SoCal Multifamily Sales Pulse -July 25, 2021 - July 31, 2021
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Here's What's Happening In The Market, Here’s What This Means For You
Something Big Is About To Happen In The Housing Market
A crash in the housing market seemed inevitable during the early weeks of the COVID-19 recession. However, that bust didn't come to fruition, in fact, the opposite happened: A combination of government support, recession-induced low-interest rates, and eager homebuyers set off a housing boom. Since the onset of the crisis, median home prices are up a staggering 24%.
But much of that government aid and support is about to go away. The foreclosure moratorium, which prevents foreclosures of federally-backed mortgages, will come to an end on July 31. Then on Sept. 30, the mortgage forbearance program, which allows some borrowers to pause their payments, will lapse. Since the beginning of the pandemic, over 7 million homeowners have been enrolled in the forbearance program. However, as the economy has improved that number has fallen. As of July 11, there are still 1.75 million borrowers, or 3.5% of U.S. mortgages, enrolled in the forbearance program.
If even a small fraction of the 1.75 million homeowners currently protected by the mortgage forbearance program opt to sell instead of going back to repaying their mortgage, it could have a big impact on the historically tight housing market. According to the National Association of Realtors, there are only 1.37 million units currently available for sale. Over the past four decades, the U.S. has averaged 2.5 million units at any given time. This year, housing inventory hit its lowest level since the data started getting tracked in the '80s.
"High positive home equity among delinquent homeowners results in lower likelihood of foreclosure since people can refinance or sell the home to avoid defaulting on their mortgage," says Nik Shah, CEO of Home.LLC. Those who do choose to sell are unlikely to shift the market. The forecasted uptick in inventory, he says, "isn't much given that inventory is at a 40-year low. So, we project that home prices will continue to grow rapidly even if the forbearance program ends."
Orange County multifamily had 15 Closed Sales Last Week. All Closed Sales Last Week were 2-4 unit buildings. The majority of the closed sales sold in 45 days or less with one sale on the market for 427 days. There were 6 closed sales in Santa Ana. The rest of the sales were split amongst different cities throughout Orange County.
The big story this week for Orange County multifamily is listings and Months of Inventory. With 15 New Listings Last Week there are 156 Total Number of Active Listings. But the Months of Inventory moved from 3 months to 4 months. This means over the last 30 days the Absorption Rate has increased and listings are staying on the market longer. The Active Listings, Dollar Volume moved over $500,000,000 for the first time in over a month.
Long Beach multifamily had a total of 6 Closed Sales Last Week. This matches a couple of the recent week’s low points in closed sales for Long Beach. Closed sales were split between 2-4 unit buildings and 5+ unit buildings with 3 in each building size. Most of the sales occurred in 12 days or less and one property took 416 days to sell. Without this one sale increasing the days on market the Average Days on Market would have been just 21 days.
With 14 New Listings Last Week that was the highest number of New Listings we’ve seen in over 6 weeks. This increases the Total Number of Active Listings to 106. Months of Inventory doubled from 3 months to 6 months.
Los Angeles County
Los Angeles County multifamily Closed Sales Last Week totaled 93 closed sales. This is below the prior week's sales (101) but still about average for LA County. The Closed Sales - Average Days on Market increased to 49 days after the prior weeks increase to 45 days. Less than a month ago the Closed Sales - Average Days on Market was below 40 days. Still, the majority (49) of the Transactions Sold At or Above Asking Price.
With 133 New Listings Last Week and 85 Expired Listings Last Week the Total Number of Active Listings dropped below 1,800 again. Months of Inventory remained at 10 months.
San Diego County
San Diego County multifamily had 17 Closed Sales Last Week. 11 of the 17 closed sales were in the city of San Diego. Closed Sales - Average Days on Market remained low at just 27 days. If you remove one property that took 187 days to sell then the Closed Sales - Average Days on Market stat drops to just 17 days. There were only 3 Transactions That Sold At or Above Asking Price. This figure is usually half or slightly more than half of the total closed sales for the week. There were 9 duplex sales and 8 fourplex sales.
There were 25 New Listings Last Week in San Diego County. This is about average. But Months of Inventory went from 12 months previously to 16 months currently. There was also an increase in the Total Number of Active Listings to 211 listings. An overall increase and on the high end for San Diego County.
Not much happening in Riverside County multifamily this past week. Riverside County multifamily had just 4 Closed Sales Last Week. This ties the lowest amount of weekly closed sales 3 weeks ago, when there were also only 4 closed sales.
With 7 New Listings Last Week the Total Number of Active Listings dropped below 100 for the first time in several weeks.
San Bernardino County
San Bernardino County multifamily had 8 Closed Sales Last Week. This is a little on the low side for closed sales in San Bernardino County. The Closed Sales - Average Days on Market was 50 days. Higher than typical. It’s usually around 25-30 days. Transactions Sold At or Above Asking Price was about normal with half (4) of the closed sales selling at or above asking price.
There were just 7 New Listings Last Week. This is way below normal. A typical week see somewhere between 12-20 new listings. Months of Inventory went from 7 months to 9 months. The Total Number of Active Listings was up just1 to 144 total listings.