Wow…what and active season it’s been so far! But there’s already signs of things shifting into low gear. Typically, the most active real estate market is between March and until about mid-August, but that doesn’t mean you need to stop whatever you’re doing to make some quick real estate decisions. The home buying season is about to shift in low gear but there’s still much to consider when deciding whether to buy, sell, or invest in real estate.
Buyers are in luck right now: By and large, this year’s home-buying season is a far better bet for buyers than in the past. At the beginning of the year I heard a lot of complaints about lack of inventory. I think that’s changed considerably in the last few months in virtually all of the South Bay.
Some areas which typically have low turnover were saturated with active listings: Hollywood Riviera (currently 32 active listings), Seaside Ranchos in Torrance (currently 10 active listings), South Shores in San Pedro (currently 10 active listings), Hermosa Beach (currently 66 active listings), Rancho Palos Verdes (154 active listings), Palos Verdes Estates (currently 98 active listings).
How about price range?
If you’re looking for a condo under $500k in the South Bay you have your choice of approximately 106.
If you’re looking for a 4 bedroom single-family-residence in the South Bay for under $1,000,000 you’ve got your choice of approximately 142 properties.
And what about interest rates?
They just sank to a 3 year low. The average rate on a 30-year fixed as of today is 3.70%….with projections of it dipping even lower. Lower rates give increased buying power to prospective homebuyers looking to purchase the average-priced home by the equivalent of 15%, meaning that they could effectively buy $45,000 ‘more house’ while still keeping their payments the same as they would have been last fall.
INVENTORY
Because there’s a currently healthy inventory of active listings in the South Bay you will see some languish into the Fall and, for many sellers, that means price reductions. Fall is typically a perfect time for buyers to find good deals and experience less competition with other buyers. However, this Fall makes it even more intriguing when you factor in attractive mortgage rates.
LOOKING FOR INVESTMENT DEALS?
If you’re looking for multi-unit properties Lawndale is still my number one pick. You can still find duplexes for under $650k and triplexes under $850k. San Pedro is an interesting prospect for commercial buildings. The development in the area has skyrocketed over the last couple years and the consensus is that property value (across the board) in San Pedro will move substantially in a positive direction in about 2 years. Rent control will shy away most investors from considering San Pedro but if you play it right you can find a good deal with fantastic cash flow.
ARE YOU BUYING, SELLING, or INVESTING?
The health of the real estate market is different in each of these categories. If you’re a BUYER and you’ve zeroed in on an area it would benefit you if you understood the dynamics of recent Active, Pendings, and Solds. NOW through January 2020 is a good time to put your search in high gear. Take advantage of those rates!
If you’re considering SELLING, keep an eye on recent Active, Pendings, and Solds in your neighborhood. Know what ‘area’ you live in and how it might differ from an adjacent communities in your city. For example San Pedro has nine MLS areas (South Shores, Palisades, Pt Fermin, Vista Del Oro, Holy Trinity, Barton Hill, Plaza, North SP, and Miraleste Pines) that are distinct and price differently. Look at those ‘market update’ flyers Realtors leave at your door! This will help you have an educated discussion with your Realtor when it comes time to list your home. It’s tipping to a Buyer’s market right now so pricing your home correctly is incredibly important.
If you’re thinking of INVESTING? There are 4 main types of real estate property. These are residential, industrial, retail and commercial real estate. Residential real estate is the safest type to invest in. This is because the rate of return is literally guaranteed. One of the basic human needs is shelter and people will always search for houses to live in. Thus, you are always bound to find tenants for your residential property. However, residential real estate has a lower profit margin when compared to the other types. Commercial, retail and industrial properties offer a more significant profit margin. However, there is a much higher risk of vacancy or no payment of rent during tough economic times. So, it’s important to know which type of property you intend to invest in as you consider this venture.
Bottomline: talk to a trusted Realtor to assist in helping your achieve your real estate goals.