Why get ready to jump now?


Earlier this week, home buyers found rates on 30-year fixed-rate mortgages more than an entire percentage point below where they saw them last year at this time. The difference between 2019′s 4.5% and today’s 3.25% can greatly reduce a monthly payment and total interest paid.

And for those who already own homes, the data firm Black Knight published data showing that over 11 million U.S. homeowners could save an average $268 a month—more than $3,200 per year—by refinancing mortgages that are at least a point higher than today’s almost-historic lows. Over 1 million of those borrowers were in mortgages with rates so high that they could save an average of $600 per month.

Some loan programs have been furloughed because investors and banks are girding their loins for a post-COVID economy. So why did rates on most of the programs that remain go down? During periods of uncertainly, people put more money into U.S. Treasury bonds, causing bond prices to go up, and yields—the interest paid on those securities—to go down. Mortgage rates tend to mimic the yields on 10-year Treasury notes, which have been falling. As yields drop, so do mortgage rates.

Take-away: You can lock-down a great rate for up to 60-days during your lock-down at home, while shopping virtually. Take as long as you want on virtual house tours! And be prepared to potentially jump on a post-COVID deal when the time is right.

The National Association of Realtors released the following statement today:

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Lawrence Yun, the National Association of Realtors Chief Economist released the following statement today:

“The Federal Reserve slashed interest rates to near zero, which should have a positive impact on the housing market. The monetary policy change is the same one applied a decade ago during the Great Recession – the lowest rates combined with quantitative easing. This is an all-out measure to prevent a recession and fight the fear that is blanketing the country. It is the right policy, since the policy can easily be reversed should a vaccine be discovered or the virus go away. 

“During the last recession, real estate was on wobbly ground with loose lending and too much supply. Today, there is no subprime lending and too little supply. The real estate market will hold on much better.” 

Keep calm and carry on (with your real estate plans).

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Earlier this week, mortgage rates moved to historic lows: 3.375% is being offered on a 30-year fixed Jumbo (up to $3,000,000) and 2.750% on a 15-year fixed conforming loan up to $510,400 (3.125% is offered on a 30-year fixed conforming loan). The welcome rate adjustment happened as COVID-19 spread, international oil prices dropped, and the U.S.’s stock market got pummeled. The stock market’s continued excitability (and reactivity to Twitter) makes real estate a sound investment for stuffing coffers. The median price of a single-family home in Los Angeles County was $650,000 in January, representing a sizable 8.5% increase over a year earlier, according to new sale numbers from real estate tracker CoreLogic. A median-priced condo cost $515,000, a more modest 1% uptick over Jan. 2019.

The number of properties on the market continues to dwindle, which keeps prices up. According to Zillow, only 14,216 homes were listed countywide in January—a drop of nearly 22% since a year ago. With fewer homes available for buyers to choose from, for-sale signs aren’t staying up very long. In January, the typical single-family home in Greater L.A. took 26 days to sell, according to the California Association of Realtors. That’s down a full 10 days from Jan. 2019. Statewide, the median home took 31 days to sell.

In other news…L.A.’s highest-end sales (over $20 million) marched along with 6 single-family homes closing in January: 9272 Robin Drive ($42,509,000), 9268 Robin Drive ($33,009,000), 1677 N. Doheny Drive ($25,950,000), 651 Siena Way ($24,000,000), 1116 Napoli Drive ($22,250,000), and 167 S. Rockingham Avenue ($20,833,500). The highest condo sale of the month was 1200 Club View Drive #8 for $9,400,000.

Into the Weeds

As more states relax marijuana laws, these legal changes are affecting the real estate industry on multiple levels, according to a new National Association of Realtors (NAR) survey released on Tuesday. The “2019 Marijuana and Real Estate: A Budding Issue” report says Realtors have noticed the legality of Mary Jane making an impact on real estate markets in various ways. In states where pot is legal in some form, 9 to 23% of Realtors polled said they believe residential inventory is dwindling for a few reasons, including the marijuana industry’s all-cash purchases. 12% noted that they’ve seen an increase in residential property values near dispensaries. 27% reported that they’ve seen a decrease in property value.
On the leasing side, about 50% of survey respondents operating in states where medical marijuana is legal reported having no issues leasing a property formerly occupied by a tenant legally growing pot—as long as the property had been modified and “restored.” In locales where both medical and recreational marijuana are legal, 49% of Realtors said they did not have difficulty leasing a former grow property to a new “grow” tenant.
NAR’s study also revealed the marijuana industry’s positive impact on commercial property demand, and in some areas, commercial property value (think Desert Hot Springs, CA—known these days as “Desert Pot Springs”). More than 40% of Realtors saw an increase in commercial property values near dispensaries in states where marijuana is legal.

Is Luxury on the Rise?


According to a report out this week, many rich home buyers laid low in 2019, as economic uncertainties turned purchasing in some cities into risky propositions. But don’t be surprised in 2020 to spot the world’s wealthiest people beginning to spend again as home prices in highly-desired areas stabilize—and even start to rise.

The global property consultancy firm, Knight Frank, sees “activity and prices increasing in some prime cities, but by smaller margins than in the past.”

Los Angeles’ sweet spot is in the $2,000,000 to $10,000,000 range, where Knight Frank predicts a 2% rise in sales prices in 2020. Despite some 9-figure sales in 2019, demand was “weak overall” for the highest of high-priced digs, says the report, and does not see that trend changing. The report cited “a more bullish outlook on homes priced below $10M.”

Paris leads the firm’s 2020 forecast for growth, with a 7% increase in luxury sales prices, followed by Miami (on the rebound to a 5% increase over 2019) and Berlin (4%), where luxury homes are in short supply. London’s outlook is almost flat, with a 1% increase expected in 2020, but that’s good news from their 3% drop last year.

The forecast is not glittering for everyone. Vancouver’s high-end sales figures are expected to drop 5% in 2020. New York may drop 3% due to a glut of inventory in the luxury space: To sell all the newly built condos in Manhattan at the current sales pace, it would take nine years. Knight Frank also sees a slight drop in Hong Kong’s market (2%), in part due to political unrest and trade wars.


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