After speaking with colleagues, management, lenders, title/escrow officers along with our own experiences during this turbulent time, I thought it would be prudent to put together a summary of pertinent information on the Los Angeles residential real estate market as of 3/26/20–
Market Update-
*Despite a shut-down of open houses this past weekend and most brokers highly discouraging any in-person showings, 25+ deals went into escrow this week between four Westside Compass offices…quite a few with multiple offers and new to the market. This was surprising to management but also another sign of the lack of inventory we have faced over the past couple of years coupled with low interest rates.
*The vast majority of deals that went into escrow were “entry level” purchases for a neighborhood. For example, homes around $2M in the Palisades or $1.4M in Mar Vista. The “high-end” level of homes are not getting near the attention.
*Across the board in Los Angeles, Compass has had a surprisingly low rate of escrow cancellations. Deals are sticking together but a handful (5%) are seeing some buyers try to re-negotiate the sales price before closing escrow. In some cases the tactic has worked while in others the seller has initiated cancellation escrow instructions with the intent of keeping the deposit. Overall, the deals are making it through escrow with the normal back and forth re request for repairs, though buyers are definitely being sticklers when it comes getting their requests taken care of.
*New listings started decreasing a few weeks ago and are probably off about 70% this week (educated guess), compared to the normally busy spring season. This will undoubtedly be the case until some sense of normalcy is restored. Once that happens, we may very well see quite a few listings between those held off to sell and those forced to sell.
*Preliminarily, our real estate executives are predicting a 10-15% initial price correction. However, this number is shifting on a weekly basis at this point and doesn’t take into account the recent surge in the stock market.
Lending-
*The big banks which do the majority of loans on Westside/South Bay, are operating as business as usual when it comes to standard purchases. The rates for a 30-year jumbo mortgage are typically around 3.25% and the 7/10 year ARM’s are in the 2.5/2.75% range. However, the secondary loan market has dried up, especially when it comes to jumbo products or loans that are more difficult to qualify.
*The surge in re-finance applications a few weeks back has created enough of a backlog that many lenders have increased their rates to slow down demand. It was described multiple times as a “bit of a roller coaster”. That said, if a homeowner is willing to contact a variety of banks, they will be able to find someone who is beating the market…it literally shifts from day to day.
*Most big banks have agreed to defer mortgage payments for those directly impacted by Covid-19. Article-
*Appraisals are still happening. With many homeowners not wanting the appraiser to enter their home, appraisers are walking the outside of the property, asking to see through windows and then having the homeowner take interior photos and e-mail them.
Title-
*Title companies can close escrows electronically but the county recorder office is otherwise closed and is not having any in-person meetings.
*The grant deed and loan docs are still required to be notarized in person. Some states have figured out ways to complete this process electronically by video, but not California. Some traveling notaries are working but people are advised to schedule signings as soon as possible.
Construction – Jobs considered “essential”
*As I write this, Construction/remodeling of homes is considered essential. Most city permit officers are working but at a slower pace so be prepared for delays. Landscaping/gardening/pool service/moving companies are all considered essential.
Rental Properties
Here is a link to the city of Los Angeles web-site explaining their eviction moratorium.
We hope you and yours are doing well and are safe during these difficult times. Please feel free to reach out if you would like to further discuss or just catch up...we can chat in-between my attempts at kindergarten and pre-school teaching sessions…:).
