2020 Year in Review | Conejo Valley
2020 started off on record pace with the spring selling season beginning in early February. Then March came and we all know what happened then. Even though we locked down for a couple months, real estate was considered an essential business so transactions were still happening, just at a much lower rate than we would normally expect during the spring months.
Then the shutdown was lifted and the floodgates opened.
All that pent up demand came pouring in. Multiple offers were common as we just didn’t have the inventory to keep up with the ever increasing demand. And why was demand increasing? The flight to the suburbs and record low interest rates. Working from home gave many the desire for larger houses with more bedrooms and bigger yards away from the traffic, crowds, and the stress that comes with city living. Hence the desire for the Conejo Valley.
The move-in ready homes often sold in days if not hours. However the homes that needed work tended to sit since most people working from home and homeschooling their kids didn’t have the time or desire to oversee a remodel.
In spite of the all the turmoil of 2020, home prices finished the year strong. The median price of a Conejo Valley home (Westlake Village, Agoura Hills, Oak Park, Thousand Oaks, and Newbury Park) ended the year at $879,500 up 4% from $842,500 vs. last December. Interest rates ended the year at about 2.75% down from about 3.7% last year.
What to Expect in 2021 | Home Buyers
Be ready to compete for the desirable homes. The consensus opinion is that 2021 will be as competitive as 2020. There are some things you can do to make your offer stand out.
- Be prepared to shorten (or remove) some contingencies.
- Have your lender fully approve you through underwriting so you can shorten or remove your loan contingency.
- For the hot homes, view the asking price as a starting point. Be prepared to offer higher than asking price on your initial offer.
The good news is we typically don’t see homes sell for substantially over asking price, but $10-25k over for a typical home is common.
One of the most effective ways to gain an advantage in this competitive market is to work with a local buyer’s agent who has established relationships with local listing agents. Active agents network with each other and share upcoming listings not yet on the market. Plus, when you’re competing, we’ll often help “guide” each other to help make the deal happen with an agent we know and trust.
Most importantly, don’t get discouraged. You may lose out on a home or two, but eventually, you’ll get an offer accepted. You may have to be willing to make some compromises, but it will happen.
If you are looking for a home, here’s a great place to start: Conejo Valley Neighborhood Tours.
Conforming Loan Limits 2021: L.A. County $882,375, Ventura County $739,450.
What to Expect in 2021 | Home Sellers
Yes, it’s a seller’s market. But that doesn’t mean sellers should automatically expect multiple offers way above asking price. Yes, that happens often, but I’ve also seen many homes miss the mark and sit on the market.
This market can make even the most seasoned agents look foolish at times. Some homes that were expected to take some time to sell or were perhaps over priced sold in minutes and some that were expected to sell in minutes sat on the market and had to accept a lower offer. You really just don’t know for sure until you put it out there.
Much of it comes down to condition, price, and neighborhood. If the home is in a popular neighborhood and is in good condition, but it’s not selling, it’s likely over priced.
If the home needs a full remodel, it will likely take longer to sell because the pool of potential buyers willing to oversee a remodel is substantially lower.
Plus multiple other scenarios. The point is, you need to know what you are selling and to what potential market of buyers and act accordingly with the best strategy to sell quickly and at the highest price point.
It’s still a good time to be a home seller. All indications point to another year of high demand and few homes for buyers to choose from. The Conejo Valley lifestyle and excellent schools continue to attract home buyers from all over the country and especially from our neighboring valley and cities. 2021 should be another great year for those needing to sell.
Read my blogs for sellers to help you prepare: Tips for Selling a Home
Diving Deeper | Moving on to 2021
The California Association of Realtors (C.A.R.) released its 2021 housing forecast.
Median home prices are expected to increase 1.3% in 2021 after about a 8.1% increase in 2020 and interest rates are expected to remain steady at 3.1%.
Last year, C.A.R. forecast an increase in median prices of 2.5% versus 8.1% (projected) in 2020 and interest rates were expected to climb to 3.7% but are currently closer to just under 3%.
The number of home sales is expected to increase 3.3% which is good news for buyers waiting for more inventory in 2021.
Strong Economy Forecast for 2021: Despite all the uncertainty and the short term impact felt by many businesses, the economy is expected to grow 4.2% in 2021 and unemployment is expected to drop from 8.8% to 7.1%.
(See: Current Local home prices)
Are there a flood of foreclosures coming?
There’s been a lot of online chatter about a flood of foreclosures rumored to hit the market in 2021 once mortgage forbearance expires. According to most economists, that’s unlikely to happen for several reasons:
- Homeowners have more equity than they had during the last market downturn.
- NINJA loans (no income, no job, no assets) are a fraction of the outstanding loans compared to 2007.
- Home prices are more in line with incomes than they were in 2007 making a bubble burst less likely.
- The government is on board with avoiding a foreclosure crisis.
Why Are There So Few Homes For Sale?
One thing that’s been consistent in the Conejo Valley over the last 8 years or so is the shortage of homes for sale.
On a national level, home building has not kept up with population growth since the Great Recession. Millennials are a huge generation that are now forming households and need homes to buy. The Boomers were expected to downsize in retirement freeing up the bigger homes for younger generations. That hasn’t happened.
Locally, the Conejo Valley has been built out for years. And as the flight to the suburbs gained momentum, the issue has gotten more challenging. Low inventory will continue to be an issue going forward in 2021.
The Bottom Line
The overwhelming consensus is that real estate will continue to thrive in 2021. There are still many economic and social challenges to overcome over the next year, but there are also many reasons to be optimistic.
From a local real estate standpoint, the challenges we face are much more skewed towards the buyer side since inventory will remain low. However, with interest rates at near record lows and all the positive aspects of living in the Conejo Valley, 2021 should be an excellent time to buy a home. Just be prepared to be flexible and patient!