My magic crystal ball has once again decided to remain cloudy….Here we are 10 days into the New Year and not much has changed from 2016… However If you have been reading news items home prices are a big topic. Mortgage rates zoomed up in December of 2016 only to zoom back down last week. Next week.. who kmows.
You can expect mortgage rates to rise in coming months as the FED sees some light at the end of the recession tunnel. I expect mortgage rates to jump around a lot as lenders try to figure out how much risk they are willing to take.There are a lot of lenders offering low down/no down home loans .. including some of the major banks. Depending on how well they manage these types of loans it could be good news for first time buyers.. or bad news for everyone.
Banks are sitting on a lot of cash they have not used to help their customers in terms of lower fees or higher savings rates. How they manage these funds will say a lot about what the future holds for consumers. It will be interesting to see if the new adninistration decides to allow banks/lenders to police themselves and removes existing consumer protection laws concerning mortgages.
Many changes in 2017 may be beneficial for home sellers and buyers. I have a number of clients who would sell property today if ithe capital gain tax was lower. There are a lot of rental properties both single family and small income properties that could well hit the market if the tax code changes a bit. If the administration changes the tax code about second homes you might see some of these properties hit the market if owners no longer have much of a tax advantage.
I believe home prices in the South Bay will continue their climb but at a slower pace. Inventory levels will influence prices in the coming months. Currently inventory is on the low side in all the Beach Cities. North Redondo, the most affordable Beach City, had very low inventory all year. . While Manhattan Beach, the most expensive Beach City, saw a large increase in inventory.
Last year inventory increased in Manhattan and Hermosa but remained low in Redondo and stable in El Segundo. The increased inventory in Manhattan Beach had an impact on the housing market.
Manhattan Beach Home Inventory 2011-2016:
Manhattan Beach saw a large increase in inventory in 2016. It also saw an increase in the number of sales over 2015.. 390 homes sold in 2016 compared to 359 in 2015. The median home price for single family homes, condos and townhomes for 2016 was $2,075,000 which was just slightly over the median price in 2015 of $2,060,000. The median price for a single family home in Manhattan Beach in 2016 remained the same as 2015 at $2,200,000. I think you will see inventory continue to move upward as there are a number of new home projects that have yet to hit the market. The spring selling season kicks off after the Superbowl. This is usually a hint as to market activity for the rest of the year.
Hermosa Beach Home Inventory 2011-2016:
Inventory rose in Hermosa in 2016 after years of few homes on the market. So far this year inventory in Hermosa is on the rise with 42 homes and townhomes currently on the market. There has been a rise in the number of small residential income properties on the market in recent days. 2016 saw 222 homes old in Hermosa compared to 224 in 2015 The median home price in Hermosa Beach moved up from $1,468,000 in 2015 to $1,560,000 in 2016
North Redondo Beach Inventory 2011-2016:
North Redondo saw a larger drop in home sales than any Beach City.. 487 home sales in 2016 compared to 529 in 2015. Low inventory definitely had a major effect on home sales. Multiple offers remained the name of the game for most of the year. While new townhomes were going well over a million dollars the overall median home price in North Redondo only went up slightly.. The median 2016 home price was $875,000 compared to $825,000 in 2015.
South Redondo Home Inventory 2011-2016:
South Redondo was quite different from North Redondo. While inventory remained lower than normal sales were good. There were 367 properties sold in South Redondo in 2016 compared to 343 in 2015. Home prices really shot up last year. The 2015 median home price was $881,000 only slightly higher than North Redondo. The South Redondo 2016 median home price was $1,039,000. A number of new construction projects as well as higher prices along the Esplanade accounted for much of the rise in vale.
Inventory in North and South Redondo remains on the low side. Redondo Beach has the largest number of residential properties as well as the most affordable in the Beach Cities. Low numbers of “affordable” housing for many buyers is a major issue. Increased inventory in Redondo Beach would be very welcome for the Beach Cities’ home buyers.
El Segundo Home Inventory 2011-2016:
El Segundo saw a big dip in home inventory this year after hitting a high in July of 30 homes for sale. The number of home sales in 2016 was almost the same as 2015.. 136 in 2015 and 134 in 2016. Home prices however took a major leap over 2015 numbers. The median home price in 2015 was $842,500. In 2016 the median price jumped to $1,075,000. The rise in tech companies in Playa Vista was a large factor. New restaurants are popping up in downtown which may be a response to change in the area demographics.
A new administration could bring interesting changes to the equation. If all goes as President -elect Trump wants we will see major changes in many industries that affect the real estate market. One of the major items the new administration has thrown into the arena is to reduce or get rid of many regulatory oversight programs. These folks seem to forget that one of the major promoters of the 2007 real estate crash was lack of oversight. Let’s hope history doesn’t repeat itself. on that one.
Personally I wouldn’t mind seeing banks breaking up into 2 separate types..Type 1 could only make home/small income property loans. Their major business would be consumer based and consumer friendly. Perhaps handling bank accounts for non-gazillionaires as a start. Type 2 banks could continue to pretend they are stock brokers and hedge fund managers. They could do major commercial lending and other high risk ventures… and if they made poor choices.. well no bank ios too big to fail…