Are asking prices obsolete in this crazy real estate market?

Asking prices. Pay me this and we’ll make a deal. Easy? Not so fast.

In our hyper-inflated industrial real estate market, every COMP is a new high watermark. Demand for manufacturing and logistics buildings outstrips supply. Read: There is approximately three to four times the number of buyers than there are sellers. Is this scientific? No. Strictly anecdotal from my experience this year and the last six months of 2020.

Therefore, sellers are counseled to proceed cautiously lest they leave shekels on the sideboard. One way to accomplish this is to enter the market un-priced. The traditional back and forth of a negotiation – offer, counter, counter, strike – is history. What’s replaced it is akin to the old adage of “bring me a rock.” Yes, that’s indeed a rock. Now, bring me another rock. Once referred to as “countering oneself” – a no-no – is now quite common.

Here is the typical cadence these days while representing a buyer. We scan available inventory that meets the buyer’s parameters. If there is one match, you’re lucky. Two or three? Jackpot! You then check with the seller’s broker to confirm availability and touring protocol. Ooops. Sorry, we’re under contract. No, that sold last week. Nope, the tenant renewed.

Our system is quite archaic compared with our brethren in residential sales. Yes, we must call – quite inefficient – brokers to verify info. Realty boards streamline this with their levels of availability – active, active pending, active, contingent, etc. But there’s no such luck in our world. Commercial real estate is not under the same purview.

But, I digress. Back to the search. Faced with limited or no avails – now what? Well, we then scan the list of buildings available for lease. There might just be a seller hiding among the lease listings. You must filter out the “portions” of larger buildings as a buyer would have to buy something much bigger and factor out the owners who are atypically sellers. Hop on that phone and dial your fellow agents. Ok, cool. You found a possibility.

A proposal must check ALL the boxes – price north of where the last sale traded, superior financial qualifications, very few – if any – contingencies, quick close, large deposits, a bit of pixie dust, a hope and a prayer. Frequently, the off-market Hail Marys are dropped in the end zone. No score as the time expires.

But, you still have the buyer. Now what? Hand to hand combat. You pull a list of everything – vacant or occupied. Put together a nice letter outlining your need and be very specific. Send them to the owners. You might just hit pay dirt.

So, are asking prices obsolete? It would certainly appear so!

Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104.

 

Orange County adds 8 million-dollar ZIPs, loses 8 housing bargains

Orange County added eight million-dollar Orange County neighborhoods in the year ending in March as the pandemic era’s rapid home-price appreciation left eight fewer “affordable” ZIP codes with sales prices under $600,000.

My trusty spreadsheet, filled with Orange County homebuying stats from DQNews/CoreLogic, found 22 of the county’s 83 ZIP codes with median selling prices above $1 million vs. 14 a year earlier. Total closed sales of all residences — existing and new homes; single-family houses and condos; at all prices — were 3,895. That’s up 39% in from the locked-down scarred March 2020.

Those seven-figure communities had 979 sales equaling 25% of all Orange County homes sold. In March 2020, 661 residences were sold in ZIPS with $1 million-plus medians, or 24% of transactions.

Why? A buying binge created by cheap loans and few homes for sale. So, the countywide median for the month of $835,000 was up 10.6% in a year.

Bubble Watch tracks housing risks. Read it here!

At the other end of the pricing spectrum, Orange County’s “bargain” communities — medians of $600,000 and below — numbered seven vs. 15 a year earlier That’s 53% fewer sub-$600,000 ZIPs in a year.

Sales in these “affordable” ZIPs were 254 — making “bargains” 6.5% of all purchases. In March 2020, 130 purchases were in “bargain” ZIPs — or 4.6% of all sales.

The month before, there were 22 million-dollar ZIPs and 6 “affordable” communities.

Here’s the million-dollar ZIPs, highlighting communities new to the club, for March …

Newport Beach 92662: $3.73 million — up 15% in a year.

Corona del Mar 92625: $3.24 million — up 18% in a year.

Laguna Beach 92651: $2.57 million — up 38% in a year.

Newport Beach 92661: $2.48 million — off 3% in a year.

Newport Coast 92657: $2.17 million — off 33% in a year.

Villa Park 92861: $2.16 million — up 78% in a year.

Irvine 92603: $2.08 million — up 25% in a year.

Newport Beach 92663: $2.05 million — up 3% in a year.

Newport Beach 92660: $2.03 million — up 23% in a year.

Dana Point 92624: $1.38 million — up 15% in a year.

Irvine 92602: $1.35 million — up 12% in a year.

San Clemente 92673: $1.25 million (new) — up 40% in a year.

Santa Ana 92705: $1.20 million — up 19% in a year.

Dana Point 92629: $1.16 million (new) — up 24% in a year.

Trabuco/Coto 92679: $1.16 million (new) — up 36% in a year.

Los Alamitos 90720: $1.15 million (new) — up 16% in a year.

San Juan Capistrano 92675: $1.13 million (new) — up 20% in a year.

Huntington Beach 92649: $1.07 million (new) — up 20% in a year.

Huntington Beach 92648: $1.05 million (new) — up 10% in a year.

Yorba Linda 92887: $1.05 million (new) — up 30% in a year.

San Clemente 92672: $1.05 million — off 0.2% in a year.

Seal Beach 90740: $1.01 million (new) — up 1% in a year.

Here’s Orange County’s lowest-priced ZIPs in March …

Stanton 90680: $596,500 — up 30% in a year.

Santa Ana 92703: $565,000 — up 9% in a year.

Santa Ana 92704: $542,500 — up 22% in a year.

Santa Ana 92707: $477,500 — off 8% in a year.

Laguna Woods 92637: $390,000 — up 11% in a year.

Santa Ana 92701: $314,000 — off 38% in a year.

Jonathan Lansner is business columnist for the Southern California News Group. He can be reached at jlansner@scng.com

Inland Empire starts 2021 with nation’s highest rent increases

The Inland Empire’s hot apartment market got even hotter in 2021, with the biggest rent hikes in the nation, numbers from four leading apartment trackers show.

At the same time, a year-long dive in Los Angeles and Orange county lease rates may be ending as rents turn the corner and vacancies level off.

The Inland Empire “is a performance superstar, not just for the region but also for the nation,” said Greg Willett, chief economist for Dallas-based apartment tracker RealPage.

“The Inland Empire, Sacramento and Phoenix have been leading all markets for rent growth for the past few years, and the pandemic has only accelerated that trend,” added Yardi Matrix’s April multifamily housing report.

L.A. County, meanwhile, “appears to have moved past bottom for the moment, with occupancy stabilizing and rents up on a month-to-month basis,” Willett said.

And Orange County’s apartment market “hits the middle ground between what’s happening in the Inland Empire and in Los Angeles,” he said. The Orange County market “now is back in relatively good shape and should sustain some momentum moving forward.”

The numbers are based on first-quarter surveys by four apartment research firms: RealPage, CoStar, Moody’s Analytics Reis and Yardi Matrix.

All four indexes showed falling rents since the spring of 2020 in L.A. and Orange counties. Behind those numbers was an apparent eastward migration of home-bound tenants in search of more space and lower rent.

That migration boosted demand for Riverside and San Bernardino county rentals, leading to quick turnarounds and waiting lists for vacant units.

“I cannot remember a time when we had this much demand and its impact on rents and vacancies,” said Randall Lewis, executive vice president of Lewis Management Co., which manages about 11,000 apartments, mainly in the Inland Empire.

Jam-packed

The average apartment rent in the Inland Empire was $1,662 a month during 2021’s first quarter, up $130 a month, or 8.5%, from the year before.

Last quarter’s 8.5% growth rate was the biggest in the Southern California News Group’s composite index since at least 2010 — and the biggest in CoStar’s data since at least 2000.

Yardi and RealPage both listed the Inland Empire as having the nation’s biggest percentage gains in rent this year. Moody’s Analytics Reis listed it as having the second-highest year-over-year rent gain.

A year ago, the Inland Empire had the 26th-highest rent among 82 U.S. metro areas tracked by Moody’s Analytics Reis. This year, it moved up to 21st-highest among those 82 metros.

Yardi figures show Inland Empire rents increased 31% over a five-year period, almost triple the national rate.

“The rental market in the Inland Empire is extremely strong,” Lewis said. “This is fueled by the ability of many people to work from home, as well as the cost advantage of the Inland Empire vs. closer-in markets. Other factors that play into this are a growing job base in the Inland Empire, which produces more demand, as well as demographic forces, which are favorable for the rental … markets.”

State employment figures show employment levels continued rising in Riverside and San Bernardino counties through most of the pandemic.

Vacancy changes are even more striking.

One year ago, all three areas had pretty much the same vacancy rate: 4.1% in the Inland Empire, 4.3% in Orange County and 4.4% in L.A.  County.

Since then, L.A. County’s vacancy rate rose to 5.2%, and the Inland Empire’s vacancies fell to 2.4% — the lowest rate in at least 11 years. Orange County’s vacancy rate fell incrementally through the pandemic, dropping to 3.6% last quarter.

“The (Inland Empire’s) existing apartment stock is jam-packed full,” Willett said.

Few new rentals

Inland Empire rents, meanwhile, are likely to continue outpacing the rest of the region since apartment construction hasn’t kept up with demand.

Almost 39,000 new apartments are under construction in the four-county region, according to RealPage. But just 6% — or about 2,400 units — are in the Inland Empire, even though the area accounts for about 18% of all rental units, U.S. Census figures show.

Orange County, by comparison, which accounts for 16% of the region’s rentals, has about 7,400 new apartments under construction. L.A. County, with 66% of all local rentals, has about 29,000 new units under construction.

The pace of inland apartment construction will pick up in the next two years, Lewis said. But until it does, rents will keep rising, said Willett.

“With only about 2,400 units under construction, occupancy (in the Inland Empire) is going to remain very tight in the near term,” Willett said.

Signs of recovery

Meanwhile, signs of recovery are starting to turn up in Los Angeles and Orange counties as well.

The average rent for an L.A. County apartment was $2,085 a month during 2021’s first quarter. That’s down $77 a month, or 3.6%, from the year before and marked the fourth straight year-over-year decline in L.A. County rents.

But it’s up $4 a month from the final quarter of 2020, rising on a quarter-to-quarter basis for the first time since 2019.

“We are seeing rates tick up a bit,” said Paul Julian, a principal with Advanced Real Estate Services, an Irvine-based apartment owner with about 10,000 units stretching from Newport Beach north to Azuza and east to Redlands.

Fred Sutton, the California Apartment Association’s L.A. spokesman, said he’s not aware of any urban L.A. property owners raising their rents. But vacancies stopped rising, he said.

“People are no longer turning in their keys and saying, we’re leaving,” said Sutton. “That was a real phenomenon” during the pandemic.

Orange County’s average rent increased for a third straight quarter in the January-through-March period, rising to a record $2,108 a month. That’s up $14 a month, or 0.7%.

It’s the first time in nearly five years that an average Orange County apartment was more expensive than in L.A. County.

Two L.A.’s

Suburban L.A. County was less impacted by the pandemic while city centers were hit hardest, observers said.

Free-rent offers and other concessions are up in L.A. County’s urban core, Julian said.

“You’re looking at just about two months of free rent,” Julian said. “Whereas in the suburban market, we see less of that.”

The pandemic likely accelerated the search among the millennial generation for “hipsturbias,” or suburban enclaves offering shopping, dining and entertainment, he said. Suburban L.A. County, as well as the parts of Orange County and the Inland Empire, have benefitted from that trend, he said.

“Many (millennials) are having children. They want more space, and they need more space. They’re looking at schools,” Julian said.

12 indicted in alleged Southern California ‘green’ loan and mortgage fraud scheme

LOS ANGELES — — — — A lots people have actually been fingered regarding an expected residence mortgage fraud in addition to “eco-friendly” auto loan system that ran throughout Southern The gold state and also led to losses of around $15 million, the California Chief law policeman’s Workplace introduced Wednesday.

The 133-count grand court charge, handed up April 26, states that the criminal activities took place in Los Angeles, Waterfront in addition to Ventura counties.

The indictment bills the defendants with a choice of matters, consisting of conspiracy theory, house car loan rip-offs, grand break-in, identification break-in, fraudulent, submitting a false or constructed record and money laundering.

The culprits presumably manipulated the Yrgene Power Fund as well as Renew Funding, organization that provide moneying to accredited specialists for power- efficient home enhancements for house owners, and made use of inaccurate identities to acquire home mortgage from conventional financial institutions and difficult money providing establishments, according to the Chief law officer’s Workplace.

“The cases versus these chargeds charge a pattern of negligence for the regulation as well as also decision to get to taking the identifications of the dead just to improve their plan,” The golden state Lawyer General Of The United States Rob Bonta said in a declaration disclosing the expenses. “Our office will definitely seek to hold these accuseds accountable for their claimed activities.”

Those hired the indictment are: Tamara Dadyan, 39, Richard Ayvazyan, 42, Artur Ayvazyan, 41, Grigor Tatoian, 50, Andranik Petrosyan, 46, Arshak Bartoumian, 48, Artashes Martirosyan, 43, Lilit Malyan, 39, Lubia Carrillo, 41, Rosa Zarate, 49, Estephanie Reynoso, 31, in addition to Vanessa Bell, 60.

Eleven of the chargeds have actually begged not guilty, with Malyan due back in a midtown Los Angeles courtroom for accusation Might 18.

The instance originated from a multi-year examination by the Los Angeles Authorities Department, with aid from the Federal Real Estate Money Firm, Workplace of Assessor General.

The lawyer general of the United States lauded both firms for “their work to put an end to a comprehensive, six-year rip-offs prepare that caused the theft of an estimated $15 million.”

“If you were a target or know please phone call 213-486-6979,” stated a tweet from LAPD Capt. Lillian Carranza.

San Bernardino County homebuying sizzles: busiest March in 15 years, highest prices ever

San Bernardino Area real estate’s searing marketing spree proceeded in March with sales 29.3% over in 2015’s lockdown duration as prices climbed 18.3% over one year.

The acquiring binge came as vaccinations aided reduced coronavirus threats as well as cut the pandemic’s broad financial barriers. Interest rate remained decreased as well as additionally the minimal supply of homes to acquire made life challenging for house candidates looking for brand-new or bigger area. DQNews/CoreLogic’s report on shut bargains in Wild County from March exposes …

… … Sales: 3,234 residences marketed, existing along with new– – up 29.3 %in a year. It was 2006 when a March had a lot even more sales. Last month was 34% above the 10-year common rate for a March.

Previous one year? 33,449 San Bernardino Area acquisitions– – up 11.5 %above the previous year as well as 14.1% over the 10-year standard.

Rates: The countywide median of $429,500 average was up $66,500 or 18.3% over twelve month. Over one decade, gains well balanced 10.6% yearly. One of the most as much as day median climaxes of $410,000 from February. Previous year saw 8 papers established.

And also prices considering that the Great Recession? Up 13% vs. the 2000’s bubble-era high.
As well hot? Examine “Bubble Watch” columns byclick on this link. Below’s an explore vital pieces of San Bernardino County in March … … Existing single-family homes: 2,546 marketed, up 25.1 %in a year …

…. Median of $419,000– – a 21.4%rise over one year. Existing condominiums: 176 sales, up 23.9% over year.

Normal of $398,500 — — a 18.2% rise in a year. Recently developed: Professionals used 512 brand-new homes, up 58%in

a year. Common of$486,500– – a 2.3%reduction over one year. Building contractor share: 15.8% of sales vs. 13 %a year earlier

. San Bernardino Area constructing specialists ‘‘ slice of the industry rates No. 1 among SoCal’s six areas. Cost rank: Specifically exactly how San Bernardino Area’s typical contrasted to Southern The gold state’s 5 different other areas: No. 6 overall; No. 6 for single-family resales; No. 5 for home resales; as well as No. 5 for brand-new residences. How economical is cash? Rates on a 30-year, fixed-rate home finance balanced 2.88% in the 3 months completing in March vs. 3.51%a year previously. That relates to 8%more purchasing power for house hunters. At these costs, a customer with 20% down would pay $1,426 a month on the$429,500 average sale vs.$ 1,306 on in 2015’s $363,000 normal. So during the previous year, the regular residence settlement is 9 %pricier. Specifically how slim is supply? The location had 36,241 homes provided to get as of February, contrasted with 49,000 a year previously, according to Zillow. So is this market threat cost-free? No, in spite of what great deals of sector supporters may

state. Climbing prices enhance major”cost”problems. Register for Residence Stretch e-newsletter by clicking right below. Six-county SoCal: 24,885 provided, up 32.2%. over one year.
The ordinary expense was record $630,000– – a 14.5%increase. Los Angeles Region: 7,618 used, up 33.9%Ordinary? record$750,000– – a 17.2%increase. Orange County: 3,895 sales, up 38.5%. Mean? paper$835,000 – a 10.6%boost. Beachfront Area: 5,016 marketed, up 37.5%. paper$ 476,750 – a 17.9%surge.

San Diego Area: 4,112 marketed, up 22.4%. Mean? record$680,000 – a 15.3%surge.

Ventura Location: 1,010 marketed, up 24.2%. Typical?$658,000 – a 12.5%rise. Relevant Articles– Area’s residence rates leapt 9-16% in March, largest gains in 7 years Riverside Region’s insane homebuying: busiest March in 15 years, biggest rates ever before Los Angeles Location homebuying: record $750,000 price, busiest March in 14 years Wild Orange Area homebuying: file$835,000 cost, busiest March in 15 years Homebuying’s bubble hazards neglected by field’s ‘ V-eerleaders