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Rising Home Sales Show Americans Are Looking Past the Coronavirus

Americans are behaving very differently than they have in previous recessions — convinced that the coronavirus pandemic will soon pass, many continue to spend money as if nothing has changed.

Driving the news: The latest example of this trend is the Commerce Department’s new home sales report, which showed home sales increased in April despite nationwide lockdowns that banned real estate agents in some states from even showing listed houses.

Sales of newly built homes rose by 1% in April compared with March, dramatically outpacing economists’ expectations for a 22% decline.

What we’re hearing: “I am quite surprised about the resiliency of the housing market,” Lawrence Yun, chief economist at the National Association of Realtors, tells Axios.

“My reading is that both buyers and sellers believe there will be no price reductions,” he adds. “Sellers are listing their homes as if there is no pandemic.”

What’s happening: Yun says there are four main factors driving the market’s strength.

Dwindling supply as a result of fewer homes being built in recent years and older people not moving.

Historically low mortgage rates.

The CARES Act moratorium on residential foreclosures for borrowers with federally backed mortgage loans.

Consumers who were locked out of the market in 2019 and are confident prices will continue to rise even in the face of the recession.

The intrigue: Much of the purchasing over the last few months has been done by home buyers rather than investors, NAR’s data shows, and the most sought-after properties are lower- and mid-priced houses. Higher-priced properties are seeing limited demand and a glut of supply.

Between the lines: While the prices of new homes declined slightly in April, those for existing homes rose to the highest level on record and Yun expects to see them increase by 5% by the end of the year, touching new record highs.

Yes, but: The pandemic looks to be accelerating an “unhealthy development” in the U.S. housing market — the lack of affordable housing for young adults and middle-class Americans.

“Prices have risen consistently above people’s income growth,” Yun says. “It has been happening for six or seven straight years.”

Watch this space: The bullish sentiment may not last forever, Yun warns, but he sees no signs that it will fade any time soon.

“There are unknowns out there, but so far the housing market is surprising on the upside in terms of buyers chasing few supplies and bidding up the price.”

Confidence in the housing market also is evident in expectations about the future held by consumers.

While the Conference Board’s consumer confidence index has fallen by 30 points from its March level, expectations about the next six months in the May survey were 10 points higher than in March.

In fact, the expectations index rose to its highest level since September.

Why it matters: Consumer confidence is likely helping drive asset prices higher, including the stock market, as hopes are rising for a quick economic rebound despite warnings from economists of long-lasting damage.

What happened: The Dow jumped 530 points to close at 24,995 while the broader S&P 500 rose 1.2% on Tuesday, led by airline stocks, which made up one-third of the 15 biggest gainers on the S&P.

Royal Caribbean and Norwegian Cruise each rose 15% and Carnival jumped 13%.


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The Economy is Tanking. So Why Aren’t Home Prices Dropping?

COVID-19 has caused volatility in seemingly everything but housing

More than 38 million Americans have lost their jobs since the outbreak of the COVID-19 pandemic. Stay-at-home orders have ground much of the economy to a halt, prompting trillions in stimulus spending by the federal government in hopes of keeping industries afloat.

But anyone hoping a silver lining to the economic chaos would be deals in the housing market have thus far been disappointed; for the week ending May 9, the median listing price in the United States was up 1.4 percent year-over-year, according to Existing home sales in April fell by almost 18 percent, but prices rose 7.4 percent compared to a year ago.

Why isn’t the tanking economy bringing home prices down with it? It’s a reasonable question given that so much of the economy moves in lockstep, and the last economic crisis in 2008 sent the housing market into free fall.

So what’s different this time around? Let’s break it down. The price of anything is a function of the relationship between supply and demand. Generally, home prices have been pushed up over the last 5 years by high demand created by a then-booming economy and a low supply of housing for sale, due in part to relatively low levels of housing construction and available land on which to build.

After the outbreak of the pandemic, housing demand fell as buyers lost their jobs, part of their income, or simply didn’t want to be shopping for a house in the middle of a viral outbreak and what figures to be a period of great economic uncertainty.

Demand dropping was evident in a number of metrics. Although a weak indicator of buyer demand, traffic to real estate portals like Zillow and Redfin dropped significant in the beginning of the outbreak, as did more reliable indicators like pending home sales and weekly mortgage applications.

Usually, a huge drop in demand would put downward pressure on prices; home sellers would be competing with each other to attract a limited number of buyers by dropping their asking price. But while housing demand has dropped substantially, housing supply also dropped in lockstep as potential home sellers pulled out of the market for many of the same reasons buyers are.

New home listings is a good indicator of housing supply, and after stay-at-home orders were enacted, new home listings cratered by as much as 80 percent year-over-year. Redfin reported that 41 percent of offers were subject to a bidding war over the last month, suggesting demand is outpacing supply—just as it was before the pandemic.

While both supply and demand have dropped, the relationship between the two went largely unchanged, meaning the drops in supply and demand were generally proportional to each other. Furthermore, home sales also dropped after the pandemic hit, and it’s hard for prices to move when there aren’t as many housing transactions to make prices move in aggregate. Together, this leaves prices much where they were before the pandemic.

This is consistent with how housing markets have fared in previous pandemics. A Zillow study looked at housing markets in cities hit by previous pandemics in Asia and found that whole activity dropped, home prices didn’t move much. A good way to think about the housing market at this moment is that it’s on pause—buyers and sellers have left the market, transactions have dropped in response, and prices aren’t moving.

For a comparison point, the relationship between supply and demand was very different before and during the 2008 financial crisis. Prior to the collapse, shady lending practices created excess demand for housing by bringing unqualified buyers to the market. Home builders responded by increasing construction to meet this demand.

When the financial system locked up, it brought the excess housing demand to a halt because banks weren’t able to lend in the same volume—not to mention the recession the collapse induced, which caused unemployment to rise and buyers to drop out of the market.

At the same time, banks foreclosed on houses in the millions. Given housing supply was already high from home builders constructing in excess, this sudden pile up of foreclosed houses created a nightmare scenario for the market—low demand and very high supply. Home prices plummeted.

This scenario is highly unlikely to play out again for two reasons. First, there was already a housing supply shortage prior to the pandemic, so any addition to the housing supply wouldn’t be exacerbating an existing over-supply problem, like in 2008.

Second, a foreclosure crisis on the scale of 2008 is unlikely, at least in the near-term, because the federal government has placed a moratorium on foreclosures on federally backed mortgages and directed the mortgage industry to offer mortgage forbearance for up to a year to homeowners who have been impacted financially by the pandemic.

Assuming this stays in place, a wave of foreclosures won’t lead to a supply spike that puts downward pressure on home prices, but given the situation is fluid, it can’t be ruled out that the federal moratorium is lifted.

And historically, the financial crisis was an aberration with regard to how recessions typically impact housing markets. While 2008 obviously destroyed the housing market, previous recessions have barely moved at all. If anything, prices went up.

While the current conditions haven’t led to a short-term price drop, the long-term economic trends induced will likely effect prices in the future. Zillow economist Skylar Olsen says Zillow is forecasting a price drop of 2 to 3 percent through the end of 2020, depending on the city, compared to where prices were in February.

“We don’t expect prices to fall by too much, at least nothing like the last crisis because housing in general is much more resilient than it was last time,” she says. “We didn’t have excess building driven by excess credit that drove excess homeowners. We don’t have excess in housing.”

There are faint signals that housing markets are slowly building back up. Demand metrics like mortgage applications are up, and pending home sales have returned close to their normal in cities less impacted by the pandemic.

However, pending home sales in cities hit hardest on the coasts remain down significantly year-over-year. And markets across the country remain supply constrained, as new home listings remain down year-over-year even in cities that haven’t been hit has hard by the pandemic.


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First Line Realty Donates $8,470.99 to One Line Foundation!

First Line Realty donates a portion of all real estate commission proceeds to One Line Foundation, at no extra cost to the buyer or seller. Garrett’s goal is to promote “Property with a Purpose” by satisfying his clients’ real estate needs while simultaneously working to build a stronger community.

Thanks to all of First Line Realty clients, we have been able to donate $8,470.99 to date, making the $10,000 2020 goal close to being achieved!

Get in touch with Garrett Trainor at First Line Realty for any real estate needs with no obligation! Property with a Purpose!

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How to Invest in Real Estate During the Pandemic

There has been a surge of renter households in the US. As a result, the economic shock waves set off by the coronavirus pandemic will reverberate not only for tenants but the owners of those properties as well. Whether you are an accidental landlord that has enjoyed income from your old primary residence or are depending on your multi-family real estate portfolio to provide the majority of your income in retirement, here is a summary of the obstacles and opportunities you need to consider. 


Obstacle – The current economic downturn has drawn several comparisons to the most recent recession. While the causes are significantly different, lenders have tightened their criteria again for home purchases for both home buyers and real estate investors. Recently, the FHA has significantly tightened their credit scoring criteria for qualifying for a loan. In addition non-qualified (NQ) lending has reportedly taken a hit as well. This is a significant concern for some real estate investors that need short-term lending to purchase and renovate if they do not meet income standards.

Opportunity – While credit has tightened on several fronts, financing may offer significant upside for property owners that qualify. Today’s rates are relatively low. If you meet mortgage lending guidelines, you may be able to refinance a property at lower rates. Additionally, if you were planning to expand or improve your real estate portfolio, you can borrow against the equity in your existing properties at historically low rates.

Single Family Housing

Obstacle – With unemployment increasing as a result of this pandemic, anyone owning rental property is likely concerned about their tenants’ ability to pay. Because of the passage of the CARES Act, evictions are frozen for 120 days starting March 27, 2020 for renters who live in properties that receive federal subsidies such as Section 8 vouchers or for renters whose landlords have government-guaranteed loans, including loans backed by Fannie Mae, Freddie Mac, the FHA, or the USDA. If the rental unit is not covered by the CARES Act, many individual states have issued similar suspensions on evictions. 

Opportunity – While the CARES Act gives some tenants a means to avoid eviction, homeowners with government-guaranteed loans may be able to request forbearance for up to 360 days if their income is reduced as a result of COVID. In order to determine if your mortgage is backed by a government agency, start with the two largest entities: FannieMae and FreddieMac. If your loans are not backed by a government agency, speak with your loan servicer and ask about what options would be available in your situation. 

If your tenant is struggling to pay but they are an otherwise good tenant, consider using the mortgage reprieve to temporarily reduce or suspend rent for a predetermined period. You should also help make your tenant aware of the stimulus support and temporary unemployment benefit increase. These resources will not only help them pay you but help get them get back on their feet faster once the economic downturn subsides. 

Multi-Family Housing 

Obstacle – Just like smaller properties, multi-unit apartment complexes are going to face problems with tenants who have lost their job or taken a steep pay cut. Anything larger than 4 housing units cannot be financed with a mortgage, so the loan forbearance options through Freddie Mac or Fannie Mae don’t apply. 

Opportunity – That doesn’t mean that you are without options. If you have a larger rental property, follow much of the same guidance as earlier. Work with your tenants if they are good tenants to help them access relief so that they can pay you at least in part and stay in your unit long-term. 

You also want to reach out to your bank right away to see how they can work with you. Just like you don’t want to lose a good tenant, they don’t want your loan to go into foreclosure. Ask them if they can work with you by skipping some payments and adding them to the end of your loan or temporarily making interest-only payments on your loan. That way, if your tenants can pay enough rent to cover this lower payment, taxes, insurance, and other fixed costs, you should be in a much better spot to navigate the COVID outbreak.

Commercial Property

Obstacle – Similarly, many small businesses have been forced to close by state and local stay-at-home orders, which limit their ability to bring in the revenue to pay their rent. Commercial property cannot be financed with a mortgage, so the loan forbearance options through Freddie Mac or Fannie Mae do not apply.

Opportunity – If your property is leased out to a small business(es), then you may want to work with your tenant to make sure that they have applied for the Payroll Protection Program if they are eligible. If your tenants qualify for the PPP, then they can use a portion of those funds to pay their rent, which is a huge relief to you. Similarly, if you currently pay yourself a smaller salary but get more of your income from the rent your business pays to you, the PPP can help your business not only protect your paycheck but also the rent you pay to yourself as long as it is reasonable for the local market.

Staying Prepared For Future Uncertainty

By now, you have noticed that if you have cash and a good credit score, it gives you more flexibility in terms of dealing with this crisis. Here are a few best practices to live by to keep your real estate portfolio in good standing in this and the next crisis:

  • Maintain little or no credit card and other high interest debt
  • Maintain a credit score of 740 or higher
  • Maintain enough cash to cover vacancies and maintenance on the target property for a year
  • Maintain enough income to pay the rental property mortgage if there’s a sustained period of vacancy

There is a decent chance that if you make good moves in this market, you can possibly walk out of this with a better real estate portfolio.


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San Diego Housing Supply Overview

In April, the stock market pared some of its March losses while overall economic activity nationally continued to slow. With more than 20 million initial unemployment claims filed nationwide in April on top of more than 10 million initial claims in the last two weeks of March, suddenly much of the country is out of work, at least temporarily. This dramatic economic slowdown is reflected in this month’s real estate activity, which is down significantly. For the 12-month period spanning May 2019 through April 2020, Pending Sales in the San Diego were down 1.2 percent overall. The price range with the largest gain in sales was the $1,250,001 to $2,000,000 range, where they increased 7.3 percent.

The overall Median Sales Price was up 3.3 percent to $590,000. The property type with the largest price gain was the Single-Family Homes segment, where prices increased 3.7 percent to $665,000. The price range that tended to sell the quickest was the $250,001 to $500,000 range at 26 days; the price range that tended to sell the slowest was the $5,000,001 and Above range at 114 days.

Market-wide, inventory levels were down 31.8 percent. The property type with the smallest decline was the Condos – Townhomes segment, where they decreased 18.0 percent. That amounts to 1.6 months supply for Single-Family homes and 1.9 months supply for Condos.

Quick Facts: Residential real estate activity in San Diego County, comprised of single family properties, townhomes and condominiums. Percent changes are calculated using rounded figures:

  • Pending Sales 2
  • Closed Sales 3
  • Median Sales Price 4
  • Percent of Original List Price Received 5
  • Days on Market Until Sale 6
  • Inventory of Homes for Sale 7
  • Months Supply of Inventory 8
  • + 7.3% – Price Range With Strongest Pending Sales: $1,250,001 – $2,000,000
  • + 2.5% – Home Size With Strongest Pending Sales: 3,001 – 4,000 Sq Ft
  • – 0.3% – Property Type With Strongest Pending Sales: Condos – Townhomes

If you are interested in buying or selling, please reach out to Garrett Trainor at First Line Realty!


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Recent Home Sales in Ramona, California, 92065

Since February 1, 2020 there have been 124 detached homes that have sold in Ramona, California, 92065.

No one-bedroom detached homes have sold in Ramona. One-bedrooms are more commonly condominiums rather than detached homes.

Two-Bedroom: 5 two-bedroom detached homes have sold in Ramona in the past 3 months. Square footage ranged from 976 to 1,492. Average sold price was $375,880, ranging from $307,000 to $460,000. Average days on the market was 65.

Three-Bedroom: There are many more three-bedrooms in the market since 63 three-bedrooms have sold in Ramona in the past 3 months. Square footage ranged from 1,134 to 4,300. Average sold price was $555,427, ranging from $405,000 to $860,000. Average days on the market was 23. As you know, the purchase price of the home takes into account the lot square footage and not just the home square footage. The lot sizes vary greatly in Ramona, from .25 acres to over 20 acres. This is something to keep in mind when looking at market data.

Four + Bedroom: 47 four-bedroom and 9 five-bedroom detached homes have sold in Ramona in the past 3 months. Square footage ranged from 1,500 to 5,193. Median sold price was $574,000, ranging from $450,000 to $1,800,000. Average days on the market was 57.

If you are interested in a market analysis for a certain zip code or area in San Diego please let Garrett Trainor at First Line Realty know and he will be happy to help!

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Current Homes for Sale in Ramona, California, 92065

Interested in living in Ramona, California? As of today, May 7, 2020 there are currently 65 detached homes for sale in Ramona, California, 92065.

One-Bedroom: There is only 1 one-bedroom for sale in Ramona listed at $795,000. It has been on the market since November 2019 and is located at 925 E Old Julian Hwy. This new build is 1,672 Sq Ft on 9.85 acres of land.

Two-Bedroom: There are actually no two-bedroom detached homes for sale in Ramona!

Three-Bedroom: Unlike two-bedrooms in Ramona there are plenty of three-bedrooms for sale, over 31 for sale! Asking prices range from $499,000 – $995,000. There are two listed in the millions at $3,750,000 and $4,500,000. The median lot size is a little over 30,000 Sq Ft. Average days on the market is 39 days. The average square footage is 2,375, ranging from 1,200 Sq Ft – 4,560 Sq Ft.

Four + Bedroom: There are 33 four plus+ bedroom homes for sale in Ramona. List price ranges from $449,900 – $995,000. There are an additional three homes listed in the millions: $1,100,000, $1,200,000, and $7,495,000! The latter is 8,000 Sq Ft custom home with 360 degree mountain views, built in 2009, and is on 352 acres! It is a four-bedroom / 5-bath home that has been listed for 16 days. This Equestrian Estate and Arabian Horse Ranch includes amenities such as several other historical homes dating back to 1890, a 35 Stall State of the Art Barn with covered riding Arena, an additional 12 Stall barn, a Breeding facility, a 12 Stall Mare Hotel, a Presentation Office, a covered Bullpen, numerous dry turnout pastures and irrigated pastures, two wells and much more. Wow!

The average days on the market for four + bedrooms is 33 days and the average square footage is 3,034 Sq Ft, ranging from 1,950 Sq Ft to that massive 8,000 Sq Ft.

If you are interested in a market analysis for a certain zip code or area in San Diego please let Garrett Trainor at First Line Realty know and he will be happy to help! Stay tuned for Just Sold data for Ramona, California!

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First Line Realty – Just SOLD – 5310 Rex Ave #1, San Diego, CA 92105

Congratulations to my buyer of 5310 Rex Ave #1, San Diego, CA! We were able to sell her home and find her this beautiful home closer to her work! We were also able to purchase this property below appraisal price! If you are interested in purchasing a home please reach out to Garrett Trainor at First Line Realty. Property With A Purpose! 

  • Just Sold May 2020
  • Selling Agent
  • Sale Price $236,500
  • 1 Bed / 1 Bath
  • Year Built: 1973
  • Home Size: 630 Sq Ft
  • Community: City Heights
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Five Possible Electric Home Dangers

The leading cause of home fires is due to electrical mishaps. Learn about the most dangerous things electricians see homeowners do most often that could be putting your home at risk.

  • Using Adaptors on Two-Prong Outlets: Some older homes may have old two-prong outlets, but many of today’s appliances are three-prong. Instead of using adaptors, upgrade your outlet to a three-prong version.
  • Using Loose Electrical Outlets: Plugging into loose electrical outlets can lead to fires. Replace loose electrical outlets ASAP.
  • Using the Wrong Extension Cords Outside: Make sure the extension cord is rated for outdoor use. Otherwise, it could overhead and potentially cause a fire.
  • Overloading the Circuit: Look for signs that you may be overloading the circuit. If you suspect an overloaded circuit, contact a licensed electrician to inquire about upgrading your panel.
  • Overlooking the Importance of Ground Fault Circuits: All outlets in the kitchen and bathrooms should be equipped with ground fault circuit interruptors which will shut off power then they sense water near.