In Long Beach, closed sales of single-family homes have decreased in recent months as inventory remains tight, with fewer new listings coming on the market, according to local real estate executives. With the holidays and an election year approaching, they expect similar trends moving forward.
“The last six months of last year and the first six months of this year were down significantly from comparable periods of time,” Phil Jones, owner of Coldwell Banker Coastal Alliance, said of sales volumes of single-family homes in Long Beach. Over the past 12 months, there has been a 1.7% increase in pending sales compared to the prior year-long period, but closed sales are down, according to Jones.
Jeff Anderson, CEO and founding principal of Anderson Real Estate Group, noted that sales picked up in October, but not significantly. Slowing sales are typical beginning around late fall through the winter, he said, adding, “Spring takes off as the selling season.”
“New listings are coming down. The number of sales is staying consistent. It’s just eating into the inventory,” Anderson observed. The current inventory of all single-family homes in Long Beach, including both detached homes and attached residences such as condos, is about 2.4 months, he noted. This means that if no new homes came on the market starting today, everything listed would sell out within 2.4 months, given current demand.
“In October there 19.4% fewer new listings that came on the market than in 2018,” Jones said, referring specifically to detached homes. “The single-family detached inventory was only 2.2 months at the end of October compared to 2.9 months in 2018,” he added. Jones speculated that fewer Baby Boomers may be listing their homes for sale because, even though they may want to downsize, the inventory is so low that they are unable to find anywhere suitable to move.
The median price of a single-family home in Long Beach at the end of October was $699,000, a 6% increase compared to the same month in 2018, according to Jones. The median price of condos was $398,000, a 5.1% increase.
While list prices are still increasing, Anderson noted that the final sales price of homes in recent months has been about 1-2% lower than the list price.
According to both Anderson and Jones, historically low interest rates – which for a 30-year fixed rate mortgage are now at about 3.75% – play a role in strong demand for homes. But low loan rates may also be at play in the slowing number of new listings. “Interest rates are incredibly low. We thought maybe that would open up the market to buyers . . . but instead what we saw was a humongous increase in re-fi’s,” Anderson said. He explained that more homeowners are re-financing their mortgages in order to invest in upgrades to their current homes.
As for next year, Anderson expects that the market will remain stable, if not a bit slower. “Traditionally, during times of uncertainty people tend to wait it out and see what happens. And it’s going to depend on if our [interest] rates are stable,” he said, referring to the fact that 2020 is a presidential election year. “I would predict maybe a slight slowing down in the market. . . . And pricing we think will just stay flat.”
Jones noted that housing affordability will remain a challenge for first-time homebuyers going forward. “Unfortunately they can expect pretty much a similar picture,” he said of 2020.
Jones sits on the boards of both the California Association of Realtors and National Association of Realtors, and pointed out that the organizations are lobbying for incentives to benefit first-time homebuyers. For example, “We allocated $10 million for signature gathering to get our Proposition 5 back on the ballot with tweaks to it,” he said, referring to a ballot initiative that failed last year. “Prop 5 allows for the portability of property taxes anywhere in the state, you can buy up or down, and you’d be limited to three times of transferring your tax base. . . . We believe that would create a tremendous amount of activity.”
Jones added, “The overall problem is we’re 3.5 million units short in the state. And if we continue to restrict the creation of new housing, it’s just going to get worse as we go on.”