With California’s Ever-Evolving Luxury Home Market: Is Now the Best Time to Look for Homes Up to $10 million?

According to Statista, single-family luxury homes in Los Angeles spent an average of 103 days on the market in the later months of 2019. Some industry insiders have predicted that 2020 will be a good time to buy a luxury home in Southern California, especially in the $2 million to $10 million range.

But the COVID-19 outbreak has influenced every segment of the homebuying market, including luxury homes. You can find homes with significant price cuts in many areas in Los Angeles and Orange Counties, including properties with prices cut up to 10% or more since mid-March 2020.

Some mortgage rates, like 30-year fixed-rate VA loans and 15-year fixed-rate VA loans, have decreased slightly following the Federal Reserve Bank’s lowering of its interest rate to zero on March 15, 2020. However, other mortgage rates, including conventional 30-year home loans and 15-year fixed-rate conventional mortgages, have increased even with the basic Fed rate being literally at zero. Even FHA mortgage interest rates have increased slightly, with approximately rate increases of .1 to .33% observed after the Fed slashed its rates on March 15.

So if you’ve been looking for a luxury home to buy, now may be a good time, especially in the $2 million to $10 million range if you’ve sold your home elsewhere. If you need a mortgage to buy your property, you will definitely want to work with an experienced home mortgage and a real estate professional to find the right home to buy. You do have a lot of choices right now and can look for the home you want in the right neighborhood, with the best mortgage deal. Virus fears shouldn’t affect your home search and mortgage process: every mortgage and real estate professional is working to conduct business virtually, including virtual home tours and signings.

Sources

https://www.statista.com/statistics/953484/days-on-market-luxury-los-angeles-california-by-type/

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Will the Corona Virus COVID-19 Crisis Affect Your Home Buying Plans? Learn How Virtual Selling and Open Houses Can Keep You Safe Today And Days Ahead

In response to the COVID-19, the coronavirus pandemic, California governor Gavin Newsom announced that as of March 19, 2020, all Californians should stay at home except for essential activities like shopping for food and going to the pharmacy. Open houses don’t fit the criteria of “essential activities,” so how is the real estate industry handling the COVID-19 crisis?

Virtual open houses

Realtors have offered 360-degree virtual tours of homes for a long time, and now these services are more important than ever. You can continue looking for homes online and see everything without any need to leave your home. You can stay in touch with your realtor using online services as well.

Some realtors are introducing video walk-throughs, which will help you to see homes in more detail than a virtual tour. Already popular, virtual tours and video walk-throughs are safe ways to continue your home search during the coronavirus emergency.

Real estate does not have to come to a halt

Across the U.S., developers are worried that the coronavirus pandemic will halt their projects. Only VA home mortgages saw a slight decline in interest rates when the Federal Reserve lowered the prime interest rate to zero in mid-March. Conventional and FHA home loans saw a slight increase in interest rates in 30-year fixed-rate mortgages, 15-year fixed rate home loans, and adjustable rate mortgages (ARMs).

Deals are still going through, but new listings are slowing or coming to a halt. People still need to move for work or personal needs, but the majority of real estate experts are predicting that the usual spring housing market won’t be happening this year.

If you’re a home seller, you aren’t risking anything by leaving your home on the market while changing to virtual tours and walk-throughs.

Closing deals is one of the main hurdles to continuing real estate transactions. With today’s technology, some closings can occur virtually/online, not requiring parties to the transaction to be in the same room. In California, virtual remote online notarization is still being considered by the state legislature, but COVID-19 makes this law much more of a priority.

You can still look for homes, apply for mortgage pre-approval, and consider listing your home for sale during the COVID-19 pandemic. This unprecedented crisis hasn’t stopped the real estate market, but it is likely to cause lasting changes.

Sources

https://www.silive.com/coronavirus/2020/03/rapidly-shifting-real-estate-market-canceled-open-houses-virtual-tours.html

https://www.cnn.com/2020/03/19/success/real-estate-coronavirus/index.html

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Buying a Home This Year? Discover the Secrets of Home Negotiations That Leads to Fruition

When a home goes on the market in a popular neighborhood, it can quickly garner many offers. How can you get the home you want to buy at a price you can afford if there are several offers, and some buyers are even offering more than the listed purchase price?

It turns out that purchase price isn’t the only criterion that home sellers consider when they have multiple offers to buy their home. They can consider other factors, including loan or appraisal contingencies, and will appreciate buyers who are flexible on needed repairs.

What factors will sellers consider when choosing between offers on their home?

Earnest money deposits: to prevent a buyer from making multiple offers to buy multiple homes, a deposit of money with a real estate brokerage or escrow company can secure your offer and show sellers that you sincerely want to buy their home. Your real estate agent will advise you as to the right amount of earnest money deposit, which can vary depending on the seller and on the current real estate market in the neighborhood where you want to buy. Just a side note: make sure your purchase agreement discusses how your earnest money deposit will be refunded if there are problems like a failed home inspection.

  • Write your best offer: work with your real estate agent to determine the best offer that you can reasonably afford. Especially in tight real estate markets, this can help you to be the winning offer when the seller makes their decision.
  • Get loan pre-approval: We’ve previously written about the importance of being pre-approved for a loan. Having loan pre-approval greatly increases your chances of your offer being taken seriously and accepted.
  • Prepare a counter offer: work with your real estate agent to prepare a counteroffer in case the seller requests one. Your agent has the experience to advise you in the counter offer process.
  • Don’t get into a massive bidding war: We get it — you fell in love with a house and you really want it. But you could fall prey to overbidding. Basically no homes are worth paying more than you can afford. Give yourself some backup home choices, and leave the bidding wars to the ultra-competitive people who will get caught up in the desire to beat the other guy at any price.

All of this can sound overwhelming. Working with a real estate professional who can establish a good working relationship with sellers and seller agents will be key to helping you buy the home you want at a price you can afford.

Sources

https://www.thebalance.com/multiple-offers-competing-home-offers-1798836

https://la.curbed.com/2020/1/9/21056801/buy-house-los-angeles-real-estate-market-2019

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