RE-Insider is looking at 2013 with short interviews with agents and brokers in California. Here is the first in our series with Howard Wood, Managing Broker for South Bay Brokers.
Q1. Where do you think the housing market is headed in 2013?
The housing market in the coastal areas of S. California shot out of the gates quickly in 2012 and has only accelerated with the low inventory of homes and an abundance of well qualified buyers. 2013 most likely will continue through the year with a limited supply of homes on the market and lots of buyers. The number of listings in the South Bay are down considerably (approximately 40%) from 2012, which was down considerably from 2011. There doesn’t seem to be any factor out there that will change this.
Q2. What sort of opportunities do you see with the low mortgage rates?
The low mortgage rates provide several opportunities – the most obvious is being able to qualify for a larger loan which means the bigger home or the more desirable location. For the homeowner, with all- time low interest rates, they can refi their mortgage to lower their monthly payment. One item I’ve noticed with clients and friends that have lowered their payments, they feel much better about the overall economy and have a more positive outlook.
Q3. Do you believe the rates will stay low? Are you seeing people rushing to buy?
I believe rates will stay low through 2013 but who knows after that. Buyers should take advantage of the low rates now and not wait. The economy seems to be improving at a quicker pace than most economists thought and rates won’t stay down for ever.
Q4. What kind of properties do you think we’ll see the most growth in 2013? (single family homes, income properties, etc)
The properties that are showing the most growth are – not surprisingly- the homes in the best locations. Beach cities, such as, Manhattan, Hermosa and Redondo Beach have seen great appreciation in the past year. Specifically, within these areas, the most desirable locations have appreciated the most. Also, investors are looking for the best return on their money and have been purchasing apartment buildings with large down payments and in many cases all cash. As a result, these apartment buildings are in great demand and appreciating quickly.
Q5. What has changed in the last few years in your relationship with lenders?
There are fewer lenders now and the larger Banks (B of A and Wells Fargo) have gained a greater share of the market. The mortgage bankers still provide a greater variety of loan programs for the borrowers.
Q6. How have you adjusted to the volatile housing market? Where do you turn to for help?
The largest adjustment that I’ve made in this volatile market is high level networking with agents at South Bay Brokers and peers within the business to find homes prior to hitting the market. I can no longer wait to see the new listings on the MLS. I need to find them for my clients beforehand. With inventory so low, it’s difficult to find the right home, so it is necessary to work longer and talk to as many people as possible.
Q7. What is one change that you believe needs to be made to the CA real estate industry in 2013?
The change that is needed most regards lenders and qualifying ratios for self- employed people.
It has been very difficult for self- employed to qualify for loans even when they have very large down payments. The lenders are making FHA loans with 3.5% down payments but are denying loans of 50% Loan to Value because the borrower’s tax returns don’t show sufficient debt –to- income ratio. Which loan is riskier to you?
Q8. What else would you like our readers to know?
Now is the opportune to time to buy a home because it is a strong market for both buyers and sellers. It’s a good time for the “step up” buyer – you can buy the larger home and know that if your current home is priced correctly, you can sell quickly. For the seller, there are well qualified buyers that can purchase and close quickly.
To contact Howard:
South Bay Brokers
1640 S. PCH
Redondo Beach, CA. 90277
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