Since the 2008 recession, no other event has impacted the Los Angeles real estate market as much as the COVID-19 pandemic. When quarantine began on March 15th, normalcy abruptly ended, and every aspect of our lives was turned upside down.
The nature of the virus disrupted every industry. Real estate was no exception and experienced low transaction numbers in March, April, and May.
We are now nine months into the pandemic. America has found ways to adapt to this new normal. Residential real estate has proved to be one of the few industries to not only survive this pandemic but thrive in it.
As inner-cities become less enjoyable during the prolonged quarantine, coastal locations have become significantly more desirable. To successfully navigate the dramatically changed coastal real estate market, we must have a grasp of the key changes and how to adapt to them. Let’s take a look.
1. Sellers Are in Luck
The prolonged quarantine is directly responsible for turning America’s residential real estate industry into an indisputable seller’s market. Supply outweighs demand nationally, and the resulting shortage puts sellers in an advantageous position.
During 2020, the median home sale price in America increased by 15%—the highest on record, according to Redfin. In a normal year, sale prices decline as the summer buying peak ends and autumn begins. But 2020 is not a normal year, and the market enjoyed a steady increase in national sale trends through September, October, and November.
“The luxury housing market normally takes a hit during recession as wealthy Americans tighten their purse strings, but this isn’t a normal recession,” according to Daryl Fairweather, chief economist at Redfin. High-end homeowners have the flexibility and financial capability to move, and there is plenty of incentive to do just that in a prolonged quarantine.
A glance at the data demonstrates this. According to a recent report from Redfin, luxury real estate sales in Los Angeles jumped 30.5% in the past year, with a 3.5% YOY increase in average sale price.
For sellers, the message is clear: sell now. If your coastal real estate is well suited to the pandemic—spacious, has a chef’s kitchen and a designated office area—there are plenty of buyers who would pounce on it to take advantage of a beautiful area while the city undergoes more closures. You would be rewarded with a higher sale price than in previous years and fewer days on the market, as the Los Angeles average decreased by 17.6% in the last year.
Additionally, the Los Angeles real estate market has increased competition from states with lower tax burdens, especially Texas and Florida. Although this hasn’t negatively impacted the coastal market in any meaningful way, it’s a fact to take into consideration. Hire a strong real estate agent today to guide you through a sale while the seller’s market is strong in Los Angeles.
Although the market is solidly in your favor during this time, reasonably priced luxury real estate is selling faster than others with aspirational pricing. Many sellers are coming into the market with well-priced homes, and they are negotiating with buyers. Buyers are looking at the history of aspirational-priced real estate (which hasn’t sold in recent years) and are taking that into account. This is important to keep in mind when determining a sale price with your real estate agent.
The safety risks posed by the coronavirus have resulted in necessary social-distancing, which has altered the way we communicate during this time. Fortunately, the business of real estate has successfully adapted to these changes with the help of technology.
Do away with risky in-person meetings and use video conferencing to communicate with your agent and prospective buyers. In-person walk-throughs can be eliminated as well. Thorough coverage of real estate with high-resolution photographs and virtual walk-throughs can help the buyer get a strong grasp of the place from a remote location.
2. Buyers’ Wants and Needs Have Evolved
With office, school, and general amusement closures, families now need their homes to function as a workspace, school facility, and entertainment center—all on top of the regular expectations of a home. People’s worlds have grown smaller during the pandemic, and homes now have to cater to more of their owner’s needs.
Additionally, the attraction of being centrally located in a city has been reduced. All bars, museums, and social clubs have been temporarily closed. Most restaurants offer only delivery and takeout options, as outdoor seating arrangements are threatened by possible future shutdowns.
With COVID-19 case counts rising nationally, this new normal does not appear to be changing anytime soon. Buyers have been reconsidering what they want out of their home as they prepare for the long haul.
The following are key features that make properties particularly attractive during these times. If selling, consider investing in these features. For buyers, be on the lookout for these highlights, as they will make a property sell quickly.
The greatest workaround in the time of social-distancing has been the internet. Meetings are held over video conferences. Children are schooled through online portals. People stay in touch with loved ones through FaceTime. Buyers need the internet to handle performing as the main work, education, and communication tool in their home. For sellers, installing a high-performance internet system could allow you to negotiate for a higher asking price.
Designated Office Space
This has become a must in 2020. Nearly everyone works remotely, and it's tiresome to make a bedroom, living room, or dining room also function as an office. Properties with a designated and outfitted office space gain more interest from buyers than those without.
Similarly speaking, many desire to maintain a semblance of an exercise routine. Constantly rearranging furniture in one of the living spaces for a workout gets old.
Properties with pools are the most attractive, but it’s not necessary to install one if you don’t have one. Completing simple renovations to make a bathroom more spa-like or arranging the basement to have an area perfect for exercise equipment will address this important need of prospective buyers.
3. Coastal Real Estate is More Competitive for Buyers
The flip side of a seller’s market is that buyers receive a more challenging undertaking. With higher demand and sale prices, buying coastal real estate is going to be more difficult than it was in recent years, but it is still far from impossible. There are strategies you can utilize to maximize your chances of success in this current market.
Know the Landscape
Wants and needs from buyers have changed dramatically over the past eight months. Real estate’s proximity to desirable urban neighborhoods is no longer a selling point, as COVID restrictions have reduced the lure of living in a city.
The new highlights for residential real estate in Los Angeles are space, elevated accommodations, and proximity to desirable outdoor locations. Luxury homes right on the cliffs of Palos Verdes are going to be much more competitive than others a little more inland on the peninsula. Similarly, homes with higher square footage garner high interest, as do homes in gated communities in response to the summer’s protests.
There is no harm in looking in a very popular area, but it’s worthwhile to broaden your search to find more possible options.
Be Smart With Your Strategy
Acknowledge buying coastal real estate during this time will be tough, so be prepared to pay for an asking price with less room for negotiation. If you begin a dialogue with a seller, move quickly. Present your highest and best offer first. Accept the inspection process might be less thorough than it was in the past.
If you’re buying from out of town, consider doing a virtual walk-through instead of spending valuable time traveling to the city and scheduling an in-person showing. The faster you move, the more likely you are to get the deeds of a coastal home.
Maintain a Healthy Perspective
These are tough times. We’ve all experienced dramatic change in the past year, and it’s important to prioritize a positive outlook. Buying coastal real estate is more challenging than normal, so be sure to remain centered throughout the process.
Focus on gratitude for the amount of time you currently have to spend with your family and for your health. Identify activities that help center you (yoga, meditation, baking) and incorporate them into your routine.
You will be able to navigate this buyer’s market if you remain balanced and work with a qualified real estate agent. With your commitment and a little luck, a beautiful home on the coast of Los Angeles will soon be yours.
Thinking of selling your Los Angeles coastal real estate or looking to buy? Please feel free to contact us today, as we’d be happy to guide you in selling your Palos Verdes home or show you available coastal real estate for sale in Los Angeles.