The new normal?
Nobody expected this year to be like this. The pandemic has changed everything in modern life, from sports to business, travel to recreation, and everything in between. While unemployment numbers have recovered slightly, around 10% of Americans are still unemployed and many industries are feeling the burn. We are witnessing the largest drop in US Gross Domestic Product (The total output of the economy) in at least the last 80+ years. But America is a resilient country, and as they say "this too shall pass".
While many real estate assets have remained strong in the face of this storm, Retail properties continue to show weakness as many small businesses have had to shut their doors and more and more people shop online. Simon Property Group, the largest owner of malls in America, reported earning this week and net profits were down 50% as only 73% of tenants were able to pay their rents.
In last months letter, we discussed the resilience of the Los Angeles single family market, where prices have only moved higher from pre-pandemic levels. Single family homes, especially in areas just outside of the main urban center are in very short supply, and buyer's desire for more space for a home office, increased privacy, and the prevalence of record low interest rates are keeping competition tight for these homes and prices high. Of interest however, is the spread between existing homes for sale and new construction for sale, which has widened significantly - meaning less people are willing to pay premium prices for new construction, and as a result many pricey new constructions continue to sit on the market. As a result, new construction continues to trend lower (although from somewhat high levels).
Another interesting point is the spread between single family homes on market and multifamily properties, which also continues to widen. Multi family properties faced some headwinds even before the pandemic as prices have been pushed higher for land while rents have remained relatively flat for existing buildings due to strict rent control laws. In addition, with so many unemployed it is unclear if many renters will be able to continue paying their rent. As a result we have begun to see market rents come down slightly especially for newer more expensive units. Lower incomes and increased supply has thus begun to mean slightly lower prices for multifamily assets.
One thing is clear, we won't be returning to the world as we knew it anytime soon. However, with chaos there is often great opportunity for innovation. With the pandemic chaos and the upcoming election, there is a lot of uncertainty right now, but pain and progress often go hand in hand so we at LA Creative Realty are very optimistic about the future. Many families are purchasing their first homes, our cities and freeways are less crowded, and global emissions are down nearly 17%. The housing market remains strong and rife with opportunity for both buyers and sellers, and smart investors will likely soon find opportunity that has not been present for many years.
Thank you for reading this letter and thank you for supporting LA Creative Realty. I wish you all continued health and happiness, and as always, if you are interested in buying, selling, or investing in any real estate, or just have questions, get in touch! I would love to speak with you!
Let's make it a great month!
Take care,
- Gabe
Featured Listings
5709 Burnet Ave - Sherman Oaks Elegant 3br 2ba home on a quiet and attractive street in Sherman Oaks. Convenient access to the 101 and 405 freeways, and located within two excellent school districts. Upon entering the home you will find real hardwood floors, a beautiful natural brick fireplace, and a spacious living room with a well constructed skylight to bring in plenty of natural light. Pass through the dining area and you will find a sizeable kitchen with beautiful oak cabinets, sparkling new appliances, large premium washer/dryer and vast storage space. The primary bedroom has a large and attractive en suite bathroom, also with extra storage space. The large tranquil backyard features impressive, low maintenance turf and has plenty of room to add a pool, ADU, or garden.
Have you had any thoughts of buying or selling a home or investment property?
LA Creative Realty is a boutique real estate brokerage firm. We combine generations of real estate and investment experience with modern technology exceptional client relationships and thoughtful investing to deliver the dream home for our Buyers, the best prices for our Sellers, and the best returns for our Investors.
#lacreativerealty #realestateinvestor #realestateagent #firsttimebuyers #homebuying #LosAngelesrealestate #fivereasonstobuyahome #sellingyourhome #investmentproperty #realestatebroker #Californiarealestate #MarketInsight #TheNewNormal
Aegis Management DBA LA Creative Realty Lic. # 01932663
All material presented herein is intended for informational purposes only and is compiled from sources deemed reliable but has not been verified. Changes in price, condition, sale or withdrawal may be made without notice. No statement is made as to accuracy of any description. All measurements and square footage are approximate. Equal Housing Opportunity.
Comentários