It’s easy to assume that every part of the economy has been badly harmed by the coronavirus pandemic, but that is not the case for Orange County real estate — particularly in real estate sales, services, and new home construction. While the Orange County housing market did briefly stumble in the early days of California’s stay-at-home orders, real estate construction and sales were quick to find their footing again. Today, Orange County homes are flying off the proverbial shelves at record pace.
As a luxury real estate agent in coastal Orange County, I had a front row seat to the widespread uncertainty that precipitated the brief housing slump. On March 19th, California’s Governor, Gavin Newsom, issued stay-at-home orders statewide. The grim portents of COVID-19 hung thick in the air here in Newport Beach, Laguna Beach and Corona Del Mar, souring the cool ocean breeze. It took nearly two weeks to regain some clarity, when real estate and related industries were officially classified as an essential service. In the meantime, a wave of wary home sellers pulled their listings off the market. The usual ways of doing business were upended. We began to learn to adapt.
Just like with existing homes, there was early disarray in new home sales and construction. With future business up in the air, new home starts and permits fell sharply nationwide in April. However, once the dust settled, builders got right back to work. By May, the new homes market had recovered significantly. It may sound crazy, but the proof is in the numbers.
According to data from the Census Bureau and NAR, new home sales have been surprisingly resilient since the start of the pandemic. After just two months of slowing, sales of new homes began to pick up in May across all US regions except the Midwest. In our Western Region, new home sales rebounded a whopping 29% from April to May, and were even up 31% from May 2019.
New home starts — builders building homes to sell — have rallied as well. After a sharp decline across the Western Region, new home starts rocketed back from 180,000 in April to around 300,000 in both May and June. Nationally, the Department of Commerce reported a 17% increase in new housing starts from May to June. Builders are building, and buyers are buying.
UPDATE: By August, new housing starts jumped to 361,000 in the Western Region, up from 180,000 in April. Nationally, from April to August, new housing starts exploded up by nearly 52%!
Here in Orange County, builders have big plans. A quick search reveals hundreds of homes proposed for construction. Some would replace existing housing, like these 36 million-dollar townhomes in Newport Beach. Others would develop unused land, such as these 92 homes by Trumark in Mission Viejo. Two large projects in San Juan Capistrano would add 301 new homes to areas rezoned for such projects in recent years.
This slew of proposed construction is great news for buyers who want a brand new home, and for local municipalities which are mandated to greatly increase available housing over the next 10 years. New home builders are clearly feeling hopeful too. So, what can we thank for the rise in activity amidst the pandemic? There are a number of factors involved.
First, it’s no coincidence that many are reconsidering their living arrangements now. After staying home with their families for an extended period of time, people are realizing they need more from their property. They want to expand upon their existing home or move up to something with more space and amenities.
One of my best clients said this to me recently, after he just spent $1,000,000 improving his main residence in Colorado: “The super-rich are also stuck at home and wanting more out of them. They want to feel safe, and commutes are less of a concern these days. Additionally, the Feds printing money has people looking for hard assets.”
On the macro level, the housing market’s resilience comes down to two big factors: real estate as an essential service, and historically low mortgage rates.
Given California’s existing housing shortage, it is hardly a surprise that the state has allowed residential construction during this crisis. The same goes for new and existing home sales: Buying or selling a home is deeply personal with a huge economic impact, not to mention that a majority of the process can be handled online. Even the in-person and labor-intensive construction industry has seen almost no disruption.
Employment numbers show that Orange County real estate jobs are at 97% of their pre-coronavirus peak. This includes real estate agents, lending and escrow officers, construction workers, building suppliers and so on. Construction is down by only 300 jobs, a nearly imperceptible loss of just 0.3% (except for those 300 unfortunate souls, of course). Unlike hard-hit sectors like hospitality and restaurants, real estate and related businesses are relatively healthy. That’s all due to their classification as an essential service.
The other major factor that has kept real estate afloat is the historic decline in mortgage rates. It’s hard to imagine now, but there was a time when buyers signed on for a 30-year fixed rate loan with an APR upwards of 14%. Flash forward from the ‘80s, and today’s home buyers are graced with an unprecedented national average 30-year fixed rate of just 3%. Mortgage rates have a huge impact on the total cost of a loan over its lifetime, so buyers are jumping to take advantage of these record lows.
Investors benefit from lower rates as well. The national average on 15-year fixed and 5/1 adjustable rate mortgages are both near rock bottom, at 2.54% and 3.09% respectively as of this writing. Lower rates allow investors to increase their leverage on a deal, buying more property for less money and reaping the difference in later profits. Whether you’re looking to settle down or make an investment, the current loan market presents a uniquely attractive opportunity for a real estate purchase.
UPDATE: As of the second week of October, the average national rate on a 30-year conventional low is a jaw-dropping 2.81% — another record low — while the 15-year fixed rate is matching its record low of 2.35% set in September, and the 5/1 ARM is hovering around its record low at 2.9%. Rates have literally never been this low… Can they go lower?
These days, predictions are a dime a dozen. Existing home sales are incredibly strong today, but the continued health of the housing market depends on the resilience of the overall economy. No one I know owns a crystal ball to divine our fate. Furthermore, new home sales do not hinge on all the same economic factors as existing home sales.
New home sales are more about supply than demand. Before a builder starts a project, it must make economic sense to do so with respect to the cost of materials, labor and construction loans. If the market is saturated with existing homes for sale, then builders might hold off until that supply is diminished. These factors are not present in existing home sales, where prices fluctuate purely on listing supply and buyer demand.
Ultimately, it’s a good sign that new homes are being proposed and built in Orange County. Buyers want the homes, builders want the work, and California needs the housing. Real estate is essential, and mortgage rates are low. If you’re interested in buying a new home, what are you waiting for?
Selling real estate is a unique career. Agents come in all shapes and sizes, with diverse backgrounds ranging from business management to entertainment to homemaking to everything else under the sun. Given these vast differences in abilities and past experience, your process working with a real estate agent can vary dramatically from one to the next. And yet among every single agent, there’s one skill that matters more than all the others. One skill which can make or break your sale. One skill which is truly the heart and soul of an agent’s work.
“So, what is it?” you say. “Spit it out! What’s the most important skill that every agent needs?”
Well, since you asked so nicely: It’s setting the listing price.
We all know that negotiations are the name of the game when buying or selling a home. You want an agent who will apply force to every lever of a deal, fighting at every opportunity to save you money or boost your closing price. What you may not know is that a properly priced listing can earn you more money right from the outset. Conversely, an agent who can spot an improperly priced home might just snag you a deal.
In nautical terms, setting your listing price means choosing where to drop anchor. Once you’ve settled on a location, you throw out your bait to see what house-hunting fish swim in for a nibble. Yet no matter how tasty the bait or how shiny your lure, if you price too high, you simply won’t get any bites.
This metaphor is particularly apt when you consider broader business strategies. An “anchor price” is a widely used tactic that companies use to establish a psychological baseline for their products. If the shoe store says some boots are worth $200, then you’re getting a great deal when they’re on sale for just $100, right? (Even if they cost the store just $5.) While it’s exceedingly rare to see a home listing’s price drop anywhere near 50%, real estate is still affected by this psychology—with very real effects.
Those effects are most clear in an overpriced listing. If you list too high, you’ll be subject to lowball bids, upturned noses, and open houses as empty as a ghost town. New listings tend to see the most activity and buyer interest within their first few weeks on the market. When your listing is overpriced, you’ve essentially wasted the most crucial days of your home’s marketing period.
After a few lonely weeks with too few or too poor of offers, you’ll likely consider a price reduction. Mind you that price reductions are a completely valid tactic in many cases, as markets can shift during the listing period for a myriad of reasons which may be impossible to foresee. However, it’s not a fun thing to do, if the lack of interest stems from simply pricing too high for the current market at the time of listing.
Ultimately, an overpriced listing is one of the great tragedies of real estate. The reverse, however, is not so dire. Let’s look at underpriced listings next.
An under-priced listing is not nearly the same catastrophe as an overpriced listing. In fact, setting your home’s listing price below its current market value can be a compelling strategy. Like a Black Friday sale, a low listing price can draw folks out of the woodwork to take a look at your home. Remember that the first few weeks of a new listing are the most important—a low listing price can pack those weeks with open house visitors, agent showing requests, and “saves” on sites like Zillow and Trulia.
That’s not to say that pricing low doesn’t come with risks. If your home still garners less than the critical mass of interest needed to boost offers and counters above market value, you’ll wind up in another sad state of affairs. In a worst case scenario, the market may shift under your listing and (like current interest rates) you’ll have little room to maneuver the lows any lower amidst an economic downturn.
The safest bet for most sellers and agents, especially those with less experience under their belts, remains to price a listing right around market value.
So how does an agent find exactly the right price to drum up the most interest and highest offers on a listing? The best tools at an agent’s disposal are the recent sales around your home.
When you first meet with an agent, they’ll likely provide you with a CMA, or Comparative Market Analysis, detailing the price and statistics of recent listings in your area. Much like an official appraisal, CMAs compare the sold homes in your area, their features, amenities, and the dates they sold, against your own. They’ll also compare the homes that are active and pending right now, more indicators of your current local market conditions.
By comparing and contrasting your home with other listings in your neighborhood, your agent can triangulate a ballpark figure for your home’s value. That’s the science of setting a listing price. Popular home search tools like Zillow have grown that science into complex algorithms which claim to output estimates within a few percentage points of error.
Then there’s the art of pricing a home. Like painting a masterpiece, it takes years of experience and a profound professional insight to obtain an organic sense for pricing. Through dozens of transactions and persistent study of the local market, consumer tastes, national trends and lender criteria, a seasoned agent has the acumen to see beyond the comparables. Even in a subdivision with identical floor plans, every home is unique. To assess every variable and produce a strategic, targeted price is a talent which not every agent possesses.
At Stavros Group, we’ve been working in your neighborhood for years. We know what works, what sells and how much it sells for. If you’re thinking of buying or selling a home in Newport Beach, Laguna Beach, and greater Orange County, let us know. We’d be happy to discuss your options during a free, no-pressure consultation. Real estate is our passion. We’re excited to share that passion with you, to match you with the great results that you deserve!
Photo courtesy: visitlagunabeach.com
Welcome to Laguna Beach! There really is no bad time to visit, but early in the summer is a great time to stretch your legs along its fantastic beaches. This sign welcomes visitors to Laguna. It was built in 1935, and still stands proudly on the corner of Forest and Park Avenues.
If you are an artist, love art, are creative, or want to be, or just love a creative vibe, Laguna Beach is a great spot for you. The art scene is very active all year long, and a good first blush look at the art scene is to take advantage of the First Thursdays Art Walk. It is an educational monthly art event, which is held every first Thursday of the months from 6 to 9pm. It is free to the public and showcases the diverse cultural art scene that you can find here.
There is no reason to ever be bored if you live in Laguna Beach. If you are looking for great musical talent in an intimate venue, check out Laguna Beach Live! Each year they present more than 30 concerts and free educational programs for kids at the Laguna Beach Boys & Girls Club and the Laguna schools, and also for our senior citizens at the Susi Q Center. There are some great concerts coming up in June, including:
June 10th 4-7pm
Laguna College of Art & Design
2222 Laguna Canyon Rd, Laguna Beach
CMT’s Edge calls The Barefoot Movement “One of the most promising bands on the Bluegrass scene. Billboard magazine describes them as “Slices of Bluegrass, Country, Folk and even a little bit of Rock & Roll.”
We think enjoying an afternoon of incredible bluegrass music and delectable BBQ sounds like a great time to spend relaxing in Laguna Beach.
Every other Wednesday
June 13-September 5
6 – 8pm
Seven Degrees event facility
891 Laguna Canyon Road
Jazz it up every other Wednesday in Laguna Beach. Some of the hottest jazz musicians in our area will tune their instruments to give you a memorable performance, all in an intimate setting. A full buffet and bar menu are available for purchase when the doors open at 5pm.
Did you know the world’s second smallest cathedral is right here in Laguna Beach?
Photo Courtesy: Shutterstock.com
In 1933, Long Beach suffered a devastating earthquake. Out of the rubble, workers salvaged bits and pieces that would quickly become St. Francis by the Sea. The Guinness Book of World Records states that it is the second smallest cathedral in the world, with a grand total of only 42 seats.
Photo Courtesy: visitlagunabeach.com
Did you know the oldest museum in the State of California is right here in Laguna Beach? The Laguna Art Museum is the host to works by California artists only, making it unique in the state. The museum has a rich history, as it was formed by local artists in 1918 and by 1929 it had raised significant funds and opened a grand custom-built gallery, which is still contained in the present-day structure, known as the Steele Gallery. The museum is located on one of the busiest streets of any coastal town and only 300 feet from the ocean. It is a spectacular museum with an impressive view.
Like the museum, the Sawdust Art & Craft Festival showcases and promotes local artists. Toward the end of June, it will open one of its two main events each year. The festivals attract more than 200,000 visitors. You can shop along sawdust-covered paths through a handcrafted village of exceptional art and craftsmanship. You can also enjoy live entertainment on three stages, and catch artist demonstrations as well as participate in hands-on art workshops.
June 29 – September 2nd
10am-10pm
When you live, work, and play in Laguna Beach, there is always something waiting to entertain, educate and inspire. If you are thinking about making Laguna Beach your home, contact us at The Stavros Group so we can help you find the home you’ve always wanted!
If you had to choose a handful of the most gorgeous spots in California, Laguna Beach would definitely make the list. This seaside resort in southern Orange County has remained relatively protected from urban encroachment by its topography: rolling hills surrounding it, a dedicated greenbelt and limited access from the highway.
Laguna Beach was officially founded in 1887 following the Mexican-American War. Around 23,000 people call it home, and its primary source of income is tourism, with much of tourism coming from the many art festivals held here each year.
Laguna Beach has been an art colony from its roots. Residents have welcomed three million people to the area for annual events including the Pageant of the Masters, Festival of Arts, Sawdust Art Festival, Art-A-Fair, Bluewater Music Festival and Kelpfest. We mentioned the Festival of Arts: it is a top-rated juried art show and features original works from 140 of Orange County’s finest artists. It is the perfect spot to enjoy art workshops, dinner, guided art tours, music entertainment, hands-on demonstrations, as well as pick the perfect art piece for your home or business. Mark your calendars for Festival of Arts July 5-September 1.
Creating and displaying art is important to the residents in Laguna Beach. Committees place art in public spaces, everything from the artist original lamppost banners to street corner art. You can enjoy art as a spectator with the many art festivals, or ‘get your art out’ at art classes, exhibits, and the First Thursdays Art Walk.
Of course, there are many things to do here in March and beyond: here are a few of our favorites.
Thursday, March 22nd at 6pm
The former president of the Laguna Beach Historical Society will be giving a talk on the history of the heyday of the Laguna Beach Art Association, which paved its way in the Roaring 20’s and never looked back. In the beginning, members of the Laguna Beach Art Association showed their works in a cottage, but thanks to a fundraising effort by painter Anna Hills, the Association opened a custom-built gallery in 1929. Art history runs deep in Laguna Beach, and The Stavros Group is delighted to be part of it!
LCAD Gallery
Thursday, March 15 4-6pm
You might call Jeffrey Rovney a Renaissance man: he has worked as an attorney, software design, magician, and photographer. He will share stories while he showcases his circus-themed photographs.
Saturday, March 24th 10:45am-12:15pm and 1:00-2:30pm
The Soul Project
1516 S Coast Hwy, Laguna Beach
The Soul Project is hosting a workshop which will cover the basics of modern hand lettering using brush pens. If it sounds intimidating, it’s not: it will be taught for beginners by Olivia of Atiliay, and will provide you the foundation needed for writing beautifully. She will teach you the right tools to use, how to use your brush pens to create basic strokes, write the upper and lowercase alphabet and faux calligraphy. Not only will she give you one-on-one guidance during the workshop, but you’ll also receive a starter kit with writing tools, workbook, worksheets and paper.
Film night: Thursday, March 15 at 7pm
This 1952 classic tells the story of an unscrupulous movie producer (Kirk Douglas) who does anything necessary to get to the top of the studio system, discarding his movie star (Lana Turner), his director and writer along the way. The museum’s curator Janet Black will introduce the melodrama.
We love the artistic life and vibe of Laguna Beach. We would love to call you neighbor, so if you are interested in moving to this vibrant area, give us a call! We are the luxury real estate standard in OC!
Many people long to live in a sunny location where there are beautiful beaches. The town of Newport Beach in Orange County is one such California locale that seems to have everything. There are some wonderful residential neighborhoods, and there are a number of living options that include gorgeous luxury homes and upscale condos.
This town beside the sea boasts many stunning beaches and plenty of water sport activity options like kayaking, surfing, and boating. The water is warm, the sand is golden and there are some spectacular sunsets at dusk. There are plenty of shops, decent restaurants and other eating venues. At night, there are some lively clubs, great music and good company. There is something for everyone, and the people here are friendly. This is a nice alternative to big city life. If ever wanting some of that larger excitement, it is only an hour’s drive to several bigger city destinations.
There are many advantages of living in this beautiful geographical location. The neighborhoods seem more like smaller town communities where everyone looks out for each other. The schools are superb, and the town is relatively clean. The great thing about moving here is the different choices in housing. There are wonderful single family homes, condos, and apartment complexes. A sizable number of classy upscale homes draw many, and most neighborhoods feel safe. The beaches have nearby attractions like bowling, arcades, various clubs, picturesque hiking/biking trails, and bars if you like that scene.
While there are some good deals on upscale homes if you know where to look, it can be a bit difficult to buy or sell a top-of-the-line home without knowing all of the nuances of the real estate market in these parts. Working with an experienced realtor who specializes in these higher-end living environments is usually the best way to buy or sell these homes. Sellers often run out of time and might end up settling for far too low a price. Newcomers to the area often get hoodwinked into paying too much when buying a local luxurious home featuring added amenities. Schedule your free consultation.
