We are sure that people who are interested in Real Estate would be happy to find out how did COVID-19 impacts the housing market in Los Angeles. Well, if you are in a rush, we can quickly overview the information.
There are a lot of predictions that in June, July, and August period that there will be a lot of property buying opportunities as the sellers are trying to push through their properties even though earlier, they were a bit reluctant. However, the sales of new properties are still a bit down compared to prior years. The home sales are down from April, most likely because of the continued “stay at home” orders statewide. In May, home sales dropped hard, 45% from the year before. Sellers have either raised their asking price or pulled out of the market altogether. While realtors expected the summer months to be busy with reluctant buyers, it has been a slow go, although June did see 28% more in escrow than April.
The overall economy is going to make a difference in the real estate market, as it will in all markets. With the re-opening of more businesses, more people are starting to venture out and about as the stay-at-home restrictions are lifted, maybe there’ll be time to salvage what is left of 2020.
RTI Properties, Inc. property management experts are here to bring more insight on LA real estate and housing market and have your best interest in Los Angeles Property Management. If you want to find out more about the Coronavirus impact on the Los Angeles housing market, this article is a great opportunity to find out everything about it!
Following are the impacts of COVID 19 on Los Angeles Housing Market
» Coronavirus has pushed more lower Mortgage rates
» An abrupt Drop for LA Rental Market
» Single-family Housing Industry at Decline Stage
» Rise in Apartment Hunting
» Commercial Real Estate has experienced a 40% decline in leasing and investment sales since April
» LA Multifamily Expects Minimal Vacancies
» How is the Buyer & Seller Behaviour After Coronavirus Recession
» Where the Los Angeles housing market currently stands?
» Predictions for the Future of the Los Angeles Real Estate Market
Coronavirus has pushed more lower Mortgage rates
The mortgage rates are lower thanks to the decision by the Federal Reserve to slash its benchmark interest rate to almost zero, but is it enough to bring potential homebuyers out of hiding? With the economic uncertainty, will sellers put their house back on the market and will buyer attend open houses as stay-at-home orders are eased.
Related Article: Economic Impact Of The COVID-19 Pandemic In The United States
So, while the interest rates have dropped, mortgage lenders are getting tighter with loan approvals. Required FICO scores are going up along with required down payments. If you’re thinking about taking a home equity loan in Los Angeles, think again. Two major banks are not issuing new home equity lines of credit at this time.
An abrupt Drop for LA Rental Market
The unrelenting housing crisis of Southern California has been hit by the Coronavirus as if it needed another issue. The rental season was slow to start this year, the rental rates are still declining, and this isn’t helping the real estate investment market.
In March this year, apartment rent averaged $2,499, a drop from February rents of $2,524. Los Angeles legislated a rent freeze for its 624,000 rent-stabilized units in April, 2020 and evictions were banned. There is legislation in motion to make this statewide, but experts are concerned this is only a temporary band-aid for an epidemic that doesn’t show any sign of fading off into the sunset. Contact RTI Properties professionals for Los Angeles Rental Property Management.
Single-family Housing Industry at Decline Stage
The pending home sales dropped dramatically, with buyers and sellers both sidelined under stay-at-home orders implemented. In April this year, California home sales had a sharp drop as the market begin to get the full impact of COVID19, even though the median price in the state stay north of the $600,000 cost for the second consecutive month. The single-family detached house sales in April 2020 were down 25.6% from March, and 30% down from April 2019. That helped offset the recession-level decline of closed home sales and kept the overall numbers in positive. This month-to-month drop was the largest since 1979, so the COVID-19 has really made a huge impact in the Housing Industry and Property markets of Los Angeles and overall California.
Rise in Apartment Hunting
Some good news! In mid-March, according to Google stats, everyone was looking for ways to disinfect their home and set up a home office instead of looking for an apartment. By April, it seems that life was getting back to normal as apartment searches increased to the same level pre-pandemic, giving real estate investors a sign of optimism and encouragement for the rental market to move forward. In fact, the bounce-back and realignment of consumer’s apartment searches, in line with the typical seasonal trends, showed an increase of 17% since the drop in March, leading us to think the doom and gloom could be lifting as Americans get on with their lives. The number is still rising! No wonder, when the prices are going at least a little bit down, it is a perfect opportunity to find yourself a new place. Contact RTI Properties professionals for Los Angeles Apartment property management.
Commercial Real Estate has experienced a 40% decline in leasing and investment sales since April
The economy has been zipping right along the past few years for commercial real estate owners, brokers, and landlords. Then the Coronavirus came along. California Governor Newsom issued an executive order on March 16, 2020, requesting that lenders refrain on both commercial and residential evictions and foreclosures in light of the worldwide pandemic caused by COVID-19.
Those people that were making money fast and furious were blindsided by a crisis fueled by a pandemic that seemingly came out of nowhere. Has this changed the commercial real estate industry forever?
When commercial building owners experience unpaid rent or can’t rent spaces, it is a financial loss for them. If this pandemic crisis continues, certain patterns in real-estate usage could cause a permanent reduction in real estate value, even as the world re-opens, and life continues.
On the commercial side of real estate, numerous small retail businesses and restaurants have been forced close permanently, leaving that commercial space vacant. Corporate chains are either withholding or unable to pay their rent, using this time to have their lease re-written with a lower rent.
With online retail already taking a bit out of physical retailers, the coronavirus crisis helped them get an even bigger bite. Department stores that have closed during this pandemic may never re-open. That takes away foot traffic in shopping centers and malls, and that takes away potential customers for everyone else in those areas. Contact RTI Properties professionals for Los Angeles Commercial Property Management.
For the latest in Los Angeles Real Estate and Los Angeles Property Management news, trends, and housing market, make sure to stay connected with our blog at https://www.rtiproperties.com/blog/los-angeles-real-estate-market-outlook/
LA Multifamily Expects Minimal Vacancies
Economic and real estate experts were expecting approximately 17,000 multifamily units to become available by year-end, the highest amount for Los Angeles since 1990. Then the pandemic hit and changed everything, and the supply growth projection dropped over 20%. Today, an expectation for a drop of almost 40% and giving 2019 at a close 3.8% vacancy rate according to Los Angeles real estate experts, ParkRegency Realty.
Pandemics can bear a resemblance to unforeseen disasters like earthquakes, hurricanes, and terrorist attacks, and COVID-19 effects are still evolving and will continue revolving for some time. Experts say that we can’t and shouldn’t ascertain anything until the economy re-opens.
How is the Buyer & Seller Behaviour After Coronavirus Recession
Economists and real estate professionals are seeing that after this forced pause in life, home sellers are once again gearing up to sell their property as the economy re-opens. On the buying side of this, buyers are ready to grab a low-rate mortgage and lock in their monthly payments. What do the numbers tell us? If you want to see the real numbers, the 2020 NAR survey is as it follows:
- Buyer Behavior – Over 40% of the buyer delayed their purchase, and over 15% stopped looking because of job loss fears and stay-at-home restrictions.
- Buyer Expectations – Almost 60% of the buyer say they expect home prices to drop.
- Buyer Preferences and Search Criteria haven’t changed during this pandemic
- Seller Behavior – Fifty-one percent of NAR members report delays by sellers, while 17% are letting virtual communication do the selling for them.
- Sellers Listing Prices – Almost 75% of the sellers have been reported not to lower their asking price.
Indications are that sellers are delaying their home sales by several months. The first part of May saw more than a 10% increase in mortgage applications, and new listings of properties for sale increased by almost 6%. Home sales for ultrarich hasn’t waned as the $50-million homes are still on the move.
Related Article: Southern California Rental Market Outlook For 2020
Where the Los Angeles housing market currently stands?
In 2008, we were knocked to our knees as a country with a financial crisis that sent the real estate market into freefall. It was the ideal time for those who still had a job, credit, or savings to score on real estate purchases. Are we to expect the same from the COVID-19 economic fallout? Definitely, the coronavirus pandemic stated the country and its economy on a big pause, including the housing market of LA.
Since late March, when the world we put under stay-at-home order, the number of new home listings dropped swiftly, and restrictions on mortgage lending have tightened up. We have seen a nine percent drop in home sales across the country.
According to data from Zillow, you can clearly see how their pageviews were changing during the Pandemic. At the start of the COVID-19, when people dramatically were losing their jobs, the pageviews went down at almost 20%. As of April 15, the pageviews went up 18%, so this means that the housing market is not that bad after all.
Once this pandemic has passed, what does the recovery for the Los Angeles housing market look like for the future? Los Angeles is one of the country’s hottest real estate markets and has increased over 6% before COVID -19. While the home listings hit bottom just as the stay-at-home orders went into effect, they have started rising again.
Predictions for the Future of the Los Angeles Real Estate Market
In April and May, experts predicted that the summer months would see some great opportunities for house buying because of an overstock of inventory. Creating an excellent buying opportunity due to a backlog of inventory as sellers pulled out while the stay-at-home orders were active.
The construction supply chain has impacted that could lead to more upward pressure on home prices in Los Angeles, California. The unsold inventory is already seen at low levels, and reduced construction activity means that is likely to continue—especially when buyers respond to lower rates help to offset the effects of a slower economy and increased economic uncertainty. The situation remains fluid, and conditions could deteriorate beyond what is currently visualized depending on the severity and duration of the outbreak.
Overall, those predictions were on spot as buyers and sellers both were hesitant to enter the real estate market. The decline in new listings and pending sales both support this and with price drops in April and stay-at-home restrictions lifted this summer. Los Angeles Real Estate market would surge in new listings and it would potentially create a buyers market. Even now, you can see how 2020 real estate statistics are different from previous 4 years.
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The days are busy for everyone, and when you need more hands-on for property management, you need a company like RTI properties. We know what it takes to form a strong foundation between our clients and their tenants, and we are that bridge that makes that happen. With each relationship we have built over the last 30 years, we take pride and value each of our Residential, Commercial, and Rental Home Owners/Investors providing high-quality full-service property management in Los Angeles County. Contact RTI Property Managers or Call today at (310) 532-5994 to learn more about Los Angeles Housing Market and real estate trends and have your best interest in Los Angeles property management.