BHAUS EIGHT September 2022 Newsletter

Hello community,

It feels like we were just sending a “welcome summer” newsletter, and just like that, Labor Day has passed and the end of summer has arrived (although let’s be honest, in Southern California we live in an endless summer). Hope you made the best of it before the back-to-school routines and traffic. Our BHAUS team took advantage of some R&R, traveling to Mammoth Lakes, Merida (Yucatan, Mexico), Tulum, San Francisco, Seattle, Vancouver, Poland, and Croatia!

It was a busy summer selling season as well, for both our community of buyers and sellers. Our Hawthorne listing just closed $36K above asking price, and our client in Barstow just went into escrow. Meanwhile, our buyers are busy looking for the home of their dreams!

BHAUS EIGHT Properties:

SouthBay Real Estate.

Generally speaking, the real estate market has slowed down, but as we all know, different markets slow down at a different pace. Such is the story of our Southbay market. While we saw the overall average prices drop in August by 2% (-$30K) vs last year and 7% vs last month (-$100K), the majority of cities we report on experienced an increase in home prices (exceptions last month were Hermosa Beach and Rolling Hills Estates - these may be due to outliers).

While prices increased, albeit at a slower pace than previous periods, DOM (days on market) went up slightly, with the exception of Manhattan Beach, Inglewood (North), and Palos Verdes Estates whose DOM actually dropped; Gardena, Lawndale, and Rolling Hills Estates DOM remained unchanged versus same period last year. While we had seen an uptick in inventory at the beginning of summer, August new inventory dropped across all reported cities, and we are expecting inventory trend to remain unchanged given the expected Fall slowdown.

Regardless, particular cities remain a hot market with new listings coming up every week, especially those a little bit further from the sand.

Home Stats by City.

Below are the snapshots of average home prices, # Sold listings, DOM, # New listings by city, inclusive of all types of properties (ie: Single Family Residences, condos, townhomes) compared to July of last year.

Economy & Mortgage News.

While rates dipped slightly below 5% in early August, they started climbing the rest of the month. Currently a conforming 30-year fixed rate mortgage is averaging about 5.8%, hurting buyer demand and refinancing applications.

The good news is that due to high interest rates, sellers are re-callibrating their pricing and as mentioned above, average home price increases are happening at a much slower pace than previous periods. This means buyers can have a little break in pricing, while they still need to mitigate the high mortgage interest rates.

While inflation continues to stagnate overall spending, the jobs report suggests a strong labor market. According to C.A.R., although non-farm payroll growth tamed down in August, there still was a 315K gain in jobs, with unemployment rate increasing only slightly to 3.7%. Analysts are expecting the Fed to continue increasing rates to continue fighting inflation, so stay tuned for the upcoming Fed Meeting this month to discuss any further interest increases.

Investor Corner.

The 2021-2022 legislative session has ended in Sacramento, and with it, a few bills pertinent to real estate were defeated. C.A.R. opposed them all, as they were going to bring some detrimental value to home owners and investors alike. We’d like to pass along what those bills were for your information.

Below is the message of the C.A.R.’s President to our community:

SB 1105 sought to grant vast taxing and bonding authority to an unelected Housing Agency Board in San Diego. C.A.R. does not oppose housing agencies per se, but this agency would have paid for its housing initiatives with taxes that would have affected and increased the cost of buying and holding property. The Board could have imposed or put on the ballot, if required by law, several special taxes on real property. Taxing housing to pay for other housing makes no sense and would increase the already high costs of housing, making it more expensive for homeowners to keep their property in a challenging economic environment and make the properties less affordable to purchase. As the state emerged from the pandemic with a $97 billion state surplus, the Legislature agreed that solving California’s housing problems should not be placed on working Californians struggling to stay afloat and keep their homes in a tough economic environment.

SB 1026 would have created a burdensome energy-efficiency audit process that would have been required to be performed for each rental unit every time a unit is rented. Specifically, the bill’s author sought to require housing providers determine the energy efficiency of appliances and heating systems, as well as door, wall, ceiling and floor insulation. Housing providers are not energy-efficiency experts and, as a result, they would have been forced to seek costly professional assistance every time they rented a unit to accurately report the energy efficiency of each aspect of the unit.

AB 2383 would have, among other things, imposed onerous requirements on housing providers by requiring they provide an extensive written statement to an applicant if the applicant’s criminal history information is used as the basis for possible denial. The written statement would have been required to include copious amounts of information, including the applicable law providing the basis for each conviction. Most housing providers are not lawyers so they would have no practical way of providing all of this detailed information.

C.A.R., over the course of several months, provided feedback regarding practical implementation concerns with both SB 1026 and AB 2383. However, that feedback was rejected. Consequently, C.A.R. was forced to oppose both bills, which would have increased costs and liability on small housing providers during a pandemic, as well as made it more difficult for prospective tenants to secure housing.

Contact your BHAUS EIGHT team with any comments or questions!

To subscribe to our weekly emails of investor opportunities and our digital newsletter, please email Sonia directly at Sonia@bhauseight.com

From BHAUS to yours.