SUMMER OUTLOOK: REAL ESTATE HEADS INTO BUYING SEASON ON FIRM FOOTING

INMAN REPORTS: The US housing market, after understandably sputtering this spring due to COVID-19, is showing resiliency as the market picks up substantial steam all over the country. Realtor.com reported that after listings started dropping drastically in March, in the face of unknown science at that time, regarding the virus, the slowdown in listings bottomed out toward the end of April. The rapid response of both CAR, and NAR (California and National Assoc of Realtors), of quickly mobilizing both standards of protocol for showings and listings, but also disclosure forms for transactions to protect and inform both buyer and seller. Also effecting the return of transactions was Real Estate quickly being shifted into the “essential” category during the lockdown, where housing should be considered in any crisis. Zillow economist Skylar Olsen told Inman that the summer market is now considered, “Robust,” after sales bottomed out at a full 50% down compared with year over year. (More on that in next story). Having standards of personal protection for both the client and Realtor has made all the difference. The biggest challenge to the market is the same as before the pandemic and that is inventory. The tight supply seems not to have to do with COVID-19 panic any longer and has more to do with homeowners staying in their homes longer. If you need to sell, now is the time for optimal pricing. If you need to buy, you will never find a more equitable time for buyers given a sellers market. Why? Interest rates of course, remain very low. Pimco CEO states that inflation is such a thing of the past as we once knew it, that rates (the rate that banks pay set by The Fed), could remain low for years. That rate isn’t directly tied to real estate rates, but the 10 year treasury and bonds, which do relate to real estate should be closely aligned. 

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TIGHT INVENTORY, EVER RISING RENTS, KILLER INTEREST RATES, THE MARKET IS A LITTLE CRAZY

Tenants are struggling with 9 straight years of rent hikes, as we continue to have a housing crisis of epic proportions. That may sound dramatic, but we need housing, and more rental and cross economic levels of housing. We need it all; apartments, condos, affordable housing, single level, high rise density housing. But from where shall it come? Cities are at odds over development and density, price points remain an issue as the median housing price climbs again for unprecedented months continuously. Driven by equally historic low inventory across all of Southern California, and equally historically low interest rates, early February is seeing the lowest bond rates in 20 years, which if you’ve been following the market, is truly saying something, housing is hot. According to the Harvard Center report, the middle income renter, is struggling. (Exact numbers are in the next story). One lender, who is a monthly columnist for the Orange County Register, predicts a 25% minimum price adjustment, DOWNWARD, in the next decade. No one sees it now, but there may be a smidgen of truth or at least reality, in this prediction. Our affordability index is too high, for our median income ratios. Simply put, the general population will not be able to sustain or afford these high prices after the top tier quits buying. People still will need to sell, so logic says, prices will come down at some point as demand wanes and inventory increases. We’ll see.

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