As median price points of single-family homes continue to rise, sellers remain at an advantage while buyers engage in bidding wars for the few properties available within their price range.
The median price of a single-family home in Long Beach as of March was $640,000, according to Phil Jones, owner of Coldwell Banker Coastal Alliance. Jones called the increase – 6.8% higher than March 2017 – moderate in comparison to the double-digit price gains that have occurred over the past few of years. “I’m actually blown away by how moderate it is,” he said.
The reason for Jones’s surprise is that the inventory of single-family homes available for sale citywide is only enough to meet about two months’ worth of demand. In other words, if no new properties were listed today, all the homes currently on the market would sell out within two months. Historically, the average inventory in Long Beach was six months.
“With inventory so unbelievably tight and interest rates moving up, I think that’s going to ease a little bit of the demand, but not enough to really cool the market too much,” Jones speculated.
New listings for single-family homes decreased by 14.5% from March of 2017 to the same month this year, Jones noted. “The sellers that could move can’t because they can’t find a replacement property,” he said.
The inventory of condos available for sale is just over a two-month supply, he added. The median price of condos for sale in Long Beach was $382,450 in March, a 20.6% increase from the same month in 2017.
Jones attributed the high price appreciation of condos to strong demand for entry-level properties. “The demand is really pushing the condo [market] because of the price ranges, typically,” he said.
Eileen Rivera, owner of Bixby Knolls-based boutique real estate firm The Rivera Group, said that sellers are in a stronger position than ever when it comes to home equity. “I think we’re all kind of holding our breath a little bit. Like this is so wonderful, [but] how long is it going to last?” she said. “For buyers, it’s hard. The flip side of the coin of single-family residences in the City of Long Beach is it’s hard for someone to get their foot in the door for the first time.”
There are many more buyers seeking entry-level homes at lower price points of $500,000 to $600,000 than there are buyers looking for high-end homes, Rivera noted. “If you’re a first-time buyer and you’re struggling, you need a plan,” she said. “The last five properties we put on the market had multiple offers in the first four days.”
Jones said buyers often have to contend with bidding wars. “We keep hearing all sorts of stories about buyers’ frustrations competing with multiple offers in just about every situation,” he said. Only 23% of first-time homebuyers can afford the median-priced entry-level home, he said.
Homes priced at $1 million and above are not selling as quickly, in part due to tax reform, according to Jones. “The new tax reform impacts that price range pretty severely with the limitation on mortgage interest deductibility,” he said.
“I have concerns going forward because of the ongoing inventory shortage. We have such an affordability issue, and we really have a supply problem in this state,” Jones said. “We’re in the middle of a housing crisis, and Sacramento does not seem to be responding to it quickly enough or significantly enough. And it’s only going to get worse. That’s why we have these moves for rent control. We need more supply.”
However, Jones added that Long Beach is fortunate in that there are new residential units being built throughout the city. “That’s really unusual across the state,” he noted.
Despite affordability challenges, Rivera pointed out that Long Beach is a city with momentum and a good place to invest in real estate. “What I think is wonderful for our city is the pride of ownership and the improvement we have seen in some of what used to be the outlier communities,” she said. “When I came to Long Beach in 1981, walking down the street of Retro Row then and walking down the street now – it is night and day.”
Rivera added, “You can see the growth and the pride that’s coming to Long Beach. . . . I think the signs are everywhere that this is a great place to invest, a great place to buy.”