Homeowners in California are being encouraged and incented to build Additional Dwelling Units, or ADUs, but aren't landlords evil? It seems like the whole of government is attacking landlords. Does
Zillow Shifts Focus - Will You Still Rely on Them for Real Estate Info?
Dated: February 12 2024
I really don't want to make my real estate news review all about Zillow, but they are both the largest real estate company in the US based on market capitalization AND they have just stopped sharing data and replaced it with a constant stream of real estate that can only mislead buyers and sellers. Not sure how that works in the long run, but it is shocking.
Before we get into that, however, let's review where the market is to take their comments in context.
I maintain there are 2 most critical statistics to understand the real estate market. On the buyer demand side, the interest rates. And on the seller or supply side, the months of homes available for sale, or inventory.
So, on the buyer demand side, mortgage rates closed slightly at 6.98%, maintaining the dramatic reversal of rates of the prior 7 month. Just a few weeks ago rates broke over 8% and some economists predicted we were headed higher, and yet here we are almost 1.5% below those levels.
Inventory opened the year at a record low for a year other than during the pandemic, 7% below the record lows of last year. As I have repeatedly said, as long as inventory is low, prices cannot go down much.
Locally, in Los Angeles, the market inched higher slightly towards a seller's market at 40. The key statistic that tracks with that change is the cost per square foot for a property, which has returned to $843 a foot after falling below $800 for the past few months.
So, in this week's survey of real estate news headlines, lots of fun stuff!
If you notice the changes in Los Angeles real estate development, you will notice the strong drive to high rises, rentals, and located centrally near mass transit. This is NOT want buyers want, but what the politicians dream of. I recently saw an example of what that looks like with this apartment in China where over 20,000 people live in one large rental unit.
Is there where you would want to live? It would take an authoritarian government to force people into this type of housing, in my experience, unless they can convince us there is no alternative.
I think we all have seen the decline of news, as the younger generations would never watch televised network news, and even the websites for these news organizations is imploding. Here is a graph showing the drop across the news industry.
Since these sites are decreasing their resources and quality, real estate oriented websites will become more important, yet seem to be at this time poor sources of information.
Redfin attempts to combine both their political activism with dishonest bias in their latest "survey" titled "One-Third of Real Estate Agents Worked With Clients Who Relocated Due to Local Laws or Politics in 2023."
First, I talk to lots of people who have relocated, and yes, many talk about laws and politics, but in each case they moved to an area where they ended up with way more home for less money than where they moved from. In most cases, they moved from over-priced real estate in California to buyer a larger home or to be able to buy a home in Nevada or Texas or Florida. So, while the survey may include a desire to avoid certain laws, the reality is much more economic drive.
Second, Redfin has to try to dump on Texas with a hidden knock on its more conservative policies when it quotes a "Redfin Premier Agent," another name for paying customer, as saying "10 people who have moved away from Texas in the last year, mainly because they don’t agree with state laws,” Vallejo said. “They all moved to the West Coast, to blue places where the policies align better with their personal views, specifically when it comes to women’s reproductive rights and LGBTQ rights.” This is the goal of the article, for Redfin to again engage in politics rather than inform its customers. Because while there may be a few people who moved from Texas to California for political reasons, overcoming the enormous financial costs, the reality is that more people move from California to Texas, and Redfin would NEVER allow the direction of the flow to determine the popularity of policies. Really, what they want to say is that principled buyers are leaving Texas, but the larger number of people moving from California to Texas have no real principled reason to move. They are careful to identify the reasons moving from Texas are social and principled, where moving from California is mostly for business. But, they key point is , there is no data to support ANY of this. its merely political opinion with an activist perspective.
As one of the downfallen standard media sources of the past, Fortune, continues to focus shoppers to resentment rather than responsibility with their latest article "‘Disenfranchised’ millennials feel ‘locked out’ of the housing market and it taints every part of economic life."
Notice the recurring theme in the news, that millennials, or whoever the "victim" of the story is about, is "locked out" and "disenfranchised." No one locked them out, its just that they need to make and save more money, spend less, and/or settle for a less expensive home if they want to buy, but rather than help people with options, it gets more eyeballs to blame "them." This article is behind their paywall, but from the title we can see its not worth paying for.
When we watch the interest rate market, one of the most important factors changing the interest rates is the jobs numbers, with more jobs causing rates to rise. And yet, it appears that our government is purposely overstating the jobs numbers every month and by a large number.
The result is that jobs are overstated, rates rise, then the government corrects the error, and rates go down a bit, and this has gone on for the last few years. This is why it is important to play for the long term rather than try to outguess the market.
For some reason, Zillow had a worse week than normal, with 4 articles that I think are worthy of mockery and scorn.
The first, now Zillow is helping to give up on the American dream of owning a home by offering indivual rooms for rent as listings on their service.
Rather than help is readers learn how to improve themselves financially, and as you will see in the next few articles rather than educate their readers on how to buy homes, here Zillow is now not just listing rentals but even rooms for rent. This is the classic mistake of trying to be all things to all people, and not doing any of them particularly well.
Zillow continues the blame game approach with their admonition not to blame the Fed for high mortgage rates.
So, who should you blame? Well, I don't know you can blame anyone, the rates are just the rates. Theoretically, the Fed is supposed to adjust interest rates to the money supply, not to strategically pick a rate that they like or think is appropriate. And who do they really blame for the high interest rates. If you read the article, the "problem" is the strong economy, which is how it is supposed to work. The one thing that neither Zillow nor CNBC not the press want to say is that while the overall economy is strong, the benefits are flowing to a small percentage at the top of the economy and those at the bottom getting government handouts, but the vast majority of the economy does not feel the economy is strong, hence the lower sales of homes and cars. Its really that simple.
And finally, to show where Zillow has really stopped paying attention to the real estate market, they claim to predict the "5 Hottest Home Trends That Homebuyers Will Be Looking For."
So, what are these 5 hottest trends the Zillow says homebuyers are looking for? They are:
- Cold plunge pools
- Murano glass chandeliers
- Sensory gardens
OK, all 5 are nice, maybe really nice, But let me be clear, less than 1% of all homebuyers will buy ANY of these 5 items. ANY of them. This content is just cute puffery that will allow them to advertise to providers of those items but do NOTHING to help a homebuyer looking to buy a home in 2024, or at least 99% of them.
So, what should YOU do?
If you are looking to buy a home and live there for a while, real estate has always been a great long-term builder of wealth and there is nothing to suggest that is changing if you can afford the home.
If you want to move or downsize, it's still a great market to sell, but a bit more challenging than in the last few years.
Finally, if you can find a property that will give you cash flow, this is a great time to get solid cash flow and enjoy the tax benefits of real estate.
How can I help you? Call, text, or email me.
Broker Associate, BRE 01022275
Certified Probate Expert
Direct: 310-210-0008 , Bill@TheLAProbateExpert.com
Born in Santa Monica, raised in Orange County, I have lived in the Inland Empire, San Gabriel Valley, South Bay, and for the last 20 the Westside of Los Angeles. I have been in real estate for over 30....
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Lawrence grew up in a coal mining town in Pennsylvania before his family moved out to Los Angeles when he was 11 years old. He earned an academic scholarship in accounting at USC and founded his own