a lot less competition and sellers that need to sell are willing to bend quite a bit.
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.) Â
Have an amazing 4th quarter, Enjoy Thanksgiving, Christmas and New Year's with your family and friends!
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 investor client, Jeff Kiu for this 5 start review!Â
Comentarios